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11/1/2018Part Two Case Studies1/4239240PART TWO CASE STUDIES JOHN LEWIS PARTNERSHIP: SEMI-AUTOMATED NATIONALDISTRIBUTION CENTREPeter BakerCranfield School of ManagementBACKGROUNDJohn Lewis Partnership is one of the UK’s top 10 retail businesses and has a distinctiveownership structure, being the country’s largest employee cooperative. All 70,000 permanentstaff are partners in the business and own 28 John Lewis department stores, two John Lewis AtHome stores, 234 Waitrose supermarkets and various other businesses. The partners share inthe benefits and profits of the business.The John Lewis department stores sell high-quality goods under a slogan of ‘never knowinglyundersold’ – which the company has used for over 75 years. The stores typically stock more than350,000 product lines, ranging from fashion to furnishings and household goods.The company has had strong sales even through the recession of 2008/10 and plans to openmore stores in the UK in the coming years. The John Lewis stores have been supplied from sixdistribution centres (DCs), each handling distinct groups of products, identified either by size(e.g. small and medium-size item DCs) or by category (e.g. jewellery/garments,outdoor/lighting, white goods and furniture DCs). In addition, there is a central returns centre.The DCs deliver goods either directly to the stores or to service centres, which tend to act asstockrooms and home delivery points for individual stores or for groups of stores.The Partnership’s growth necessitated further warehousing capacity and it was decided that thebest way to complement the existing distribution infrastructure was to introduce a new semi-automated national distribution centre (SANDC) to handle small-sized items, employing thelatest technology so as to improve efficiency and accuracy. The SANDC is located at Magna Parkin Milton Keynes, near the centre of the UK, and commenced operations in 2009.The SANDC is a £46 million capital investment. It is 60,393 square metres in floor area with aheight of 15 metres. There are 33 receiving docks and 46 despatch docks. The SANDC isdesigned to operate two shifts per day after ramp-up with potential to increase to three shiftsper day at peak in future years. It is planned to hold 87,000 SKUs.The SANDC is designed to enable item-level picking and thus reduce the need for back-of-storefacilities. In addition, the SANDC can assemble goods in the planogram (i.e. layout sequence) ofeach individual store so that items can easily be placed on the store shelves. The business case isthus based on substantial store economies, as well as warehouse operational economies.The warehouse is designed to be environmentally friendly with such features as:Solar panelsStorm water collection15% roof lightsAutomated lighting control systems
11/1/2018Part Two Case Studies2/4241RECEIVINGMost goods are received packed in cartons on pallets. These are moved by reach truck onto a lift