Mangan-p02-cs01.indd 193/22/2016 4:40:55 PMPart Two Case StudiesJohn LewisPartnership: Semi‐Automated NationalDistribution CentrePeter BakerCranfield School ofManagementBACKGROUNDJohn Lewis Partnership is one of the UK’s top 10 retail businesses andhas a distinctive ownership structure, being the country’s largestemployee cooperative. All 70,000 per- manent staf are partners in thebusiness and own 28 John Lewis department stores, two John Lewis AtHome stores, 234 Waitrose supermarkets and various other businesses.The partners share in the benefits and profits of the business.The John Lewis department stores sell high‐quality goods under a sloganof ‘never knowingly undersold’ – which the company has used for over75 years. The stores typi- cally stock more than 350,000 product lines,ranging from fashion to furnishings and household goods.The company has had strong sales even through the recession of2008/10 and plans to open more stores in the UK in the coming years.The John Lewis stores have been sup- plied from six distribution centres(DCs), each handling distinct groups of products, identified either bysize (e.g. small and medium‐size item DCs) or by category (e.g.jewellery/garments, outdoor/lighting, white goods and furniture DCs). Inaddition, there is a central returns centre. The DCs deliver goods eitherdirectly to the stores or to ser- vice centres, which tend to act asstockrooms and home delivery points for individual stores or for groupsof stores.
240 PART TWO LOGISTICS AND SUPPLY CHAIN OPERATIONSThe Partnership’s growth necessitated further warehousing capacity andit was decided that the best way to complement the existing distributioninfrastructure was to introduce a new semi‐automated national distributioncentre (SANDC) to handle small‐sized items,employing the latesttechnology so as to improve efficiency and accuracy. The SANDC islocated at Magna Park in Milton Keynes, near the centre of the UK, andcommenced operations in 2009.The SANDC is a £46 million capital investment. It is 60,393 squaremetres in floor area with a height of 15 metres. There are 33 receivingdocks and 46 despatch docks. The SANDC is designed to operate twoshifts per day after ramp‐up with potential to increase to three shifts perday 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 theneed for back‐of‐store facilities. In addition, the SANDC can assemblegoods in the planogram (i.e. layout sequence) of each individual store sothat items can easily be placed on the store shelves. The business case isthus based on substantial store economies, as well as warehouseoperational economies.