Ocado now has 18 CFC sites (including 2 micros) open of its 58 committed so far with six of those having opened in the first half of 2022. The six new sites include the first CFC for ICA in Sweden, a second site in Canada for Sobeys, and 4 further sites for Kroger in the US. “Each of these CFCs will generate dependable, recurring cash flows and attractive returns on capital,” said Ocado Group CEO Tim Steiner in the company’s latest results this week.
The company said that programmes for new CFCs are progressing well. In Europe, Alcampo has announced the site for its CFC while in APAC Coles and Aeon’s first tranche of CFCs remain on track. Good progress is being made in North America in the rollout of new CFCs for Kroger and Sobeys.
In the US specifically, Kroger now has six CFCs live in Monroe, OH, Groveland, FL, Atlanta, GA, Dallas, TX, Pleasant Prairie, WI and Romulus, MI. The company says that order volumes are ramping up well.
Meanwhile Kroger is also accelerating its spoke program (trans-shipment sites used for the intermediate handling of customers’ orders) with the opening of spokes in Columbus, OH in April and Miami, FL and Louisville, KY in May. Further spokes opened in Birmingham, AL and Oklahoma City, OK in June, followed by Chicago, IL, Nashville, KY in July. Spokes in San Antonio and Austin, TX are due to open soon. Kroger expects to extend the reach of Kroger Delivery to over 40 million more US customers by the end of 2022
In the UK four further CFCs are planned. The company also opened its first fully automated micro fulfilment centre (‘MFC’) in the first half in Canning Town which supports its one-hour delivery service Ocado Zoom. It plans to open three more in the next 12 months. The new sites include Leyton (East London), and Leeds as well as its first international MFC site in the US.
In January the company announced seven new online fullment innovations, under the banner Ocado Re: Imagined. It said this week that any clients ordering a CFC for delivery from the second half of 2023 and onwards will now have those features enabled. The enhancements can be retrofitted to older CFCs, the company said.
Ocado said it was expecting to reduce labour costs by a further 30-40% through a robotic pick solution that can pick 50-80% of the range by volume in a given site. In the UK, where the solution is being tested, Ocado said it can now pick 30% of the ambient range.
Of the seven elements of Ocado Re: Imagined live trials of OGRP (On-Grid Robotic Pick) and AFL (Automated Frameload) will begin in Purfleet in the second half. Other elements include Orbit (the world’s first virtual distribution centre) and Swift Router (delivery of short lead time orders as well as larger, longer lead-time orders from the same van) which the company said will enable it to materially reduce the higher cost of supply chain and delivery typically associated with smaller sites and shorter lead time orders, whilst preserving range.
Ocado said that underlying efficiency in both fulfilment and the last mile continues to improve. Units picked per hour (‘UPH’) improved to 174 from 172 at mature sites, and is consistently above 200 at newest sites Andover and Purfleet, with Andover achieving 220. Deliveries per van per shift have improved by 10%, though drops per van per week (‘DPV’) has declined to 177 from 183, reflecting a decision to hold surplus vans to mitigate supply uncertainty.