MHL speaks to Sid Shaikh, product development manager at Ocado Engineering, about the company’s latest work in designing and building state-of-the-art automated warehouses to significantly improve the logistics of its online delivery service.
The grocery retail market, and the online segment more specifically, are highly competitive - therefore many companies are looking to use automation to improve efficiency and profitability.
However, while typical bricks and mortar grocery supermarkets might be using dark stores or networks of smaller depots, Ocado’s business model has been built on centralised fulfilment using large-scale, highly-automated facilities called Customer Fulfilment Centres (CFCs).
What is this new branch of the ocado business?
Over the past decade, we have extended our in-house expertise in automation, both in terms of software and hardware capabilities. We have proven that we can design, build and operate smart facilities capable of picking millions of products daily and from a much wider product range than traditional supermarkets. Our warehouse automation successfully functions to deliver higher throughputs, better order accuracy and improved picking efficiency compared to the traditional bricks and mortar retail model.
When building our first Ocado Smart Platform CFC, there was no existing template so we had no choice but to build most of the technology ourselves. By developing our automation solutions in-house we have achieved tight inventory control, efficient use of warehouse space, minimised product handling and maximised product shelf life.
What technology is involved?
Ocado has a broad and deep technology stack and is always pushing the boundaries of engineering. In terms of software, we have teams working on machine learning and cloud applications, mobile app development, embedded and automation control, complex large scale simulation and modelling, supply chain software and more.
Hardware-wise, we are looking particularly at wireless communications, battery and EV charging technology, high tolerance and high volume manufacturing, complex motion control systems, large scale safety systems, advanced robotics, high speed picking, or large scale temperature management to give but a few examples. In fact, when walking into one of our CFCs, one would immediately recognise many of the Industry 4.0 applications at work, spanning robotics, AI, big data and IoT.
What are the benefits?
Our technology platform has helped maintain superior customer service levels with on time delivery at 95 per cent and order accuracy at 98.9 per cent. Our efficiency also means we are kinder on the environment: we have fewer sites so our carbon footprint is smaller than a traditional supermarket.
Our scale and use of software algorithms leads to less waste compared to other supermarkets; their waste levels (three per cent) are four times greater than Ocado’s (0.7 per cent). We are currently looking to sell the Ocado Smart Platform as a solution to international bricks and mortar grocery retailers, giving them the ability to replicate our success in other parts of the world.
In an increasingly competitive marketplace, automated systems can make the difference between success and failure. Our CFCs remain pivotal to the profitability and future success of our online shopping and delivery services. Many supermarkets currently run their online shopping service at a loss, but Ocado has demonstrated that online grocery can actually be a profitable and successful business with the use of highly automated systems and intelligent software. We have achieved profitability at an order level and we’ve invested that profit back into building and strengthening our platform and engineering know-how.
The investment in our technology has also enabled us to reach a number of milestones in the engineering industry and we have filed many patent applications, which we are extremely proud of. We’ve also collaborated with universities and research institutes to push the boundaries of what is possible in terms of robotics or battery technology.
You can read the full article on Ocado Engineering in the July/August issue of Materials Handling & Logistics, out soon.