Argos Case Study
A strategy to centralise small parts helps to maintain growth
The objective
Argos has seen more rapid growth than almost any other comparable UK retailer over the last few years. Until recently its strategy for supporting the supply chain needed to maintain this growth was to build new RDCs (Regional Distribution Centres). Each RDC stocked virtually the full range and supplied Argos stores in its region. In 2000 a review of the supply chain strategy indicated that there would be benefits from the centralisation of small items, which would then be picked by store order and cross-docked through the RDCs. This same central facility, it was decided would also be developed as the primary point for the storage and distribution of directly imported (DI) lines. The objective then was to determine how big the facility should be, what equipment, systems and operational procedures should be used and where it should be located.
Supply Chain Networks
The way in which Argos is developing its distribution operations is a good example of how supply chain networks grow within an organisation. The new facility will extend the network by introducing new delivery channels but the result will be significant cost benefits. This important point is that Argos have understood the complexity of their supply chain network and are managing it accordingly. Many organisations simply do not recognise the multiple supply chains within their business and consequently fail to manage the network to best effect.
The Logistics Business approach
We provided a full design and operational development team to work alongside the Argos project team. We used our computerised, interactive distribution centre design tool, i-flow, to model what the business might look like in five to seven years time, given a range of likely scenarios for sales growth and range expansion. This provided us with the essential parameters for considering what options might best suit the future needs of the business. The
The objective
Argos has seen more rapid growth than almost any other comparable UK retailer over the last few years. Until recently its strategy for supporting the supply chain needed to maintain this growth was to build new RDCs (Regional Distribution Centres). Each RDC stocked virtually the full range and supplied Argos stores in its region. In 2000 a review of the supply chain strategy indicated that there would be benefits from the centralisation of small items, which would then be picked by store order and cross-docked through the RDCs. This same central facility, it was decided would also be developed as the primary point for the storage and distribution of directly imported (DI) lines. The objective then was to determine how big the facility should be, what equipment, systems and operational procedures should be used and where it should be located.
Supply Chain Networks
The way in which Argos is developing its distribution operations is a good example of how supply chain networks grow within an organisation. The new facility will extend the network by introducing new delivery channels but the result will be significant cost benefits. This important point is that Argos have understood the complexity of their supply chain network and are managing it accordingly. Many organisations simply do not recognise the multiple supply chains within their business and consequently fail to manage the network to best effect.
The Logistics Business approach
We provided a full design and operational development team to work alongside the Argos project team. We used our computerised, interactive distribution centre design tool, i-flow, to model what the business might look like in five to seven years time, given a range of likely scenarios for sales growth and range expansion. This provided us with the essential parameters for considering what options might best suit the future needs of the business. The