Ocado’s Robotic Order-Fulfilment Warehouse Fire – Under Control but Supply Risk Still Present

News today that the fire at online delivery firm Ocado’s robotic order-fulfilment warehouse has been put under control, and no longer regarded as a ‘major incident,’ will be welcomed by Ocado customers and of course the firm itself. These are the times when we take our hats off to the firefighters (and other experts) who tackle such scenes.

The firm sadly is likely to face millions of pounds in losses over this disaster, but in these cases risks of reputational damage can run just as high. It will, we believe, issue a slow sales growth warning while it tries to source alternative solutions to fulfil orders. The warehouse, we understand, handles tens of thousands of orders a week, a tenth of the online orders.

Unfortunately this has happened just as the firm was issuing annual results and announcing a new one-hour grocery delivery service (Zoom) to compete against Amazon. See the news story on The Guardian (or any other major news websites); and Retailer Gazette had this to say “This could put a significant dent in Ocado’s operations, as its high-tech store was fundamental in securing its landmark deal with US grocery giant Kroger. The deal entails Ocado supplying Kroger with 20 automated warehouses, and when it was first announced, Ocado share prices skyrocketing 44 per cent – equating to around £2 billion. Yesterday, Ocado reported a pre-tax loss of £44.4 million in the year to December 2, compared to a loss of £8.3 million the previous year, due largely to its heavy investment in new warehouses, automation technology and international partnerships. Ocado was crowned the best-performing company on the FTSE 350 in 2018 as a result of its transformative year.”

Tragically, these events, whether natural disasters, manmade, environmental, geo-political or just plain unfathomable, are always present, all one can do is build mitigation into the supply chain strategy. We have developed a short series of risk management articles in conjunction with risk mitigation experts riskmethods and written by Peter Smith – not a time to advertise our own wares we understand, but it does seem appropriate to offer further reading on supply chain risk. This paper in particular talks about how procurement and supply chain professionals should act to understand, mitigate and manage the risk around disasters that can affect supply activities.

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