Dordon case study

What’s the news?

On 23 February 2013, the first delivery left our newly opened CFC2 in Dordon, Warwickshire.

In a little under two years, we had successfully bought, built and delivered a fully functioning site, based largely on our learnings from our existing Hatfield CFC and Service Delivery operations.

Utilisation of the Dordon CFC ramped up since opening ahead of internal expectations, and is now starting to demonstrate its efficiency with a lower picking cost per order than the Hatfield CFC.

How much did it cost?

The entire project will cost (following phase 2 capital expenditure) over £230 million gross. Of this the land and buildings account for just over £80 million, although have subsequently been subject to a sale and leaseback transaction as part of our agreement with Morrisons.

The balance of the capital expenditure is for mechanical handling equipment (cranes, conveyors and storage racking) and technology investment.

Why is it important?

The opening of CFC2 ensures we can continue to grow our business, as it will increase our fulfilment capacity by over 180,000 orders per week.

It is also a significant demonstration of our capabilities in designing, constructing and commissioning a facility of this scale, with the Dordon CFC now the world’s largest and most sophisticated grocery “store”, surpassing the Hatfield CFC for that title. The scale and complexity involved were both significant, particularly in the given timeframe.

At scale, the Dordon CFC will improve the operating efficiency of our business. The years of learning that have gone into the design of this CFC, combined with the latest automation and operating knowledge will lower operating costs for fulfillment to new levels. Although using the UPH measure of efficiency Dordon CFC has not yet reached Hatfield CFC levels, by the end of the period it was already cheaper to pick an order in Dordon than in Hatfield and we expect Dordon efficiency to continue to improve with further utilisation.

The capacity it provides also played an instrumental part in the structuring of another milestone event in 2013, the signing of our agreement with Morrisons (see case study).

What’s next?

We will continue to utilise Dordon CFC as part of our fulfilment solution for our retail business. We have also utilised part of the capacity to launch the online business for Morrisons.

We continue to review our expected capacity requirements, including those required by Morrisons, and will make further commitments as appropriate. We continue to work on improving the capital efficiency of our future fulfilment assets, with the objective of making them more capital efficient and quicker to construct and commission.

"CFC2 is now the world’s largest and most sophisticated grocery ‘store’."