Jumbo opens third e-fulfilment centre

In 2020, Jumbo’s online sales exceeded €500 million for the first time. When coronavirus struck in mid-March last year, many consumers unexpectedly took advantage of the opportunity to order groceries online and have them delivered to their homes. “As soon as the virus broke out, we had to scale up our EFCs in Den Bosch and Raalte to maximum capacity. We were fully booked up for weeks,” says Karel de Jong.

Jumbo’s Supply Chain Director is delighted that the firm’s third EFC was opened two months ahead of schedule. “We started filling the stock in December last year, and then by 4 January we were processing orders. Only then could we strike a better balance between supply and demand. If we’d known what we know today, we would’ve opened our third EFC a year earlier,” laughs De Jong.

Separate distribution network

In addition to the distribution network for supermarkets, Jumbo has built up a completely separate distribution network for its online channel in recent years. That was a conscious decision when its first EFC opened in Den Bosch in 2015. “One alternative was to arrange delivery from the stores, but not every store offers the full range. At our food markets, there are no fewer than 32,000 different items. That’s the range we want to offer to all our customers.”

Fulfilling online orders in existing distribution centres wasn’t an option either, says De Jong. “These were set up to handle trade quantities. But consumers only want to buy one or two packs of rice at once – not twelve. So, delivering from our existing distribution centres would mean having to reserve two picking locations for each item: one for trade and one for end consumers.”

Separate EFCs for the online channel is the best option, De Jong is convinced. “An EFC is a combination of a large store and a warehouse in terms of the technical, system and organisation aspects. This is where store logistics meets warehousing. That combination is crucial to making our operations efficient.”

A day and a half

The EFCs mirror the way stores work when it comes to design and restocking. The new one in Bleiswijk is equipped with pallet racks, with shelves at ground level. In fact, these are just like regular supermarkets, but on a blown-up scale. “We refill the stock from the existing distribution centres three times a day. What we deliver has to fit onto the shelf in one go to prevent us from having anything left over. We use the same forecasting replenishment software as we do for the stores. This helps us to identify and predict consumer behaviour.”

Jumbo uses the same principles used in every other warehouse for the layout of the shelves: fast-moving products at the front, slow-moving ones at the back. “When you’re in-store, you’ll see all the different types of pasta next to each other, so you can compare them. But that’s not how we do things in the EFCs. We only look at the turnover rate, so our staff don’t need to go back and forth all day.”

New version

To manage operations in the EFCs, Jumbo uses the same warehouse management system (WMS) as in its existing distribution centres – Locus WMS. But it wasn’t a done deal right away, explains De Jong. “When we decided to build a separate EFC in 2015, we looked at the systems available on the market. For the online food sector, there was very little standard software available at that time. Because we were already working with Locus, we discussed whether Centric could manage to build a suitable WMS based on that system. And they did.”

The result is a completely new version of Locus with features developed specifically for the EFCs. “Centric not only knows how to manage a complex warehouse, but also how to run a store. They brought that knowledge into the process, and that’s where their added value lies,” explains De Jong.

Managing leftover stock

With each new EFC, there is an improvement to both the operations and the WMS. De Jong points out the marshalling area, where the partial orders from the different zones come back together and are merged. “It was a very fragmented process in Den Bosch. In Raalte, we did improve it, including through barcode scanning. In Bleiswijk, we’ve made things even smarter by linking Locus to our route planning system.”

Another learning point concerns replenishing the picking stock. “We do our best to prevent leftover stock, but not everything fits on the shelf all the time. In Den Bosch, we had to find somewhere else to store all that, without any help from the WMS. In Raalte, we have made a distinction in the WMS between the bulk and picking locations. Leftover stock is kept in bulk locations, and the WMS notifies us if a picking location needs to be restocked. In Bleiswijk, we’ve gone a step further, and we now keep the leftover stock on the bottom or top shelf as standard. That saves us a lot of walking and also increases availability.”

Fourth EFC

It is not clear where the market for online food will go from here. Overall sales are likely to continue to grow, but perhaps not as rapidly as last year. And it remains to be seen what the impact of delivery start-ups like Gorillas and Flink will be. “According to the latest market figures, we’re the third biggest player in online food, after Albert Heijn and Picnic. But we want to become number two, just like we are in the physical supermarket sector. That means putting our foot down on the accelerator,” says De Jong.

Jumbo’s online distribution network continues to grow. This year, the company is expanding its number of home delivery hubs from six to sixteen. It’s not a question of whether a fourth EFC is needed, but when. And whether this will be a manual operation or an automated one, De Jong doesn’t know yet. If Jumbo opts for the latter, it must be tried-and-tested technology. “But setting up a mechanised EFC typically takes three years. I expect we’ll need a fourth EFC well before that.”