Cold case

What is odd about the grey warehouse that is the nerve centre of online retailer Ocado’s operations is not obvious at first.

Then it clicks: there are virtually no windows in the 1.2 million sq ft monolith squatting on the edge of a Hatfield business park.

The warehouse is effectively an enormous chilled supermarket cabinet, with different sections kept at the same temperature all year round.

Some parts are kept at a relatively balmy two degrees centigrade, while the freezer section stays at minus 25 degrees centigrade during summer and winter. Workers in the freezer section wear the kind of heavily insulated clothing usually reserved for polar explorers.

The lack of windows makes it much easier to keep the temperature just right and helps ensure the products which partner company Waitrose distributes reach the customers in tip-top condition.

The idea for Ocado was dreamt up eight years ago by Tim Steiner, Jason Gissing and Jonathan Faiman. Since then, more than £350m has been spent on building an internet grocery business that is very different from other major UK supermarket chains.

Mark Richardson, Ocado’s head of IT, says the firm’s warehouse makes it unique in the online food retailing market. “We are the only store that picks all of the goods for delivery from a centralised warehouse,” he says. “Other supermarkets often pick their goods for online delivery from the aisles of a supermarket just like ordinary shoppers.”

Richardson joined Ocado after a 14 year-long career at John Lewis Partnership, including a brief stint at Waitrose. “I really enjoyed my time there but I needed a new challenge,” he says.

Just before he left, Richardson sat in on a presentation made by the Ocado board to a group of Waitrose managers and was excited by what he saw.

“I thought it would be impossible to join Ocado as the two companies have an anti-poaching policy,” he said. But Richardson was offered a job after leaving Waitrose for another role that he never took up. He started working for Ocado at the start of 2001.

The first of his family to go to university, Richardson went to University College London to study physics in the mid-1980s. However, he did not discover his aptitude for IT until the last year of his degree, while involved in an ECG project at University College Hospital.

Richardson enjoyed the programming part of the project and after joining the John Lewis Partnership on the graduate trainee scheme in 1987, he quickly moved away from program coding to working as a systems analyst.

After many years of working with software and applications, Richardson became interested in IT infrastructure while working on a millennium project for Waitrose. Then he attended that life-changing presentation made by the Ocado board.

“There were many aspects of working with Ocado that inspired me. There was the challenge of setting a business up from scratch. It was also a case of perfect timing; I was looking for an entrepreneurial challenge after so many years of working at a large organisation,” he says.

And Richardson found life at Ocado more than lived up to his expectations. “When I started, there were only a few hand-picked managers building the business. They were an impressive crew with big personalities and were excellent leaders,” he says.

Steiner, Gissing and Faiman came up with the idea for Ocado because they believed online grocery shopping could be done much more efficiently. The three co-founders also recognised that the UK was a perfect market for online retail because of its dense population.

Richardson’s task was daunting. All of the systems had to be built from scratch, and as Ocado was doing something different from other retailers in the UK, many of the off-the-shelf systems had to be customised.

“We now develop all of our systems in-house but at the start we bought systems and modified them. Some of them are so heavily modified that it would be difficult to find the original system,” he says.

“The centralised warehouse is much more efficient at selecting goods than a shop. It’s designed for just one thing: picking groceries accurately and fast. It doesn’t have to do anything else.

“The aim is to provide the best possible customer service and preserve the integrity of orders. This means that we think about everything to ensure that the customer receives exactly the right goods in perfect condition at the time they request.”

The layout of the Ocado warehouse has been dictated by the dual demands of service and integrity in an attempt to make delivery as efficient as possible, while maintaining the quality of the goods.

Bar-coded boxes travel over 10 miles of conveyor belt, stopping at pre-determined points where pickers, following instructions on a computer screen, scan the groceries and put them into one of three bags hanging in each box. The goods then trundle off to the next picking point.

Once the customer’s order has been completed, the boxes are loaded onto cages and onto one of Ocado’s 500 delivery vans. Orchestrating the dance of the boxes through the warehouse is a doddle compared with the task of determining which van takes which orders, says Richardson.

“The system that determines the routes of the vans has the biggest infrastructure and is very complex. We wrote the system ourselves and it starts from when the order is placed on the web site. The background system does a massive amount of calculations to determine the best van for each order,” he says.

The past six years have allowed Richardson and others at Ocado to iron out gremlins in the warehouse system. “Thankfully the days when I get a call at two o’clock in the morning, to come and sort out a problem to ensure that we can meet all customer orders, are now few and far between,” he says

The biggest challenge Richardson faces now is to ensure that IT systems can keep pace with the rapid growth of the business. And as the warehouse is operating smoothly, Richardson is focusing his attention on the web site.

“We are looking to improve the facilities on the web site to help people to shop. For example, we recently launched a feature on the site that calculates when you are likely to have run out of something like dishwasher tablets. It then creates a prompt asking if you would like to buy some more,” he says.

Despite the constant challenges presented by his role, Richardson still enjoys his job.

“It’s really stimulating to be working for people who believed they could build a business from scratch to challenge Tesco. It’s bold and it’s great fun,” he says with a smile.

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!