Massive investment in its National Distribution Centre in Burnley Bridge is enabling Exertis to offer retailers, resellers and vendors an expanded range of services including dropship direct to end user customers
Next-day delivery is one of the wonders of modern life that it is all too easy to take for granted. In fact, many different processes – supported by a great deal of investment – are involved from the moment the customer goes online and clicks buy to the point the courier places the package in their hands the following day.
Exertis, the UK brand of technology distributor DCC Technology, one of three divisions of the £22 billion turnover DCC Group, has made multi-million-pound investments in a new SAP system, an e-commerce platform and warehouse automation to enable it to deliver items to end user customers on behalf of its clients, with a successful e-commerce next-day delivery rate of 99.56%.
What it calls dropship currently makes up around 10% of the 17 million units shipped annually through the NDC, with 1.8 million dropship orders to 1.3 million homes, generating £212 million in revenue. This part of the business has been growing at 25%, but that rate is expected to double in 2024 as Exertis forms new partnerships with vendors and retailers.
Next day ‘dropship’ to the end user customers of partners such as AO, Argos, The Very Group, Ebuyer, Microsoft Store and John Lewis & Partners is just one of the services provided by the company’s National Distribution Centre (NDC) in Burnley Bridge, alongside bulk deliveries to resellers/retailers’ own distribution centres (DCs) and fulfilment centres (FCs), as well as third party logistics (3PL) services like returns processing for vendors and resellers (including a used device collection and resale service for large estate technology upgrades).
There is also a Vendor Flex option, which allows Amazon, for example, to run its own warehouse operation within the NDC to shorten its supply chain and accelerate time to market for products acquired through Exertis.
While dropship might be a small part of the distributor’s existing business it is a good example of how the company is investing in and expanding its operations in response to changes in the way people buy and sell products, epitomised by the rise of stock-less e-tailers with extended product portfolios and growing demand from vendors to be able to reach customers through direct-to-consumer platforms.
These demands clearly require very different capabilities than the traditional distribution model in which a distributor takes a vendor’s product and ships it to resellers/retailers who then service the end user.
So that it can continue to provide ‘reach, simplification and leverage’ for partners in this new distribution landscape, Exertis has invested £5 million in a self-serve e-commerce platform with better integration, ease of use, pricing and product breadth. The platform is already being used by 40% of Exertis’s B2B customers and is enjoying sales growth of 400%.
The technology behind the platform also empowers vendors to sell directly to end user customers, with dropship carried out by Exertis. Exertis UK Chief Executive Tim Griffin points out that as well as better serving the needs of customers, this enables vendors to discover more about their customers.
“One of the challenges that vendors have in a world where they are disintermediated, either through a retailer or through an e-commerce platform, is that they don’t know who their end user customers are. Enabling them to have their own direct-to-consumer websites lets us feed back data on their customers, which they then own.”
To make the most of its new systems and services and to provide capacity for future growth, Exertis has invested £25 million in automation at its Burnley Bridge NDC, including a four-storey Pick Tower for the faster picking and packing of orders.
Described by Griffin as ‘the jewel in the crown’ of its £90 million distribution centre, the Pick Tower gives retailers and resellers the ability to consolidate multiple items, including hardware and software products, in the same package and, in doing so, differentiate themselves in a competitive market through the dynamic bundling of products.
Referencing Exertis Ztorm, a digital distributor of gaming and software online and via gift cards, Chief Portfolio Officer Phil Turner adds: “We have the asset base and the portfolio base within our business to enables us to put hardware and software together. That’s key for us. We are about to go live with a digital bundle with Microsoft which they’ve been pushing for some time, and our digital bundling capability allows us to do that.”
Of the 1.8 million dropship orders to date, involving 19,000 different products from 250 brands, 157,000 have been bundles.
By any measure, the NDC at Burnley Bridge is an impressive facility.
Opened seven years ago as the primary distribution centre for Exertis’s Retail and B2B businesses, it replaced the company’s existing campus in the area, which at its peak had seven warehouses, with one enormous space offering state-of-the-art technology, sophisticated security, including automatic numberplate recognition (ANPR) and biometric access control, plus additional capacity to support future growth and efficiencies.
Only last month, Exertis opened a consultation period to consider a proposal to close its warehouse and distribution facility in Raunds and move operations to Burnley Bridge.
Exertis also has warehouses in Elland, Leeds (Supplies), Lambourn (Hypertec memory and accessories) and Basingstoke, but Burnley Bridge is comfortably its largest distribution centre in the UK and Exertis is confident that from FY2025 it will be able to warehouse and distribute all stock from that one location.
The 550,000 square foot building took 18 months to build using 20,000 tonnes of concrete and 40,000 tonnes of steel. The actual warehouse has a footprint of 460,000 square foot – the size of five football pitches – with planning permission for a further 200,000 square feet should it be needed.
It rises to a height of 22 metres, with a workable height of 18.8 metres, higher than a stack of four double-decker buses.
Eighteen months ago, Exertis added a 120,000 square foot mezzanine floor within the existing footprint, providing additional working space including 60,000 square feet dedicated to returns processing and manufacturer-accredited testing.
“Within the facility, we have a 7,500 square foot Electrostatic Discharge (ESD) service centre, so we can offer our vendors full test capability in terms of return product. We can also do added value services in terms of asset tagging, memory upgrades, Autopilot and imaging for our customers,” explains Chief Logistics Officer Sion Wineyard.
The warehouse operates seven days a week, on a 24-hour basis from Monday to Friday. It has a permanent workforce of 330, supported by temporary workers who swell the workforce to 650 during the busiest times of the year.
To minimise its carbon footprint, Exertis has installed energy-saving, motion-activated LED lighting; 14 EV chargers for use by Exertis, staff and visitors; and a 65,000 square foot array of 3,000 solar panels on the roof. This generates 40% of the NDC’s annual electricity consumption, enough to power 210 homes for a year, with any excess exported to the national grid. The array reduces Exertis’s carbon emissions by 450 tonnes per year, adding up to 11,000 tonnes over the array’s 25-year lifespan.
Attention to detail
Everything about the NDC is on a very large scale, but its operational excellence is based on attention to the minutest detail.
This includes breaking down its activities – receipt, processing and despatch – into distinct steps. On an average day, these add up to 50,000 individual tasks, giving each worker 130 to complete per shift. Or, as Wineyard put it, “50,000 is the number of steps in our dance”.
The 24-hour day is broken down into three periods of eight hours: Receipt (6am to 2pm); Processing & Despatch (2pm to 10pm); and Stock Replenishment and Retailer Fulfilment (10pm to 6am).
On an average day, 90 articulated lorries will deliver 650 pallets and 550 SKUs to the NDC (rising to 1,300 pallets and 800 SKUs in the October/November peak), followed by 100 collections by Pallex (for pallets) and couriers (for packages).
The 32 aisles of warehouse racking, each 100 metres long and 16 metres high, can accommodate 31,000 pallets. Workers pick stock using 42 low-level order pickers and 16 VNA (very narrow aisle) trucks that can reach items on the top tiers of racking.
The size of the NDC warehouse brings its own inefficiencies – just think of those five football pitches. Hence the Pick Tower investment.
Essentially, a giant cage with 51,500 storage locations and 72 pick zones spread across four levels and 25,000 square feet, this secure, restricted facility reduces manual processing and touchpoints, as well as the distance needed to travel when picking stock. This is important as 55% of dropship orders are received in the last hour of the business day, with a final pull-time of 10pm.
The Pick Tower has a shelf pick location, a pallet lane and a carton lane. In the case of the latter, two types of carton (large and small) are barcoded and launched into the Pick Tower on 2.1km of conveyor. This travels past pick points where item(s) are added to the cartons. At the end, they are weighed to make sure they have been packed with the right quantity of the right products, and after the paperwork has been added they proceed to the compactor where the height of the carton is reduced by folding the edges down so that there is a void of less than 8% in any parcel. These folded down edges protect the contents and ensure Exertis is not ‘shipping air’.
Currently, 72% of all SKUs processed by the NDC are Pick Tower-compatible (some are too large) and the plan is to bring more of those items into the facility to enhance Exertis’s ability to consolidate orders and pick to order. Currently, just over one of the four floors is being used, so there is plenty of unused capacity.
“One of the things that you will see over time is us consolidating more and more of the volume that we ship to customers through that particular capability,” explains Griffin.
In addition to its investment in infrastructure, Exertis is making significant advances in two other keys aspects of digitalisation: optimisation and automation, including machine learning/AI; and digital marketing & ecommerce to help create a seamless, Amazon-like experience.
In the last 12 months, Exertis has established a data analytics function from scratch, investing in data scientists, data engineers and data analysts. Headed up by Dr Adeala Zabair, the Data Science & Analytics team derives insights and understanding from datasets to drive efficiencies in procurement and stock management.
“The DNA of our business is becoming a lot more data-driven,” says Turner.
He adds that Exertis is also doing a lot of work in robotic process automation (RPA) to optimise workflows for its own employees and for reseller partners.
“We get thousands of emails on a daily basis from resellers saying ‘Can you quote me on this product? Or can you give me a price for this product?’ and it’s really, really easy with RPA to take that, supply a quote and do it in seconds rather than wait for a salesperson to respond.”
Turner points out that the combination of data analytics and process optimisation also aids sales effectiveness.
“Being able to predict churn, being able to provide cross-sell and up-sell opportunities, being able to provide switch-sell products for some of our vendors, alternative products where we’ve got constrained stock. Getting all those tools into the right people’s hands at the right time delivers value to our customer. And this function is starting to deliver that.”
To stay abreast of changing consumer behaviour and the growing influence of TikTok and YouTube in the procurement process, Exertis is also investing in its digital marketing capabilities to engage directly with influencers and specific consumer profiles on multiple platforms.
“We’ve created a programme where we will start to do the marketing for our reseller partners and drive those end users, those customers into our resellers, so we’re not relying purely on our resellers bringing business to us. We’re doing a lot more for our vendor partners as well, who look to us to provide that leverage and reach.”
As an example, he cites last year’s launch of the PICO VR headset, which Exertis managed and did the marketing for, including pop-up stands in Westfield, France and Germany.
Griffin adds that in the meantime, Exertis will continue to invest in NDC operations to ensure its service offering and product delivery is as effective as its marketing.
“We are constantly evolving the facility – we put in that mezzanine floor 18 months ago – and we’re constantly investing in the facility to develop service capabilities. Services is one of the areas that we will be expanding, with continuing investment in close-to-the-box configuration opportunities, and we will continue to consolidate Pick Tower applicable SKUs into the Pick Tower.”