AO: Deliver the Goods – Magazine Articles

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Orders waiting to be put on trucks for delivery

AO.com is well known for its white goods and tech retail business, but for the last twenty years it has also offered 2 person deliveries for third parties. It does this by using its own 7.5 ton and 3.5 ton trucks, white vans and AO.com-branded vehicles bearing the mark of its 3PL Expert Logistics operation. “We deliver 7 days a week, 362 days a year,” says David Ashwell, managing director of logistics, AO.com, and with a promise of next day delivery from 7 a.m. to 7 p.m. to his own customers, AO delivers 95% UK Post Codes every day. The customer has the possibility to choose the date and the time slot of his delivery when placing his order.

AO.com operates a hub and spoke model with two National Distribution Centers (NDCs) in Crewe which hold inventory for all UK operations. From there, orders are routed to 17 field bases located across the UK, from Dundee to Exeter. The company plans to have two more operational outdoor bases before the end of March.

No inventory is kept at the outside bases, as they function as locations to move customer orders to their last mile delivery vehicles. In fact, as Ashwell explains, the items don’t even touch the ground between the NDC and the customer’s home, as the company uses trailers with movable floors, walls, and ceilings that move the items from the truck over. the last mile vehicle. The fleet also makes return trips so that vehicles do not return empty to an NDC.

Incoming goods, returns, waste and packaging such as polystyrene are all handled by the fleet, as well as electrical items for recycling such as a customer’s old washing machine. AO operates its own AO recycling plant in Telford, which complies with Waste Electrical and Electronic Equipment regulations.

In total, 5,500 SKUs are reserved for next day delivery with products sold ranging from white goods to televisions and computers. Ashwell explains that many products sold by AO are susceptible to damage, so the majority of the picking and packaging process is done manually. Toyota narrow aisle trucks are used between racks to ensure every item is accessible. The company plans to add some automation in the future, but it will only be a small amount.

The company does not intend to outsource the last mile of the operation, preferring to retain responsibility for the entire customer journey. A number of small packages are currently delivered by DPD, but all 2-person operations are handled by the AO fleet. “In order to provide exceptional service, we need to be in charge of the entire customer journey,” says Ashwell, adding that “no one loves your customers as much as you do”.

It also means that AO has complete control and visibility over the entire operation with certainty of the location of every stock item and vehicle. If something is wrong, the company can act immediately, he explains. And since it delivers everywhere the next day, the customer won’t have to wait very long for a replacement item.

A central “Mission Control” is available. Thus, if a vehicle breaks down, the driver makes contact and another can pick up the load and take care of the deliveries. AO will contact all customers to advise them of the delay. “Drivers can also contact customers,” says Ashwell.

THIRD PARTY TRANSACTIONS

This love for the customer and understanding of how the logistics operation supports the retail proposition is what continues to help his third-party logistics operation win business, he explains. Traditionally, Expert Logistics delivered customer orders for white goods manufacturers including Hoover and Electrolux, but it recently signed its first contract to deliver customer orders for furniture maker The Cotswold Company.

For brands, such as Hoover, which are sold on the AO website, a truck can pick up inventory directly from Hoover to replenish AO stock or fulfill a customer order as well as transport products that have been ordered from another retailer and which will be delivered to the end customer under a contract with Expert Logistics.

Everything arrives in Crewe, then customer orders are loaded between 6 p.m. and 2 a.m. before being delivered to outside bases and on the correct vehicle for last mile delivery. A customer could order at 11:55 p.m. and have their order delivered at 7:00 a.m. the next day, says Ashwell.

The company also offers installation services, allowing it to deliver, install and remove products in a single visit to a customer for any of the integrated products it sells.

AO is constantly on the lookout for opportunities and overcoming challenges as it works within its motto of having the happiest customers by striving to do things in a better way ”.

Running his own warehouse management system and having Crewe-based IT programmers means he can constantly push the proposition, integrate into third-party systems – whether as a brand to sell on the AO site or as a logistics customer. “We can do things quickly,” says Ashwell.

Since AO also operates in Germany, the entire hub and spoke operation is replicated there.


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