Marriage of convenience – UPS & Argos

Argos, the high street retailer, has chosen UPS as its nominated carrier to smooth the flow of goods into Argos’ rdcs.

There is no doubt that nominated carrier schemes smooth the flow of goods into the warehouse. The arrival of a single vehicle containing goods from several suppliers instead of five or six part-loads has obvious benefits in terms of reduced congestion and increased handling efficiency. Argos runs a scheme that achieves these efficiencies and, since it is voluntary, aims to provide equal advantages for its suppliers as well as for itself. David McClaren, Argos’ third-party logistics manager, says: “We want the productivity of the scheme to make it attractive to suppliers – we want them to feel that it is something they ought to be using to benefit their business. “From the supplier’s perspective there are cost benefits from no longer having to deliver to five or six rdcs. Instead they only have to pay for a collection from one central point to another central point. Eventually, that works its way back to Argos because the price the supplier is able to quote us is going to be lower.” The scheme originally began 16 years ago but it has continued to develop over the years and currently handles around 35% of Argos’ inbound goods. UPS Supply Chain Solutions is the largest of the carriers involved and collects around 25% of the inbound goods – suppliers can also choose Leggett Logistics or CM Lane, who together account for 10% of the inbound products, to collect their products if they decide to use the scheme. Argos will inform the supplier of a ‘due week’ when the goods need to be delivered. The pallets are then collected from the supplier and, if they are using UPS, taken to the carrier’s Derby distribution centre and consolidated with collections from other suppliers before being delivered as a full-load into one of Argos’ rdcs. Argos has five such facilities, in Castleford, Heywood, Lutterworth, Basildon and Bridgwater, and national distribution centres at Barton-under-Needwood in Staffordshire, which handles smaller, slow-moving items; Wolverhampton, which handles bulky products such as pillows and curtains; and Telford, which handles additional lines contained in the expanded Argos Extra Catalogue. In addition to the business benefits of the scheme there are environmental advantages. UPS carries approximately 440,000 pallets a year for Argos, amounting to almost 15,000 vehicle loads. The companies estimate that this equates to 2.2 million miles a year travelled. Although Argos is responsible for setting up and monitoring the performance of the scheme, the commercial relationship for the movements is between the suppliers and the nominated carrier. In UPS’ case this means it can also pick up consignments bound for other retailers at the same time as collecting the products bound for Argos. Tony Dawson, UK sales country manager for UPS Supply Chain Solutions, says: “We might be collecting less than a trailer-load for Argos but still taking away a full trailer-load for other retailers.” Argos’ requirements for what goods are needed and when are sent to UPS using EDI, so that the Derby facility can manage the flow of stock. When loads come in, some pallets are immediately cross-docked but some are despatched later. Because there is a regular flow of deliveries into the rdcs, Argos pre-allocates delivery slots to UPS. Unless the rdcs hear otherwise they will assume that a consolidated load will arrive at a particular time. “A nominated carrier might be bringing in 20 different orders with not even one phone call for the rdc to deal with. If those had come in separately each one would have involved a phone call and had its own booking window,” McClaren explains. Another advantage is that rather than waiting for it to be unloaded, UPS can leave the full trailer and take away an empty trailer. The new trailer is then unloaded by Argos but, if the handling of other inbound loads has fallen behind for some reason, thi