Ocado committed to £41m expansion of Dordon hub
ONLINE grocery business, Ocado, has said it remains committed to a £41m programme to increase capacity at its Warwickshire distribution operation.
The company, which has just reported a loss of £12.5m for 2013, said despite its financial position it was keen to press ahead with growth.
Its agreement to provide deliveries for Morrisons is helping to sustain hopes of growth and the ability of the Dordon hub, dubbed CFC2 (Customer Fulfilment Centre), to help meet order capacity will be crucial.
CFC2 opened in February last year and the company said it had been steadily ramping up the facility since then, with order capacity peaking at approximately 60,000 a week.
“The success of the ramp up of capacity utilisation in CFC2 gives us confidence in our ability to manage the additional throughput of products and orders from Morrisons.com,” the company said.
The hub’s intended capacity was for double the amount of orders it is currently fulfilling, at around 120,000 OPW.
However, Ocado said despite the under-capacity it still wanted to improve the facility’s capabilities.
“Since opening we have committed to our Phase 2 development, which will take CFC2 capacity up to 180,000 to 190,000 OPW at a capital cost of £41m over an 18 month period,” it said.
Morrisons will pay for part of this capital cost under its agreement with Ocado. During Phase 2, which is scheduled to be completed in the second half of 2014, Ocado said there may be some short-term impact on the operation but this would be worth it once the upgrade was completed.
The growth of the business could also see the development of further CFCs.
It said in its results statement: “As a result of our agreement with Morrisons, capacity in CFC2 will be utilised faster than had originally been planned.
“Consequently, during the coming year, we are likely to commit to the next CFC project to ensure that we continue to have sufficient fulfilment capacity to accommodate future growth.”
