Case Study
The Hut Group (THG)
THG Achieves Industry-Leading Customer Service, and Lower Costs, with High-Throughput AutoStore
Country
United Kingdom
Industry
Retail
Partner
Element Logic
THG is a global company that provides end-to-end support for e-commerce brands, including everything from product development to digital strategy, brand creation, and fulfillment. With the expertise of Element Logic, the company implemented the AutoStore warehouse automation system at its Manchester distribution center. The added level of flexibility and scalability has enabled THG to handle a wider range of products while setting multiple achievements: The fastest delivery times in the UK, low distribution costs, nearly 100% picking accuracy, and no downtime.
THG is a British e-commerce technology company offering digital and material handling service for both in-house brands and third-party labels around the world. With over 100 international websites selling premium fast-moving consumer goods (FMCG) direct to consumer, and a global network of 16 warehouses serving over 190 locations, they offer all the services a brand needs to compete online.
Looking to push performance to even further heights, THG explored various automation options and made the strategic decision to invest in AutoStore at its Manchester, England fulfillment center.
Today, it’s one of the biggest, highest output AutoStore Grids in the world, operating with over 30 different brands. Using AutoStore, THG has successfully received and dispatched hundreds of thousands of orderlines per day, with the capacity to achieve more, while virtually eliminating picking errors.
Since the 2021 installation, the system has delivered all that THG hoped for in its automation investment, and more: quick installation, enhanced efficiency, significant space savings, flexible picking, reduced labor costs, and improved throughput.
AutoStore allows THG to switch between picking to order on a daily basis and batch picking during peak times, resulting in an operational capacity to pick up to 1.2 million units across 500,000 daily shipments.
THG experienced a 40% reduction in variable labor costs compared to its previous manual system. John Gallemore, Chief Operating Officer of THG, stated that this efficiency produced dramatic results on balance sheets and contributed to a rapid ROI.
"This has meant that over a two-year period we've had a 180 basis point (1.8%) reduction in our distribution costs, which have fully funded our investment in the AutoStore. Payback is incredible," Gallemore said.
The speed at which AutoStore Robots move goods has enabled THG to change its cutoff time for next-day delivery to half-past midnight in the UK, a service unmatched by its competitors.
"No one else that we're aware of offers that level of service," said Gallemore.
In fact, the average period from “click-to-delivery” for THG's UK customers is now an industry-leading 1.45 days across all orders. Moreover, the AutoStore system allows THG to carry a wider range of product categories, including beauty, apparel, footwear, consumer goods, and nutrition, allowing THG to fulfill orders for a more diverse customer base.
Gallemore attributes this success to the integration of AutoStore with THG’s flagship Ingenuity e-commerce software, a highly scalable, cloud-based enterprise platform that includes warehouse and delivery management capabilities.
"The Ingenuity platform and the AutoStore technology are both virtually category-agnostic, meaning we can take in a wide range of product categories."
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Because the AutoStore system enables users to maximize inventory in a small space, THG has actually reduced the need for additional warehousing, even as demand grows. As Gallemore put it, the system provides "incredibly efficient use of space in the buildings we have" and allows the company to fit "so much more inventory into that small space."
The system's efficient processing has resulted in reduced distribution costs, contributing to lower overall operational expenses.
"Not only do we have the best service in the UK, we also do it at the lowest cost in the UK against all of our competition."
THG commenced installation during the Covid-19 pandemic. At the time, they had run out of warehousing space and labor costs were rising. Part of their strategic thinking was that AutoStore is a proven and reliable technology that could be integrated seamlessly amid crisis.
Working with integrator Element Logic, they completed the work in 5 months with an installation of 256 Robots, 13 ConveyorPorts, 56 CarouselPorts, and over 300,000 inventory Bins. Following system commissioning and startup, THG decided to expand to 380 Red Line Robots and optimize the system in response to ever-increasing customer demands.
“We had a very short timescale to get this done right, and we felt that (AutoStore) offers a greater degree of certainty of delivery and that was proven to be the case with that five-month period,” Gallemore said.
CarouselPorts are arranged within two pick tunnels inside the 120-x-70-m Grid, a layout that maximizes the number of picking areas and shortens Robot travel times. Nine of the ConveyorPorts are used for replenishment and four for quality control.
A separate order consolidation area is reserved for items picked outside the Grid.
The AutoStore system allows for rigorous data collection and analysis, as well as a focus on key performance indicators (KPIs). THG continuously uses those features to improve the system's performance and reach higher levels of customer service.
"It's this iterative process of continuous improvement, which has led to the solution delivering the significant enhancements to our business that we have seen," Gallemore said.
Project Specifications:
"... Over a two-year period we've had a 180 basis point (1.8%) reduction in our distribution costs, which have fully funded our investment in the AutoStore. Payback is incredible."
AutoStore can fit any warehouse or fulfillment center. Make yours the next.
