Operational Efficiency

We ensure efficiency is optimised throughout our business by adhering to our core design principles of automation, use of proprietary technology, and centralisation – the culmination of these three elements being evident in our industry-leading CFCs.

We seek to drive efficiency throughout every process in our operations, from our easily navigable customer facing interfaces through to our industry-leading routing software supporting the complexity of our delivery operations.

Efficiency within our operations allows us to operate with what we believe to be the lowest product waste in the industry of 0.7% of sales across our mature CFCs which are working at scale, despite over-indexing within fresh and chilled categories. We are able to achieve this through removing several processes and consequently human touch points you would typically find in grocery retailing and using our extensive data volumes from being a digitally centred business to operate complex stock management systems to enable perfect "first-in-first-out" stock rotation.


We continually strive to improve efficiency within our business and achieve operational leverage as we grow. The operational efficiency within our CFCs is quantified by units processed end-to-end per labour hour, and we are pleased to report our overall mature CFC Units Per Hour (UPH) for the year has improved from 160 to 164, again showing how we are able to improve efficiency year-on-year. Further improvements in UPH are now largely going to come from the MHE solution in our new CFCs when they become mature. 

Throughout the year we have scaled our latest CFC in Andover, which houses the first utilisation of our proprietary physical infrastructure solution. The fundamentally different solution design within Andover will drive further UPH progression and in turn capital efficiencies throughout our business once operating at scale.

Alongside efficiencies achieved within our CFCs, we also seek to optimise efficiency in our last mile operations. Increased demand within our catchment areas combined with improvements in our proprietary routing software and in our operational practices have allowed us to further optimise our delivery network enabling us to increase our DPV from 176 to 182 over the year. Operational efficiencies achieved in our retail business can be packaged and replicated for our Solutions customers to enable sustainable and long-term e-commerce solutions.

Future Focus

Our latest solutions currently housed in Andover, and being installed in our Erith CFC, were designed with the future in mind. We have developed our physical infrastructure solution in such a way that any manual touch points within the densely packed fulfilment infrastructure are located on the periphery of the structure so that they can be retrofitted with robotics and automated technology as and when these are appropriately developed. We will be installing the first robotic picking stations within our Andover facility. These robotic arms will be positioned at certain pick stations equipped with our proprietary systems which will enable them to see and feel a wide variety of products. With these capabilities our robots can help pick customer orders much more efficiently, reducing burdensome work hitherto done by humans.

As our customer base expands we will continually look to innovate and improve our technology and infrastructure solutions to ensure operational excellence in every aspect of the fulfilment and delivery life cycle.

Capital Efficiency

As we grow and in turn develop new CFCs we have been able to improve the capital efficiency of our operations. We have achieved this through continuous improvement within our mature CFCs, which has allowed us to extract additional capacity out of these facilities without significant investment. At the same time we have been investing in technology and innovation, allowing us to build our own proprietary infrastructure and software solutions.

Our proprietary MHE solution, which is now operational in Andover, is modular (can be built to different sizes) allowing for reduced upfront capital commitment as the peripheries can be added as volumes scale within each facility. The modularity of our new solution also means that we are able to build into smaller spaces rather than being restricted to larger, out of town, warehouse facilities. This makes our capabilities more flexible and customisable to the varying capacity requirements of our Solutions partners.


Since 2015 we have been developing our fourth CFC in Erith, South London. This will be our largest and, we expect, most capital efficient warehouse to date, capable of handling over 200,000 orders per week which is equivalent to around £1.2 billion of sales at full capacity. We expect first orders from this CFC to begin in 2018. Utilising the same proprietary infrastructure and software solutions as our Andover facility (designed to deliver 65,000 orders per week at scale, or £350 million of sales at capacity), this demonstrates the scalability of our end-to-end solution.

Future Focus

Due to the fundamentally different infrastructure within our latest CFCs we are in the process of improving the reliability and resiliency of this new solution. We expect future iterations to be faster to deploy (shorter build and commissioning lead times) allowing for reduced upfront capital commitment.

As we develop and learn through the progression of CFCs we expect to be able to further advance our capital efficiency increasing the benefits of operating our centralised model in comparison to alternative methods. Any benefits realised in our own retail business will be naturally passed on to our Solutions partners.



Delivery punctuality


Order accuracy


Mature CFC efficiency (UPH)


Deliveries per van per week


Product waste


  • A risk of delays in the implementation of new capacity for both Ocado and Morrisons

Primary strategic actions

Develop More Capital and Operationally Efficient Infrastructure Solutions iconDevelop More Capital and Operationally Efficient Infrastructure Solutions

Our two mature Customer Fulfilment Centres in Hatfield and Dordon continued to operate to high levels of accuracy and with improved efficiency (we consider a CFC to be mature if it has been open for 12 months by the start of the half year reporting period). Using the units per labour hour efficiency measure ("UPH"), the average productivity for the period in these operations was 164 UPH (2016: 160 UPH). We expect most of the future improvements in CFC efficiency to now come from our newer CFCs once these are operating at scale.

Throughout the year we continued to build reliability and resiliency at our newest CFC in Andover, Hampshire, which houses the first installation of our new proprietary modular, scalable physical fulfilment solution. At capacity our Andover CFC will add approximately 65,000 OPW of capacity at maturity.

We made excellent progress over the year in the development of our fourth CFC in Erith, south east London. We continued to install the physical infrastructure and plan to commence operations in FY2018. We expect the facility to, be our most capital efficient CFC to date, enabling us to efficiently expand our UK capacity and benefit future Ocado Solutions customers through attractive deal economics. Similar to our Andover CFC, this CFC will also use our proprietary modular, scalable fulfilment solution which will enable us to phase our investment over time in line with our capacity requirements. Approximately 30% of the Erith CFC capacity will be utilised for Morrisons.com under an extension agreement that was signed in 2016.

Further enhancements to our routing system, increased availability of Sunday delivery slots and improved customer density enabled by growth led to an improvement in average deliveries achieved on a van route and has helped us increase deliveries per van per week across all shifts ("DPV") to 182 (2016: 176).

Case Study

The UK's First Driverless Grocery Delivery

In June this year we concluded a successful driverless grocery delivery trial in partnership with the GATEway Project, an £8 million research project led by TRL in collaboration with Oxbotica, Digital Greenwich, Telefonica and others.

The two week trial involved the electric self-driving van, called CargoPod, which delivered free groceries to local residents in Greenwich, South East London. The van itself is the first Oxbotica self-driving electric vehicle capable of transporting cargo by using the company’s state-of-the-art Caesium cloud-based fleet management software and their Selenium autonomous control system. Representing Ocado in this trial was our 10x technology team. The 10x team focuses on creating game-changing improvements that have the potential to revolutionize our business based on the ten times versus ten per cent principle. This involves identifying and addressing the big technical challenges facing our business, the online grocery market, and beyond. This ambitious goal demands that the 10x team stays at the cutting edge of technology, looking far into the future, and turning ambitious dreams into practical solutions.

The trial gave Ocado the ability to experiment with fresh ideas for the last mile of online retail – the stage that starts when the goods leave the facility for delivery and ends when they are placed securely in the hands of customers. We were also able to learn more about the next steps needed before driverless deliveries could become an efficient proposition for our own Retail business as well as our Ocado Solutions partners.

All numbers on this page are reported on a 52 week basis