The company

In the current context of rapidly evolving online commerce, Ocado has emerged as a pioneer in the online supermarket segment. Founded in 2000, this business group has revolutionized how people shop for groceries and established new standards in operational efficiency and technological innovation. Through a strategic combination of innovative approaches and dedicated teamwork, this group has navigated significant operational challenges, leading to disruptive outcomes that have set benchmarks in the industry.

This case study delves into the remarkable evolution of the group from its inception in 2000 as the world’s first online supermarket. Since its establishment, the group has consistently raised the bar in the supermarket sector by creating an intelligent platform. This innovative solution was a pivotal point of change, providing automated and personalized solutions for grocery retail.

Managing a fleet of 9,600 robots and over 1,000 peripherals, the engineering operations team of approximately 900 members ensures the efficient operation of Customer Fulfillment Centers (CFCs) worldwide. These centers demonstrate the company’s commitment to continuous innovation, operating several generations of robots like the 400 and 500 series, with the imminent launch of other new equipment.

However, rapid technological advancements often bring their own set of challenges. Therefore, it was found that the pace of change in technology and hardware sometimes surpassed the processes’ responsiveness. This mismatch represented a significant challenge, impacting both efficiency and the ability to maintain high service levels for which the company is known.

The company’s ambition was clear: to change the way the world shops. This bold and visionary mission required the group to not only adapt to the evolution of e-commerce but also to shape it actively. The journey of the company’s Engineering Operations proved to be a dynamic process that, while involving technological advances, demanded continuous adaptation and overcoming challenges found in such rapid growth and changes.

The challenge

As Engineering Operations reached new heights, they expanded their global reach and encountered a myriad of challenges. These were both technical and operational, deeply intertwined with the accelerated pace of technological advances and the scale of expansion.

Challenge and mission:

In Engineering Operations, the primary mission is to ensure that all assets function as expected, allowing the operations team to fulfill customer orders efficiently. This task involves correctly maintaining and servicing equipment at various locations, adhering to strict KPIs and SLAs (Service Level Agreements). Key performance indicators focus on work efficiency, costs of parts, and average maintenance time per thousand operations. The control of these metrics drives profitability, service quality, and reliability.

Strategic goal setting:

A significant project was initiated at one of the company’s sites, chosen for its status as the oldest and largest in terms of operations. Its vast team of engineers provided a suitable environment for testing improvements in labor efficiency and process changes. The project focused on two key areas: reducing the average maintenance time of robots and decreasing irregularities per thousand operations, thereby improving robot reliability.

Team involvement and collaboration:

The site team’s involvement was crucial from the project’s start. They participated in the initial analysis, identifying improvement opportunities. Leaders were in charge of various project streams, ensuring alignment and collaboration across four shifts, each comprising about 30 employees. This approach fostered a sense of accountability and efficient communication throughout the project.

Project initiatives:

The project focused on several areas, including optimizing the workplace layout for better efficiency in robot maintenance, standardizing work processes across shifts, and refining troubleshooting techniques. These initiatives aimed to improve work productivity and standardize practices, ensuring uniformity and efficiency across all shifts.

Overcoming challenges:

During this process, several challenges emerged, such as issues with reduced staff availability, disruptions in the supply chain for parts and materials, and a shift to remote communication tools like Zoom, which presented substantial obstacles. A mission control area was established to mitigate these challenges, providing a central point for visual communication and project updates, promoting better understanding and engagement among the team.

Professional development and resource challenges:

Both unexpected and positive, another challenge was the team members’ career progression in the project. Due to the skills and experience gained, many individuals involved in the project advanced to other roles within the company. While this was a great outcome for individual career growth, an extra effort had to be made to maintain consistency within the project team.

The approach

Initial diagnostic phase:

The project launch began with a week dedicated to diagnostics, with an intense focus on understanding the current operational challenges. This phase was characterized by a combination of theoretical discussions and practical exercises conducted on the shop floor. It involved a wide array of specialties and seniorities, from top management to engineers and technicians, bringing diverse perspectives and experiences to the analysis. This week focused on identifying problems and building the team and fostering a collaborative environment for the subsequent stages of the project.

A3 projects development:

Each participant was responsible for an individual A3 project after the diagnostic phase. These A3 projects aligned with the operational objectives of increasing productivity, quality, and efficiency. The A3 method, a structured problem-solving and continuous improvement approach, enabled team members to analyze problems in-depth, develop solutions, and track their implementation and effectiveness. The projects covered a wide range of issues, from technical challenges on the shop floor to process optimization.

Establishment and role of the mission control room:

The creation of a mission control room was strategic to centralize the A3 projects’ monitoring and coordination. This space became a hub for weekly operational reviews and monthly analyses. It served as a physical location for gathering and sharing information and represented the importance of the project and the company’s commitment to continuous improvement. The mission control room facilitated transparency and responsibility overview, allowing team members to keep abreast of the initiatives’ progress.

Adaptability during implementation:

The team faced various challenges, such as remote work and travel restrictions, affecting traditional collaboration patterns. This situation required creative solutions, like leveraging digital communication tools and rethinking traditional meeting formats. The ability to adapt quickly was essential to keep the project on track.

Daily KAIZEN activities and cultural change:

The project saw Daily KAIZEN activities integrated into the operational routine, marking a significant cultural shift. These activities included structured briefings before shifts, systematic quality checks, and continuous process monitoring. Setting consistent routines helped foster continuous improvement and excellence among team members, shifting from reactive maintenance to proactive improvements.

Work productivity and standardization:

A key focus was enhancing work productivity. This goal was achieved by redesigning workspace to make it more efficient, especially in tasks related to robot maintenance. Standardizing work was another important element, through the introduction of models and protocols to ensure uniformity and consistency in operations across various shifts. This standardization helped to reduce variability and improve overall operational efficiency.

Fault resolution and efficiency:

Improving efficiency in fault resolution processes was an essential component. The team worked on minimizing downtime and increasing the overall equipment effectiveness. These improvements not only reduced the average maintenance time but also contributed to better resource utilization.

Enhanced approach through dedicated projects:

Among various initiatives undertaken, one project specifically focused on the site layout design. Spotting inefficiencies in the existing layout, the team moved maintenance areas closer to the stores, significantly reducing time and motion waste. By optimizing the workspace, they ensured essential tools and parts were readily accessible, minimizing delays and distractions that previously occurred when the team had to fetch items from distant stores.

The results

Tangible and intangible results:

The results of these combined efforts were significant. Regarding tangible results, there was a 20% improvement in reliability indicators and a 40-50% increase in labor efficiency, complemented by substantial cost savings. As for the intangible results, the project fostered a culture of involvement and collaboration, attracting team members’ interest from across the group, which led to better relations and a more cohesive working environment. Daily KAIZEN implementation, pre-shift briefings, and quality checks encouraged a competitive but collaborative spirit among team members.

Improved maintenance efficiency and robot performance:

A major improvement was the reduction in the average maintenance time. The time needed to address and fix maintenance problems fell from approximately 2.2-2.4 hours to around 1.6 hours. This improvement directly resulted from optimizing the layout and having tools and parts handy, allowing for faster response times and more efficient maintenance.

Embracing Daily KAIZEN at shift meetings:

Introducing Daily KAIZEN at the beginning of shift meetings brought a more structured approach with a clear presentation of KPI data. This change resulted in better team engagement and awareness, as team members could now easily access and understand data such as security updates, performance metrics, and improvement percentages. Including PDCA (Plan-Do-Check-Act) boards in these meetings fostered an environment where ideas for continuous improvement were regularly discussed and implemented.

Standard leader’s work and Gemba Walk routes:

The project included standard work for leaders’ Gemba walk and routes, as well as tools that brought structure and consistency to daily management activities. These tools helped set clear expectations and procedures, particularly useful for new managers and internal managers. Visual audits were also introduced, ensuring that high standards were maintained in robot maintenance and parts storage, contributing to the overall efficiency and quality of operations.

QR codes and improved communication:

An innovative initiative was the introduction of QR codes for visual audits, which simplified problem recording and follow-up. This digital approach has replaced the time-consuming manual forms, making it easier and more efficient for team members to report and resolve problems.

Sustainable savings:

Perhaps one of the most significant results was a seven-figure saving. This substantial cost reduction has created a solid foundation for the group’s future growth plans. The company can now expand its operations without incurring significant additional engineering operations costs, ensuring a competitive edge in the online supermarket industry.

Cultural transformation:

In addition to the quantifiable benefits, the company has experienced a positive cultural transformation within its organization. By involving the entire engineering operations team in the improvement process and fostering a continuous improvement culture, it has positioned itself for continued success. Team members were empowered to identify opportunities for improvement, initiate their own projects, and apply structured problem-solving methodologies such as A3s.

Focus on continuous improvement:

The continuous improvement culture, firmly established during the first project cycle, remained a focal point. The team maintained high standards, adapting to changes in structure and management. Frequent checks and Gemba Walks ensured compliance with standards and swiftly identified improvement areas.

Improved layout design and efficiency:

The project focused on redesigning the layout led to substantial improvements in operational efficiency. By consolidating the maintenance areas and relocating them closer to the shops, the team reduced wasted time and movement, such as robot lifting and the use of pallets. One area was reused as a maintenance zone, creating an off-grid space for equipment maintenance. This strategic relocation made it possible to carry out maintenance activities without waiting for recovery periods, thus reducing waste in the network and increasing overall efficiency.

Project expansion and future prospects:

The success of the latest installation generated a clear intention to expand these methodologies throughout Ocado’s global operations. With more than 900 engineers worldwide, knowledge and best practice sharing is key to driving continuous improvement throughout sites. The latest project serves as a model for standardizing processes and cultivating a proactive, efficient, and improvement-oriented work culture throughout the group.

Conclusion

This case study clearly illustrates that the project developed by Engineering Operations stands out as an example of excellence and organizational transformation. This success story is about the operational improvements achieved and creating a model that other companies can aspire to follow.

This journey was marked by a series of well-executed strategic initiatives, each contributing to a substantial overhaul of operational processes. In addition to quantifiable results such as a significant reduction in average maintenance time and operating costs, there have also been qualitative improvements in team dynamics and workplace culture. These achievements reveal the benefits of a holistic approach to organizational challenges.

The change in daily routines with tools such as Daily Kaizen and visual audits shows the team’s commitment to maintaining and improving these new standards. In addition, the project demonstrated the effectiveness of combining structured and methodical approaches with practical actions on the ground. Adopting technologies and methodologies, such as QR codes for visual audits and implementing the leaders’ standard work and Gemba Walk routes, exemplify this group’s innovative strategies.

Ocado’s case study provides an inspiration for other companies wishing to enroll on their own transformation and improvement journeys. It emphasizes the importance of aligning the team’s efforts with strategic objectives, fostering a continuous improvement culture and adopting a flexible but structured approach to problem-solving.

This case study stresses that with the right blend of leadership, team involvement, and methodical approaches, significant transformations are achievable and can set new benchmarks for operational excellence.