Practical, Cost Effective and award-winning

Business Continuity, Crisis Management & Information Security Solutions

Phone:

0800 035 1231 (Mon to Fri 9am – 5pm)

Suite 3, The Cotton Mill, Torr Vale Mills, New Mills, Derbyshire, SK22 4HS, UK

The Cost of the Erith Fire and how much has Ocado Learnt from Previous Incidents?

It is rare to get detailed information on the costs of incidents; so the recent financial update from Ocado Retail, covering the period around the fire at their Erith fulfilment centre, is particularly interesting.  Comments by the company’s senior management, also raise a question mark over how much they have learnt from previous fires.

A fire broke out at their Erith site on Friday 16th July, following a crash between three robots; and firefighters battled through the night to tackle the blaze.  Fortunately nobody was injured; but the disruption to the fulfilment centre, which usually handles 150 000 customer orders a week, had a prolonged impact on Ocado Retail’s delivery capacity.  Even ramping up capacity at other sites, it is estimated that 300 000 orders were lost over the next few weeks, equating to £35m of revenue.  This dwarfs the estimated direct costs of the fire of approximately £10m.

In the media coverage of the incident, it was remarked upon that this was Ocado’s third warehouse fire in three years.  It was also noted that this was the second fire to be caused by the robots that populate their warehouses: a robot catching fire destroyed the Andover fulfilment centre in 2019.  In an interesting remark, Tim Steiner the Chairman of Ocado Retail is quoted as saying:

Everyone is reassured that the lessons of Andover were well learnt, that Erith was well contained and that we can eliminate what caused the Erith fire to never happen again.

Whilst the immediate cause of the fires was different at Andover and Erith, the sheer fact of having three fires in three years suggests that maybe a more thorough root cause analysis is required to identify any underlying issues.