XPO and Nestlé announce partnership for U.K.-based digital warehouse of the future

The 638,000 square-foot 'warehouse of the future' will mainly be occupied by Nestlé for its consumer packaged goods and as a testbed environment for XPO technology prototypes.

By Jeff Berman, Group News Editor · June 18, 2018

XPO Logistics, a Greenwich, Conn.-based global provider of freight transportation and logistics services and global food and drink company Nestlé announced today they have partnered up to co-create a United Kingdom-based distribution center (DC), which is expected to be completed in 2020.

The 638,000 square-foot DC, which XPO described as “a warehouse of the future, is located at the new SEGRO East Midlands Gateway Logistics Park in Leicestershire, and will mainly be occupied by Nestlé for its consumer packaged goods, such as Kit Kat, Maggi, and Nescafe, and also as a testbed environment for XPO technology prototypes, XPO said.

XPO said this new DC will be comprised of advanced sorting systems and robots, as well as state-of-the-art automation being co-developed with Swisslog Logistics Automation. And it added that its digital ecosystem will band together predictive data and intelligent machines, which it said will result in one of the world’s most highly advanced distribution management centers.

XPO has been supporting Nestlé’s supply chain operations for more than 15 years and understands its business, coupled with the company’s working well together in the form of a strong, collaborative relationship, according to XPO Chairman and CEO Brad Jacobs.

“We are thrilled with this partnership,” Jacobs told LM. “It puts our customer, Nestlé, at the leading edge of new thinking in the logistics space. It also gives us an ideal testing ground before pushing out each innovation globally. This partnership is a world first for both of our companies. We are creating a next-generation logistics environment for revered Nestlé brands, and it gives us this testing ground to innovate.”

XPO is investing roughly $55 million pounds, or $77 million USD, into this facility, which is based in the East Midlands section of the U.K., with direct access to the M1 Roadway for over-the-road access, the East Midlands Airport, and an on-site rail freight terminal with direct access to U.K.-based ports in Southampton, Felixstowe, London Gateway, and the Channel Tunnel.

Addressing the breadth of technological innovation at this new DC, Jacobs said intelligent machines will play a big part in the operation through the development of things like collaborative robots, or cobots, indoor drones, advanced sortation systems, and other types of automation.

“Our proprietary algorithms will forecast Nestlé’s customer demand, and smart robots will take products from storage and build mixed pallets with a range of case sizes and brands, and huge gantry robots will build what are called rainbow pallets, with layer after layer of different Nestlé products,” said Jacobs. “Once the innovation lab gets rolling, we will pilot technology that is not even on the industry’s radar yet but is on our radar.”

In terms of personnel at this DC, Jacobs said there will be several hundred jobs created there, and he said the labor base there will be planning-related, with a high level of analytics in addition to manual tasks, too.

“The lab will be an incubator and a launch pad for kinds of technology related to supply chain,” he said. “We expect it to have far-reaching impact in the industry. It will also encourage Nestlé’s global operators to think innovatively and interact with our technology team. It is a way to futureproof Nestlé’s supply chain. This partnership sets the bar very high in three areas where we are already focusing on innovation: intelligent machines, customer service, which includes visibility and tracking, and dynamic data science. It is incredibly exciting for us to bring a U.K. site into the mix.”

With more than 1,700 full-time technologists on staff full-time at XPO, including more than 100 big data scientists, Jacobs explained that XPO’s strategy between now and the planned 2020 opening of the DC is to innovate the areas where it can deliver the most value, in the form of efficiency, as well as a host of other factors like forecasting demand, which he said is embraced by XPO’s e-commerce customers, as it saves them money.

“We are thrilled to be working with XPO Logistics to build a flagship digital warehouse and technology laboratory at the East Midlands Gateway Logistics Park,” said Nestlé Director of Supply Chain David Hix in a statement. “This is a world-first investment for Nestlé that builds on a century and a half of proud history in this country. Our partnership with XPO will encourage innovation and experimentation in our UK logistics operations and help futureproof our business. We will be able to be even more responsive for our customers across our brands, which include some of the most recognizable in the world.”