Asos warehouse fire highlights threat to supply chains

Gurjit Degun
posted by Gurjit Degun
23 June 2014

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23 June 2014 | Gurjit Degun

The warehouse fire that left online fashion brand Asos unable to accept orders over the weekend raises issues around supply chain continuity planning, according to experts.

A statement from the company said the fire broke out at its Barnsley distribution centre on Friday. Asos said it estimated that approximately 20 per cent of the total stock at the site “has been compromised by fire damage and the sprinkler systems”.

“Barnsley is the centre of our distribution capability and in order not to disappoint our customers we subsequently suspended taking orders,” it said. “At 31 May 2014 the business held £159 million of stock at cost, of which around 70 per cent is held at Barnsley.”

Dun & Bradstreet’s supply chain risk specialist Lee Glendon said: “The fact that Asos needed to stop trading as a result of a single warehouse fire would suggest a lack of business continuity planning, as single points of failure should be identified as part of good supply chain risk assessment and mitigation put in place.

“In this case, it would seem appropriate to not over-concentrate inventory in a single location. Interestingly, Asos suffered from a similar event in 2006, so lessons do not seem to have been learned.”

Glendon advised businesses to identify critical suppliers and map out the risk if something were to go wrong. “These things do happen and you need to put a plan in place,” he told SM.

But John Manners-Bell, author of the recently published book on the topic of supply chain risk said the speed of the company's return to trading demonstrated it did have effective contingency plans: “Centralisation of logistics operations makes sense on an operational basis in terms of keeping stock levels low and reducing redundancy. However if you start costing in external risks such as fires, floods and security issues, then suddenly it doesn’t look so smart.

“To get back up and running so quickly, Asos obviously had exceptional contingency plans in place, no doubt helped by an earlier experience when its previous distribution centre in the UK was badly damaged by an oil depot blast. However this further disaster demonstrates the systemic fragility of many global supply chains and perhaps suggests that it would be sensible to spread risk over a number of locations, despite an increase in internal supply chain costs.”

Asos declined to comment.

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