Ocado to provide automated fulfillment technology for McKesson Canada

Ocado Group PLC last week announced that Ocado Intelligent Automation, or OIA, will provide fulfillment automation at a McKesson Canada distribution site. The company said the deal brings its warehouse technology outside of the grocery retail sector. McKesson is a diversified healthcare provider in Canada and claimed it is the largest pharmaceutical distributor in the country.

“The Ocado Smart Platform (OSP) is a configurable end-to-end e-commerce, fulfillment, and logistics system designed to meet the unique demands of online grocery retail,” Ocado said. The automated storage and retrieval system (ASRS) includes a 3D grid with mobile and collaborative robots that pick and pack customer orders. The system can handle 50-item orders in just five minutes, according to the Hatfield, U.K.-based company.

In addition to robots, Ocado said it will provide McKesson with the AI-powered software to operate the technology for the long term.

“Today represents a new and exciting milestone as we bring the amazing benefits of Ocado’s technology to the healthcare distribution and logistics sector,” Tim Steiner, CEO of Ocado Group, said in a release.

“Our technology is ideally suited to supply chains that require dense storage, highly accurate inventory management, and secure stock control,” he added. “lt has been proven over 20 years in one of the most complex supply chain environments — online grocery — and we’re now bringing our experience and IP to more sectors. We are very pleased to be expanding in Canada.”

Robots, services to be ‘capital-light’ for McKesson

McKesson Canada will pay upfront fees to Ocado during the construction process and make the final payment upon final installation. McKesson will also pay an ongoing annual fee related to the servicing and maintenance of the technology.

Ocado asserted that the transaction will have a minimal effect on McKesson’s cash flow and earnings in the current financial year. The deal is a capital-light deal, which it said will be cash-neutral throughout the development phase.

The deal will be cash- and EBITDA-positive in fiscal year 2025. At that point, installation will be complete, and McKesson can recognize the income, costs, and profits, said Ocado.

Ocado expands beyond grocery fulfillment

Ocado Group originally designed its system for grocery fulfillment, but it has been reaching beyond that sector lately.

In May, the company acquired 6 River Systems from Shopify. Waltham, Mass.-based 6 River Systems (6RS) designed its Chuck autonomous mobile robot (AMR) for the logistics and non-grocery retail sectors.

At the time, Ocado said the acquisition would give it a foothold in additional sectors. The company reportedly laid off a significant portion of 6 River Systems’ staff. It is not yet clear whether it has integrated any of the AMR technology from 6RS into its own systems.

One source told Mobile Robot Guide that with this acquisition, “Ocado can now go after non-grocery, since they won the lawsuit against AutoStore. [6 River Systems] will help them do more.”

This refers to the long patent-infringement lawsuit Ocado won against AutoStore in March. AutoStore had filed the suit in October 2020, claiming that Ocado’s ASRS infringed on six of its patents. But the U.K. High Court ruled that AutoStore’s patents were invalid and that Ocado did not infringe upon them.

Written by

Brianna Wessling

Brianna Wessling is an Associate Editor, Robotics, WTWH Media. She joined WTWH Media in November 2021, and is a recent graduate from the University of Kansas. She can be reached at bwessling@wtwhmedia.com