Robotic Pick Cell – Photo: Berkshire Grey
Where robots fit into the online grocery store ops equation
Supermarket retailers are faced with a huge labor challenge. The explosion of ecommerce is amplifying this by creating the need for more order pickers, whether store employees or third-party providers, to manually fulfill e-grocery orders from stores.
Grocers are taking several approaches to address the issue. The initial goal is to improve manual order picking speed and accuracy. What worked when ecommerce order volumes were low no longer handles the larger volume of ecommerce orders being fulfilled today.
To get more orders out of the same headcount, retailers use a combination of technology, process improvements and sometimes shelves in the back of the store with fast-moving inventory that’s dedicated to filling online orders. Each of these steps can help retailers move toward achieving pick rate targets of 65 to 75 items per hour.
But pick rate improvements only solve part of the problem. There remains the issue of overcoming shopper dissatisfaction with substitutions and out of stocks. Compounding this is the challenge of picking orders from a dynamic inventory of live store shelves that makes it difficult to know what’s in stock.
As e-grocery volumes continue to increase, some retailers have started adding automated systems to further reduce labor and improve order accuracy. Current systems on the market can provide a variety of functions, including storing items, picking orders, handling store-picked orders and dispensing orders across ambient, refrigerated and frozen products.
Automation can improve pick rates by eight to 10 times, which becomes critical as order volumes climb. These systems also deliver the added benefits of reduced labor requirements and increased order accuracy due to the total visibility of products available for sale.
When items are out of stock, retailers must resort to a substitution process that can include calling or texting a customer, which further reduces pick rates in any system. Substitutions and incomplete orders also contribute to lowering customer satisfaction levels. Shoppers have been trained to get what they order through digital-first retail and won’t understand why e-grocery breaks the ecommerce promise.
It’s true that automated systems require a significant upfront investment and are best suited to support higher e-grocery order volumes. But the payout in getting more orders out of the same workforce and meeting customer expectations are two powerful advantages over manual picking.
Discussion Questions
DISCUSSION QUESTIONS: What are the best strategies and tactics for grocery retailers when bringing in automation to replace manual online order fulfillment at the store level? How quickly will fulfillment automation come to the majority of supermarket chain stores?
Poll
Loading …BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Ryan Mathews
Founder, CEO, Black Monk Consulting
Before anything else, grocers need to stop filling orders from customer aisles. This has been a stock-out nightmare since delivery and BOPIS began. First, rethink the entire store footprint (anything on the slab foundation) and consider it a multi-functional fulfillment center. That being said, MFCs are the future. Retailers need to incorporate a high-density, small-footprint cube within the store. Even a hub-and-spoke set up will work in a metro area. This technology is cost-justified by labor savings alone, with an added bonus of great customer service.
Next, use your forecast for in-store and in-store/delivery/BOPIS business to allocate space for automation. Forget about human-only picking. It’s not sustainable. Then, make sure that you can efficiently add refrigerated and frozen and produce at the last second without bumping into customers shopping carts on the way out, perfectly timed to customer expectations regarding delivery window, of course.
I’ll stop here. This is incredibly complex, and it truly represents a whole new world for grocers. It would take a multi-page article or in-depth conversation to even start addressing all the strategy and requirements involved. Long story short, technology is the future, and the grocers who use enhanced technology to decrease cost and improve delivery will be ahead of the game.Â
It will be interesting to see what happens with ideas like this. I’ve just discovered we have a Safeway curbside/delivery store (no shopping) opening in our neighborhood.
Competing with the store paid shoppers in the aisles is frustrating — so Safeway is apparently testing something new. Yet, I don’t see it working out well. In part, the economics are always against e-commerce — assuming stores continue to attempt to deliver e-commerce for the same low prices as going to the store to shop.
My expectation is that our new local store will, within 2 years, either close or convert back to a traditional store. But time will tell.
Stores are designed for browsing, dwelling, and strolling. Warehouses are designed for efficient picking and order assembly. Trying to do both at the same time, in the same unit (as currently designed) is probably a losing formula long-term. This suggests that stores need to be reconfigured into two connected boxes – the first for humans to shop in and the second for robots to pick from. But, that still isn’t going to make the problem go away. Whether it’s a robotic or a human arm reaching for an item, that item has to be in-stock to satisfy a customer. Ditto for substitutions. The best way to ensure consumer satisfaction (today) is to have a human being carefully check the finished order. One more point, that person can call you and apologize for an out-of-stock or incorrect substitution. Automated systems can’t, and that sets up potential service recovery issues.
I normally do not make comments when I come to the discussions this late. But this topic annoys my sensibilities on two counts.
The first is the pickers in the aisles competing for aisles and products with the shoppers. It is simple. They make the shopping experience exasperating.
The second is the entire idea of filling from the shelves. I have had operations reporting to me for most of my working career. The system most retailers use breaks everything in Operations 101. It is expensive, labor-intensive, and convoluted. I understand why it was initially started this way as a necessity. But now, two years later, there is no reason it remains a Ruben Goldberg project.
The first step is to eliminate shelf picking. If necessary, add on backroom space to shelve and pick in an efficient manner. The better idea is to have a completely separate facility to handle this complex task. If you gave this to an operations or systems class as a case study, it would be laughable.
All that being said, grocery retailers should by all means rate higher than Amazon in the various measures of customer satisfaction and cost. Despite the size of the Amazon business, grocery is far from their forte.