Walmart is investing in fulfillment center technology to optimize packaging products, save store space, and potentially face some long-term labor costs and uncertainties as it adapts its supply chain during the ongoing COVID-19 pandemic.
The retailer said it is teaming up with robotics company Symbotic to implement new automation technology in dozens of regional distribution centers. The technology would target the packaging, storage and unloading processes, getting products to stores faster while requiring less rigorous manual labor, wrote Joe Metzger, executive vice president of supply chain operations at Walmart US, in a company article this month.
“In addition to saving time, limiting stockouts and increasing the speed of storage and unloading, we will also have the possibility of training employees in the use of new equipment, the creation of new skills and preparing them for the jobs of tomorrow. , “he wrote.” And because technology reduces the need for our associates to handle freight, it removes one of the most difficult aspects of the supply chain job in material handling. ”
The move comes at a time of heightened awareness of working conditions in retail warehouses, the challenges of implementing social distancing in these workplaces, and the difficulty of hiring workers. work for relatively low-paid positions. Such technology investments highlight some of the ways in which retailers might seek to address what they see as costs and vulnerabilities in their distribution systems, experts said.
“You want to take a lot of manual labor out of the equation,” said Stanley Lim, assistant professor of supply chain management at the School of Business at the University of San Diego.
“One of the problems is that when individuals are not able to work due to restrictions or other reasons, this reduction in the workforce is going to pose a problem in the ability to continue to circulate these. products and services in the supply chain, ”he said. “If you can take that uncertainty out of the equation, or at least operate with a reduced workforce, you can go on and deliver the products with a high stock rate to the consumer.”
The move reflects Walmart’s continued investments to bolster its e-commerce business and efforts to avoid the type of inventory shortage it experienced in the early months of the pandemic last year as customers embarked on the move. panic buying frenzy.
These types of investments in warehouse automation, and even in the more experimental field of autonomous delivery vehicles that Walmart Stores Inc. has ventured into in recent years, also reflect a broader shift among retailers towards development. of so-called smart logistics operations, said procurement. chain experts.
“Walmart has always been a leader in supply chain and logistics, [and] I’m not surprised that Walmart is investing heavily in technology, ”said Shiliang Cui, associate professor of operations and information management at Georgetown University School of Business.
“It’s actually a trend that a lot of [retail] businesses are moving towards, ”he said.
The pandemic has resulted in widely reported disruptions at ports and created trucking shortages that have typically exposed vulnerabilities in global supply chains. While investments in distribution facilities don’t necessarily resolve these broader pressure points, experts said it still helps retailers try to get a handle on this very important and often expensive phase in the chain: last mile delivery. to get the product into the hands of consumers.
The pandemic has also accelerated the move towards digitization that retailers like Walmart have invested in even in the years leading up to its start, said Lim of the University of San Diego’s School of Business.
“Lots of technologies around omnichannel retail – which is the ability to provide service across multiple online and offline channels and to facilitate a variety of delivery options – these are things that have been on the agenda of multi-channel retailers for the past three to five years, ”he said.
Walmart’s investments also reflect the retailer’s long-term thinking about an issue that is usually not immediately visible to consumers and is often only felt when there is a shortage of inventory and empty shelves, said the experts.
“I think something interesting about supply chains is that if you look at the investment Walmart is making in their automation, that’s great, but the really interesting thing that retailers always have to think about is this. ‘is that it’s not something that customers actually see, ”said Lauren Beitelspacher, associate professor in the marketing division at Babson College. “No one ever goes to a retailer or has a preferred retailer because of their sophisticated supply chain.
“[But] when you have fewer stockouts, you can build more relationships and trust based on consistency with the customer, ”she added. “Plus, efficient supply chains reduce costs.”