Operations

Walmart's automated fulfillment centers cut steps, grow reach

The company is planning four new fulfillment centers that will enable next-day or two-day shipping.

Walmart's automated fulfillment centers cut steps, grow reach

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The future of Walmart fulfillment centers will be automated.

That’s the message from the company’s announcement Friday that it will open four new fulfillment centers over the next three years. Employing over 4,000 associates, the centers will be located in Joliet, Illinois, McCordsville, Indiana, Lancaster, Texas and Greencastle, Pennsylvania.

These “next generation” fulfillment centers will combine “people, robotics, and machine learning,” a blog post from SVP of Innovation and Automation David Guggina.

Partnering with Knapp Technologies, Walmart said it cut a manual 12-step process down to five steps with automation. Walmart outlined this process:

  • Unload: Associates unload cases of merchandise from sellers and suppliers, and place them onto a conveyor belt.
  • Receive: On the conveyor belt, the cases head to receiving, where individual items are moved from a case to a tote. The tote then heads into an automated storage system where a shuttle transports it to a designated location. “The storage system is designed to account for every square-inch, spanning from floor to ceiling in a custom-built structure designed to hold the inventory,” Guggina writes.
  • Pick: When an order is received, the system retrieves an item, then shuttles the tote to an associate at a picking station.
  • Pack: Simultaneously with the picking operation, a custom box is created to fit the measurements of the order.
  • Ship: The completed order is then automatically taped, labeled, and routed to a designated zone. Then, it gets shipped to a final destination.

In the meantime, it uncovered advantages as it worked this out at a facility in Pedricktown, New Jersey. For one, it cuts down on footsteps as well as phases of the process. Without the automated system, associates would have walked up to nine miles per day as they picked items from multiple floors of spread-out shelving. Now, the machines retrieve it.

There is also more space. With the new centers, Walmart will be able to double storage capacity, and double the number of orders it can fulfill.

In turn, the system promises to increase productivity. Walmart estimates that associates can assemble up to four orders at once, and send packages for shipping in less than 30 minutes after the customer clicks “order.”

This is all driving at a key outcome: fast delivery to a wide swath of the United States.

“Most impressively, these four next generation FCs alone could provide 75% of the U.S. population with next- or two-day shipping on millions of items, including Marketplace items shipped by Walmart Fulfillment Services,” Guggina wrote.

These fulfillment centers are part of a network. Walmart has 31 existing fulfillment centers. When these four new centers come online, the company said it will be able to reach 95% of the US population with next-day or two-day shipping.

box on a conveyor belt.

Inside an automated fulfillment center. (Photo via Walmart)

Talk of fulfillment centers, and Amazon quickly comes to mind. That quickly brings up a reminder that the ecommerce giant has its own vast network of 1,199 distribution centers of varying sizes and types, with 287 of those labeled as some variety of fulfillment centers, according to supply chain and logistics consulting firm MWPVL.

So if Walmart wants to compete with the nation’s other retail giant, it may appear that it has a long way to go beyond four new fulfillment centers. But for Walmart, fulfillment doesn’t only take place in warehouse-like settings.

“Our priority is to strategically locate our FCs to pair most effectively with our 4,700 stores and 210 distribution centers,” Guggina wrote. “Together, this system of fulfillment assets is optimized to get orders to customers fast and efficiently.”

Through a partnership with Symbotic, some of those distribution centers will be outfitted with robotics to store, move and pack freight.

Building on its strengths in grocery, the company is increasingly outfitting stores with automation and fulfilling orders from these retail centers, as well. Chief Ecommerce Officer Tom Ward told CNBC this week that 75% of the company’s stores fulfill online orders. After all, there are built in proximity advantages with these facilities. As Walmart often notes, 90% of the US population lives within 10 miles of a Walmart store. More from CNBC:

The company’s vast number of stores allows Walmart to outmatch its competitors, [Ward] said. For example, the retailer can pinpoint the nearest store to a customer who searches online for a printer. Instead of sending the printer from a fulfillment center hundreds of miles away, a team of personal shoppers at the store can pack it, pass that to a delivery driver in Walmart’s network and send a notification to the customer to say the product is on the way.

“It might arrive in a handful of hours after they bought it online, as opposed to a couple of days later,” [Ward] said. “So it’s a transformational experience in terms of speed, which is really hard to replicate without that fantastic footprint that we have.”

Put it together, and the picture of how Walmart’s existing advantages are being put to work for ecommerce begins to fill in. With stores involved, the company can offer same-day delivery to 80% of the U.S. population.

To be sure, this doesn't mean the work of scaling is done. Upgrading fulfillment operations that enable fast shipping is key to meeting customer expectations, but it's just one step to growing the digital side of the business. The shopper experience on the company's app is another area getting a makeover, CNBC reported. To expand the number of sellers offering products, Walmart is building a third-party marketplace. When it comes to getting the packages from the centers to homes, it is working on capabilities like drone delivery, a network of local drivers and a service that delivers groceries right to a customer’s refrigerator. To grow the number of customers regularly taking advantage of these services, it is making moves to bolster the Walmart+ subscription service. Advertising is a part of the equation, too.

Adding new technology and refining processes will help it all work together. The new fulfillment centers offer a sign that the company is putting targeted pieces in place to make that happen.


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