The Supply Side: Walmart automating more jobs, high-tech distribution center on tap

Walmart continues to invest in technology that increases efficiency in the supply chain and lowers costs of the system with fewer employees as machines do more of the work. The retail giant announced it will build a new high-tech distribution center in Shafter, Calif., the retailer’s first for handling fresh and frozen groceries.

The process for handling fresh and frozen grocery has been labor intensive but converting to a new high-tech center will allow Walmart to move 40% more product than in a traditional distribution center. Walmart has worked with suppliers and other vendors in recent years to reduce transit time and processes for fresh foods, which has given four additional days of freshness to items like strawberries and lettuce.

Walmart will break ground on the center in the coming weeks and expects to open in the fall of 2020. Walmart did not provide the investment cost but did say 300 jobs will be added. Tim Cooper, senior vice president of supply chain for Walmart, said there will be around 100 technology-based STEM (science, technology, engineering and math) jobs because much of the manual labor such as order picking will be automated.

“The order-filling position is an arduous one,” Cooper said. “While the supply chain is the backbone of Walmart’s business, the jobs of the future might be less physically demanding.”

The new center will use technology developed by WITRON that can pick orders to better optimize warehouse efficiency. Cooper said the new center will serve Walmart and Sam’s Club and help get food to stores and clubs faster, extending the fresh window on perishables. He said the technology will also do the heavy lifting and stacking of boxes as programmed by employees running the system.

Shayne Wahlmeier, one of the project engineers, said the technology is “smart” and able to determine how to put boxes and crates on pallets to maximize space on the trailer. It also takes into account density and can determine what’s crushable and what’s not.

“Sort of like a game of Tetris but with apples and ice cream,” Wahlmeier added.

Walmart expects the technology will help allow for building more flexible, dense pallets that best utilize the space in a truck trailer. This should help reduce transportation costs and create savings for the company — savings that could be passed on to customers, Cooper said. Another benefit of this new center will be fewer damaged products creating less food waste, according to Walmart.

Walmart is also testing an automated grocery pickup system in Sherman, Texas, that allows customers to drive up to a spot at a pickup center, scan a code that activates the door and dispenses the groceries. Walmart tested a similar version of this in Oklahoma City over the past year and said the newest prototype in Sherman was well received by customers.

Walmart U.S. CEO Greg Foran recently said the retailer has lots of learning still to do.

“For instance, how do we replicate the personal service piece at this fully automated site? Customers who use grocery pickup at a store have that with their personal shopper,” he said.

Walmart is also testing a high-efficiency unloader and sorter in a few stores, including a supercenter in Rogers. The unloader was shown to Wall Street analysts who attended the retailer’s annual investor conference on Oct. 16. The technology sorts product by category and gives priority to items out of stock or with low counts. Walmart said it has been able to reduce the number of employees who unload trucks — a job with high turnover rates — and put that labor back into the store.

As Walmart continues to use technology to replace human tasks like robots scanning inventory and scrubbing the floor, and adds more self-checkout stations than manned ones, analysts asked the retailer about changing store labor ratios.

Foran said equalization of labor ratios in stores is always a juggling act. He said Walmart reduced the number of store co-managers earlier this year and most stores now have two. He said some stores had four or five. Stores with annual sales under $85 million have one. He said as Walmart continues to roll out online grocery pickup, more personal shoppers will be added. In many stores, the jobs took the place of cashiers. This holiday season, Walmart is also allowing cashiers to check out customers using a mobile device and skip the line entirely. Retailers such as Macy’s have been doing this for several years.

While the personal shoppers may be the most frequent jobs added at Walmart stores today, that could change as the retail giant is testing a fully automated order-picking device in a store in Salem, N.H. Tom Ward, senior vice president of digital operations at Walmart, recently said the company has worked with Alert Technology to develop the Alphabot system to fully automate the order-picking process.

He said this system is a series of robots that hold a series of products within a large framework, instead of personal shoppers walking around the store picking orders. They instead stand at the pick point and are presented with one crate of products and one crate of someone’s shopping order. A light points to the product ordered, then points to the customer crate, and it cycles through moving products into the proper shopper crates according to the customer’s order.

“This device can take the pick rate up to 1,700 picks per hour. Under the manual picker system personal shoppers can pick eight orders at once, but that’s only a fraction of the efficiency achieved with the Alphabot system,” Ward said. “The system actually can store the order for several hours at the appropriate temperatures.”

He said Alphabot has the potential to redeploy thousands of personal shoppers into other customer service roles, and it can also solve the problem for stores that don’t have enough parking lot slots for busy pickup times. Ward said when the Alphabot system goes live early next year, customers will retrieve the orders from automated doors, which open after the shopper has scanned in a delivery code. The system requires far less labor to operate, and Ward said the retailer is eager to test this first-of-a-kind robotics system.

He said Walmart is not sure how many stores might see this type of technology because it remains in the testing phase. Ward said as more technology is deployed in stores to automate what have been manual processes, efficiencies can be gained.

“There will always be a need for customer-facing employees. But when backend processes can be fully automated, there is an opportunity for savings, which can then be passed on to customers,” Ward said.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.