What will an automated supply chain look like in 2025?
Ocado's warehouse in Andover, UK.
Kroger’s recent agreement with robotics start-up Nuro, on the heels of its deal with Ocado to bring the British e-grocer’s automated fulfillment capabilities to the U.S., has got us thinking — how will artificial intelligence (AI) and robots accelerate digital transformation in retail warehouses?
The warehousing and logistics industry is already adopting robotics and AI at a faster pace than expected because the tech can pick orders and manage inventory at incredible accuracy and speed. Leading companies are finding an automated supply chain is necessary to remain competitive and meet e-commerce’s exponential rise.
Nuro's autonomous delivery pilot for Kroger.
Retail’s Race to Deliver
A recent study by Zebra Technologies found that 67 percent of logistics companies expect to provide same-day delivery by 2023 and 55 per cent anticipate delivery within a two-hour window by 2028. With Nuro, Kroger sees a way to bring same-day home delivery via autonomous vehicles that are built to hold groceries and other food items like pizza. The delivery pods are about half the size of a Toyota Corolla and have maximum speeds of 25 mph. Kroger is planning a pilot in the fall at an undisclosed location, but wide-scale driverless delivery is still years away.
Kroger has also invested $250 million to build 20 automated warehouses featuring Ocado’s smart, speedy robots that continuously shuffle hive-like stacks of crates to expose the correct items to be picked. The robots then scurry to pick stations where either humans or picking robots armed with computer vision take the goods from the bins and bag the grocery orders. Ocado claims their system can fill an average order within five to 15 minutes.
Amazon and Walmart are likely to respond to Kroger’s moves with another wave of innovation. Amazon already has a fleet of over 100,000 warehouse robots and more than 100 fulfillment centers throughout the country, allowing it to roll out free Prime Now two-hour delivery in 10 markets. However, analysts are waiting to hear how it plans to re-engineer its supply chain for Whole Foods. Walmart is testing robots built by Bossa Nova Robotics that scan inventory shelves and has tapped Postmates as it brings online grocery delivery to 100 U.S. metro areas this year.
And in China, online retailers Alibaba and JD.com have built robot-centric, technologically advanced, almost-fully automated warehouses. JD.com’s fulfillment center outside of Shanghai processes 200,000 orders daily — with only four employees. The e-commerce giant is also testing drone delivery to more than 100 rural villages.
Automation Is Expensive and Challenging
Grocery e-commerce is considered incredibly complex as far as fulfillment operations goes. Facilities require different levels of refrigeration that hold food at temperatures ranging from 50 degrees to minus 30. Robots can’t function in extreme cold, so the frozen food section of warehouses will still depend on traditional racks and human pickers. Soft, perishable items like bags of oranges are also particularly challenging for robots to manage without damaging.
Some analysts say the robot revolution won’t come so quickly as others are predicting, and robots will co-exist alongside traditional distribution methods, within standard warehouses, and will continue to do so for some time to come.
Locus Robotics’ mobile robots are an example of how robots can work with existing warehouse management systems. Its LocusBots, deployed at DHL Supply Chain and a number of third-party logistics providers, work alongside human pickers, showing people where to go next, saving them travel time and miles of walking. The robots can be leased, so companies can order more as they need them. This type of on-demand automation, “robot-as-a-service,” is opening up robotics to companies that may not have had the cash or skills to explore this area in the past.
Transformation is Upon Us
Combined with the advent of augmented reality glasses, voice interfaces, the Internet of Things (IoT), and blockchain, the opportunity to create greater operational efficiencies is making profound changes industry-wide.
IoT in particular is poised to take off in logistics as sensors provide shipment tracking, real-time visibility, and accurate inventory control. Environmental conditions, HVAC, and lighting can all be monitored for energy cost control. Logistics firms already using sensors to track assets or containers are now examining the additional benefits of IoT platforms that can manage all kinds of data.
If leading retailers can pull off warehouse automation successfully, will brick-and-mortar stores become obsolete? Lowe’s is even piloting a robot that leads customers around and answers questions. It’s not hard to envision a day when the experience of pushing a shopping cart around a store will become a novelty in a world driven by extreme convenience.