Walmart fulfillment centers will take productivity to a new level

Discussion
Walmart’s Brooksville, Florida DC system designed by Symbotic - Source: Walmart video
Nov 11, 2021

Walmart has broken ground in Texas on a 1.5-million-square-foot automated e-commerce fulfillment center and a 730,000-square-foot grocery distribution center that will enable the retailer to increase its capacity as well as the accuracy and speed with which it delivers orders to stores and customers in the Dallas/Fort Worth area.

The two new massive warehouses are part of a pledge by Walmart in July to automate 25 of its 42 regional warehouses across the U.S. These facilities will serve to complement and support Walmart’s growing micro-distribution network inside and adjacent to its stores.

“These high-tech facilities will include game-changing innovations that are radically disrupting the supply chain, getting products onto store shelves and items shipped to our customers even faster, while saving time for our associates,” Joe Metzger executive vice president of supply chain operations for Walmart U.S., said in a statement.

Walmart is deploying robots in its regional distribution centers to sort, store, retrieve and pack freight onto pallets. The initiative is designed to move products from DCs to stores with a greater degree of accuracy and speed than ever before.

Mr. Metzger explained in the summer that Walmart’s legacy system was set up to cross-dock or warehouse product that arrived at DCs until it was needed in stores. This process was handled manually by warehouse personnel. When stores were ready for the merchandise, DC workers would have to figure out how to efficiently pack a 53-foot trailer, which would be manually unloaded when arriving at a store.

The new system makes use of “a complex algorithm to store cases like puzzle pieces using high-speed mobile bots — operating with a precision that speeds the intake process and increases the accuracy of freight being stored for future orders. By using dense modular storage, it also expands building capacity. And by using high-speed palletizing robotics to organize and optimize freight, it creates custom store- and aisle-ready pallets, which take the guesswork out of unloading trucks.”

The new Texas warehouses are key in the state that has the largest number of company stores. The retailer, as of the end of July, had 593 stores in Texas with 391 supercenters, 18 discount stores, 97 Neighborhood Markets and 82 Sam’s Club units.

DISCUSSION QUESTIONS: Will automated warehouses enable Walmart to keep up with Kroger, Amazon and other rivals making big investments in their supply chain infrastructure? Do you see more opportunities for Walmart to automate distribution centers to further improve on its performance?

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"Walmart needs automated warehouses to fortify its grocery leadership position."

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20 Comments on "Walmart fulfillment centers will take productivity to a new level"


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Mark Ryski
BrainTrust

The automation hits keep coming from Walmart. Combine automated warehouses with autonomous delivery and you have a powerful one-two punch that will be hard to match. While many retailers are undertaking various versions of digital transformation/automation, Walmart is leading the pack and I believe their business results will reflect these smart investments.

Neil Saunders
BrainTrust

This is a big move by Walmart which will enable it to improve the volumes, efficiency, speed, and cost of online orders and store replenishment. It is true that Kroger has an advantage in automation because of its partnership with Ocado but this is time limited. What Walmart is doing here will eventually become the norm for all grocery retailers because it helps solve the issue of high servicing costs on very low margin products.

Bob Amster
BrainTrust

We are now seeing years of progressive change in warehouse and distribution center operations coming to fruition. The change was inevitable, but it did not happen overnight. It is not just Kroger. The two companies can coexist. This technology will proliferate to smaller and smaller chains over the next five years until warehouse robots are ubiquitous.

Lee Peterson
BrainTrust

Fulfillment centers, both pure and hybrid with stores, are the future of mass physical retail. Getting goods there faster and more cost effectively is not a “nice to have” anymore. Walmart is just reading the writing on the wall.

David Naumann
BrainTrust

Walmart’s focus on accelerating the speed of getting product on shelves is a smart strategy. Deploying robots in its distribution centers to sort, store, retrieve and pack freight onto pallets has two benefits – it increases the speed of processing shipments and it helps alleviate labor shortage challenges. If Walmart isn’t doing it already, they can expand the use of robots to manage back-of-store inventory and stock shelves.

Ken Morris
BrainTrust

Automated warehouses and stores will help Walmart compete and potentially win this race. They are making a huge investment in micro-fulfillment centers (MFCs) as well as automated distribution. And with 90 percent of the U.S. population living within a 10 mile radius of a Walmart store, they have the makings of the best hub and spoke distribution system ever created. I like this move by Walmart and investors are likely to do the same. Humans don’t stand a chance against the dynamic duo of robots and algorithms. Taking the air out of shipments by using dense modular storage at robot speed will increase efficiencies dramatically.

Lisa Goller
BrainTrust

Yes, automated fulfillment is emerging as an e-commerce essential among retail giants. Online shoppers are now conditioned to expect rapid turnaround times once they place an order – especially for groceries.

Walmart needs automated warehouses to fortify its grocery leadership position. Amazon, Kroger and Instacart already invested in robotic fulfillment to erode Walmart’s grocery market share.

For greater productivity, Walmart will likely use RFID, IoT and data for process re-engineering to continuously improve e-commerce fulfillment.

Andrew Blatherwick
BrainTrust

There is a fine balance between automation providing efficiency and restricting flexibility. There have been several supply chain operations that spent huge amounts of money on highly automated warehouse operations to eventually find them inflexible and constraining to their business. Without the details of the operation it is hard to tell if this is a really smart move or something they will live to regret. I am sure that Joe Metzger has been around long enough and is experienced enough to understand these issues and hopefully has created an ideal solution for Texas. If they get it right then it will make a very big difference in the speed, accuracy and performance of their supply chain. It sounds like a very exciting project and would be great to see when it is operational.

Shep Hyken
BrainTrust

It’s more than just keeping up, although that’s what companies do with competition. When there is a clear-cut leader, others try and compete. The only way to “keep up” is to push innovation and grow. Investing in new processes and capabilities allows companies to be more competitive with each other. That’s what’s happening here. The more companies like Walmart build out their automation and supply-chain infrastructure, the more other companies will be forced to keep up. This breeds competition which, ultimately, is good for the consumer.

David Spear
BrainTrust

A great move by Walmart. There’s always a need for speed, and with the combination of new fulfillment center automation, these new investments should enable faster flow of goods to shelves and – one would hope – more accurate stocking levels such that out-of-stocks (OOS) are reduced. OOSes are one of the single biggest contributors to opportunistic lost sales. And with Walmart’s scale, the reduction of even one OOS per day per store saves a revenue loss of double digit millions of dollars.

Liza Amlani
BrainTrust

Walmart has been a leader in implementing innovation throughout its operations. This move doesn’t surprise me and it will continue to prove that Walmart is a beast to be reckoned with.

Increasing productivity across its supply chain and enabling digital tools and automation — competitors need to take a page out of this book and start making changes now in order to keep up with Walmart.

Reinventing the department store is one thing. Rethinking the supply chain is a game changer.

Jeff Sward
BrainTrust

Looks like Walmart wants to be as unreachable and unbeatable in physical retail as Amazon has become unreachable and unbeatable in e-commerce retail. Amazon may still have the edge in overall logistics abilities, but Walmart keeps working on putting as much distance as they can between themselves and an Amazon physical retail footprint.

Paula Rosenblum
BrainTrust

Does having your own fleet of planes really give you an edge in overall logistical abilities? Or even your own vans? Those stores make a big, big difference, and Amazon has not demonstrated it knows how to leverage the stores it already has.

Jeff Sward
BrainTrust

Yes, I think having their own fleet of planes and vans, along with sole discretion on how they are deployed, does give Amazon an edge in logistics. And you are right that Walmart is absolutely pressing its advantage in physical stores.

This might be a tale of two different battles. One is grocery and the other is non-grocery.

What I think of as Amazon’s edge in logistics does not mean they can easily dominate the grocery battle. Walmart’s stores and local presence give them the advantage. In the non-grocery arena, I’d say that Amazon has the big advantage. The great thing overall is that the ferocity of this competition is wonderful for the customer!

Paula Rosenblum
BrainTrust

Nah. I had a teacher once who drew the analogy to needing a tank of gas and buying an oil well. It’s beyond overkill. Trucks and vans, sure. Planes? Seems like they would have been better off buying a container ship.

Zel Bianco
BrainTrust

I would not bet against Walmart. Enough said!

Trevor Sumner
BrainTrust

Walmart’s local delivery infrastructure combined with these automated warehouses create a powerful proposition for last-mile delivery of groceries that actually can be profitable.

Kai Clarke
BrainTrust

Yes, this is a good move on Walmart’s part. However Walmart really needs to be moving in larger steps to break the traditional routes which fulfillment centers seem to keep us focused on. Just because automation is used doesn’t necessarily mean it is beneficial. What role does artificial intelligence play in eliminating some of the key issues that Walmart has with retail basics (like out-of-stocks, which is primarily managing time to manufacture, shipping efficiencies, and time to deliver the product to the end user)? These concerns are so complex that Walmart needs superior product managers to order, manage, and sustain each of their categories and the products in them.

Paula Rosenblum
BrainTrust

I think the question should really be, have Kroger and Amazon done enough to keep up with Walmart (and Target)? The last two years have really told the tale, in my opinion. The fact that Walmart is pressing its advantage and not allowing others to leapfrog is a testament to good leadership.

Ananda Chakravarty
BrainTrust

Walmart announced it will spend $14 billion on automation and increasing capacity according to Supply Chain Digital. Their CFO stated that the expectations are a 4 percent growth in sales and operations profit influenced by this investment. Walmart has begun partnering with companies like Witron to optimize logistics. These are not small efforts but entire system transformations. For Walmart this is not catching up to the competition, but rather breaking ahead of the pack. Walmart will have the opportunity to continue their automation streak and in turn operational performance efficiency. Watch for packaging optimization options both in-situ and in-transit.

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Braintrust
"Walmart needs automated warehouses to fortify its grocery leadership position."

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