Retailers Are Changing Stores into Micro-fulfillment Centers with Robots
Reuters recently hosted a panel on the topic of optimizing omni-channel fulfillment to prepare for holiday peaks. Panelists included Jason Lerman, Director Operations at UNTUCKit; Jon Gold, VP of Supply Chain and Customs Policy at NRF; Wayne Snyder, VP Retail Industry Strategy at Blue Yonder; Gina Anderson, VP Solutions and Growth at GEODIS; and Melissa Valentine, Global Segment Director of Retail at Locus Robotics. Moderated by Maria Hurghis, Head of Retail at Reuters Events, the panel shared how they tackled the technical aspects of integrating flexible fulfillment technology to maximize productivity.
“March was a tough month for all of us,” Jason Lerman starts, recapping the horror of every retailer at the beginning of the pandemic when shutdowns were government-ordered. “We did think it was temporary, and it ended up lasting two whole months.” Jason’s team at UNTUCKit spent that time strategizing to support stores and prepare for a shift in consumer behavior while prioritizing the health of store associates.
Retail sales in March dropped 8.7% according to CNBC, the largest drop in recorded history dating back to 1992. The category that sustained the largest decline was clothing and accessories with a 50.5% drop. To many retailers, this was an apocalyptic shift and they were not able to adapt with digital strategies quickly enough to survive. Those that underwent some degree of digital transformation before the pandemic were in a better position to pivot their operations and expand online and shipping services.
Most brick-and-mortar stores stood still during lockdown. This meant thousands of products sat in backrooms and on shelves untouched, unseen, and unsold. The team at UNTUCKit reviewed options and prepared themselves for a trial-and-error approach with an unconventional omni-channel fulfillment model: Buy online, ship from store (BOSS). They essentially created micro-fulfillment centers with select store locations and implemented strategies that both protected associates and sold idle products. “That was a huge driver in helping to support the business during these really tough times and it was really exciting for me to implement that as it was our first time doing so with a company of this size, and it was really successful,” says Jason.
Many retailers did the same. “3 years’ worth of renovations was done in the first three months in this pandemic as companies tried to adjust and focus on e-commerce, which we saw explode early on,” explains Jon. He adds that the move to buy online, pick-up in-store (BOPIS) was challenging at a national scale because states and regions had differing standards defining essential versus non-essential operations.
GEODIS has also seen a rise in the importance of customer service, not just in the buying process but in the shipping process as well. Customers want to know where their packages are when delays occur. Gina commends the UNTUCKit team for thinking quickly and creating micro-fulfillment centers using their existing store footprint. She emphasizes “it’s not too late for brands to do this.” The ability is there to get packages closer to the customer and she urges other brands to jump on board and view their stores as an opportunity to do the same.
Here are the top 5 recommendations made:
- Move towards flexible fulfillment technology and models
- Invest in resources that promote worker and customer safety
- Focus on scalability of new processes
- Utilize your partners and providers
- Aggregate your data
Move Towards Flexible Fulfillment Technology and Models
The team at UNTUCKit had much less information available to prove the success of transforming store locations into micro-fulfillment centers. For them, it was a risky trial-and-error process that resulted in high reward. Now that many other companies (big and small) also converted their sales and logistics into e-commerce models, the data speaks for itself: it’s a potentially highly profitable solution.
Managing inventory is one of the biggest hurdles for retailers attempting the transformation to omni-channel fulfillment. Wayne explains retailers need to go from “best managing a problem” to being in control of their inventory. Retailers need to invest in an inventory system that covers all the aspects of omni-channel fulfillment to make sure the product is recorded at the right location, in the right amount, and in the right status (sold, returned, in transit, etc.). This ensures SLAs are being followed and deliveries are made on-time and in-full.
“Ensure that your store managers are equipped with the right tools and can essentially manage their store like your general manager would at a warehouse,” says Jason. Space needs to be adapted for associates to pick, pack, and ship efficiently. All items need to be labeled correctly and accounted for with a digital process. For stores utilizing BOPIS, the customer experience needs to be quick, easy, and accurate.
Invest in Resources that Promote Worker and Customer Safety
“Let’s not focus on what we sell, but how to sell it,” says Jon. With the uncertainty regarding essential versus non-essential operations, companies that prioritize the safety of their customers and employees through processes that meet local, state, and federal regulations will not have to worry about shutting down again. An automation solution like the multi-bot solution provides social distancing measures as part of its design, maintaining a retailer’s high productivity while complying with CDC guidelines.
Another highly important aspect of worker safety is job security. Employees concerned for their well-being will perform at lower levels due to stress and fear. Retailers restructuring for omni-channel fulfillment will be adopting many technologies that upskill workers and increase morale if executed correctly. Technology providers have the experience to guide new technology implementations that are successfully adopted by employees. For example, in the case of a multi-bot solution, warehouse workers express positivity and excitement about their robot coworkers and experience improved personal job performance as their order accuracy reaches near-perfect rates
Focus on Scalability of New Processes
“Quite frankly, the supplier has probably always been there saying ‘hey, we can do this for you in a matter of weeks!’ but the company has not been able to execute it,” says Gina, citing difficulties in receiving buy-ins and signoffs from stakeholders. The trend has shifted from implementing new processes as a method of competition to implementing new processes as a method of survival. The buy-ins and signoffs are easier to obtain and are happening much more quickly. Jason agrees, as his c-suite needed little convincing to invest in innovative ways to transform stores into micro-fulfillment centers for the sake of the business.
Wayne emphasizes the need to ensure the new technologies are scalable and robust. Retailers are implementing changes that are permanent and will continue to use these technologies far into the future. At some point, companies will no longer fear for their survival but return to a competitive state and these technologies will be expanded to support those goals.
After the success of transforming select stores into micro-fulfillment centers, Jason’s team is looking to see which additional stores may benefit from it as well. UNTUCKit made it past the fearful period of uncertainty, and thanks to the rich data provided by the new technologies, they are ready to expand and grow with more certainty.
Utilize Your Partners and Providers
Providers of future-proofing technologies are extremely committed to the success of their solution. They designed customer success departments to support their users in ways beyond simply integrating new technology. Retailers may have access to resources that help drive customer satisfaction and safety as well as productivity.
Gina shares how GEODIS works with partners to identify new locations and technologies needed to get packages closer to the consumer. She urges retailers to utilize their partners to conduct studies and “what-if” simulations to see if there are opportunities for relief. Jason’s team works with partners to model different shipment scenarios to see which method is more efficient and profitable because sometimes the most obvious solution is the most expensive.
Aggregate Your Data
Blue Yonder’s research shows 80% of retailers feel they do not have proper omni-channel processes. Many are experiencing a disconnected flow of information between in-store and online shopping, especially with regards to inventory management. With the rise of BOSS and BOPIS, inventory accountability is critical because a purchase made online can cause the in-store product to go out-of-stock and vice versa. Without clear visibility into that data, customers are left frustrated and eager to write negative reviews.
Wayne explains that perhaps for the first time, technology is catching up to the potential that has been long promised by AI and machine learning regarding actionable insights from data collected by these technologies. There is now a more holistic and in-depth view of operations available to see trends before they spike beyond control, identify opportunities, assess risk, and pivot strategies when necessary.
The capabilities of a multi-bot solution from providers like Locus Robotics have reached only a fraction of the potential that will be realized in the future as companies expand their usage beyond fulfillment to include reverse logistics. In tandem with a robust inventory management system like Blue Yonder, operations have complete visibility of their inventory, optimize their fulfillment rates, meet delivery deadlines, and seamlessly automate the least profitable functions like returns, restocking, and replenishment.