Image Source: Walmart
In 2020, the businesses that had already transitioned fully to eCommerce grew as consumers shifted their behaviors online. But many retailers also left money on the table when their supply chains failed to keep up with the surge in online demand especially during the holiday shopping season. In 2021, the masters of supply chain management – especially last-mile delivery – will run the table. Walmart recently underscored this reality when the company announced that its automated supply chain is “ready to scale.” This is significant news. We believe retailers will win by relying on human-centered intelligence to put people at the center of the supply chain.
- During an investment community meeting, Walmart announced a $14 billion capital expenditure investments in its supply chain, including a $14 billion fiscal 2022 capital expenditure that will “focus on supply chain, automation, customer-facing initiatives and technology.”
- Walmart’s investment includes automating key processes such as using bots to retrieve orders in fulfillment centers, which will exist increasingly inside Walmart stores or besides them. That way, Walmart will be able to accelerate shipments to customers directly from stores – the last mile of delivery. Walmart also offers customers the ability to pick up orders from stores via its extensive curbside pickup network. Since 90 percent of Americans live within 10 miles of a Walmart, automating fulfillment gives Walmart a crucial competitive advantage.
Why This News Matters to Businesses
- Online order fulfillment is the Achille’s heel in many companies’ eCommerce operations. When online orders surged during the holidays, many retailers struggled to keep up with demand and deliver orders in time for Christmas Day. Retailers faced to problems: 1) a surge in orders for delivery, which put a strain on their supply chains; and 2) inventory shortages resulting from retailers having less merchandise stocked up than usual for the holidays because the pandemic disrupted their typical inventory planning. (More about that here). Walmart, already operating a world-class supply chain, is improving its own online fulfillment capability to manage future surges in demand. This move will pressure more businesses to improve online fulfillment.
- Walmart’s actions also underscore how retailers are making last-mile delivery more effective, a phenomenon we’ve blogged about. For example, Apple has converted some of its stores into fulfillment centers to speed up the delivery of iPhones. Best Buy has turned to one of the masters of same-day delivery, Instacart, to offer same-day delivery. Walmart is doing all of that and more. Not only has Walmart been relying on its stores to act as fulfilment centers, the retailer is also automating the process. According to Tom Ward, senior vice president of Customer Product, Walmart U.S., “Instead of an associate walking the store to fulfill an order from our shelves, automated bots retrieve the items from within the fulfillment center. The items are then brought to a picking workstation, where the order can be assembled with speed.” In addition, Walmart is now making 1.5 million deliveries every week from its store (seven times more than in 2020) via Spark and third-party partners.
What Businesses Should Do
- Take a closer look at how you might humanize convenience as Walmart is doing with last-mile delivery. In the post-pandemic era, people want to do more than buy things online. They also want assurance that they can get what they want more safely, whether having products delivered to their homes or being able to pick up purchases at curbside to minimize contact with other people. This trend will continue. People are in no rush to return to traditional in-store shopping even with the increased uptake of a vaccine.
- No one can humanize convenience with the flip of a switch. Being more flexible about offering multiple ordering and pick-up options means that supply chain managers need better insight into where their products are at all time. That real-time awareness probably requires artificial intelligence to turn silos of data into intelligence insight, which is where human-centered intelligence comes into play.
Our offering, Human-Centered Intelligence Platforms, helps businesses transform their supply chains by supporting decision makers with intelligence. As a result, businesses improve their speed to market and humanize convenience as Walmart is doing. Reach out to learn more.