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Supermarkets will need to adopt micro-fulfilment to protect supply chains

By James Smith, UK Managing Director of AutoStore

Society as we know it has been turned on its head – and will likely not recover for some time. The Coronavirus pandemic has seen us lose a lot of the privileges we once held dear and took for granted, impacting how we now live day-to-day. From meeting up with friends through to shopping for necessities, daily life has been stripped down to its core.

The food industry in particular has been significantly impacted, stretched by panic buying and increased demand and leaving many resources scarcely available. The British Meat Production Association reported recently that demand for meat products has increased by 20-30%, with some trading levels surpassing the normal standards for the Christmas period. The Department for Environment, Food & Rural Affairs had even reported that this surge in demand has forced food production companies to increase production by 50% in the UK, meaning our supply chains will not only be operating at higher levels, but will also be doing so with fewer staff due to social distancing guidelines and an increase in staff absences. Something that will continue to impact the supply sector for the foreseeable future it seems.

With this in mind, there is a real need for an innovative new system to step forward that better prepares businesses for the long-term increased demand for food supplies we will undoubtedly see emerge in the coming months and years – not just in store but within ecommerce as well. Micro-fulfilment will be the system to do just that.

The concept of micro-fulfilment represents a system that supplies localised storage and warehouse facilities on site and can be installed in stores, removing the need for larger scale warehouse facilities which are often located great distances from stores and are unable to continue to provide the necessary support to each and every food supply store across the UK. Micro-fulfilment, put simply, minimises the amount of space which warehouse facilities take up by removing the need for traditional shelving systems and replacing this with automated robots – ultimately saving on space and allowing these storage facilities located at the rear of the store.

The flaws of traditional grocery shopping have been highlighted during this pandemic, with one-way systems, traditional shelving and social distancing measures complicating what should be a straight-forward experience for customers. Bringing the warehouse to local stores, and allowing robots to manage stock and deliver orders to customers from this micro-warehouse, and to fulfil online orders ready for delivery, is the only way supermarkets can ensure that the term “out of stock” becomes a thing of the past. Morrisons have recently explained how the pandemic is accelerating its strategy to broaden the supermarket’s offering to customers, expanding slots for home deliveries by over 60% – expecting that service to grow by a further 25% this year. To do this, there is no doubt they will require significant investment into their supply chain model, with some aspect of that likely to be made up of an automated system.

To put it into figures, your average warehouse worker will have a ‘pick rate’ of between 50-100 picks per hour, while an automated robot will deliver anywhere between 250-300 picks per person per hour. Modular systems mean that warehouse operators can fit 4x more inventory into the same space or use 75% less space for the same inventory. This new-found efficiency means brands and business owners can save up to four times as much with a smaller, denser automated system – simply due to the need to occupy less space to store inventory – and having it on site means replenishment and delivery speeds are maximised.

So what does this mean for the workforce? These facilities are bringing an end to your traditional warehouse worker, with a number of large retailers and grocery providers planning to automate their systems in the future. That much is inevitable. However, what this is also doing is opening up an opportunity to upskill our workforce and provide the opportunity to train staff in maintenance of the robots, providing greater variation and job satisfaction. Not only that, there is a huge business positive to consider, with less human dependence, more trust placed into machines and less costs to businesses incurred through staff sickness and holidays.

When we eventually emerge from this state of emergency, and supermarkets expand their ecommerce offering, they will likely be hit with a heavy demand of online orders to fulfil which cannot be managed solely by people to effectively meet that need. If this pandemic has done anything to us, it has made us rethink our social structures and how we can be more efficient in our service to customers. That said, supermarkets and grocery stores across the UK and also the US are now planning for the future and exploring the ways in which they can be better, more efficient suppliers of product.

It makes no sense for your Asda’s and Sainsbury’s to supply produce both online and in store from different and often very distanced locations. They have felt the strain of this distance during this pandemic and when an anticipated spike in ecommerce orders comes into play, we will see supermarkets yet again fighting on two fronts, in-store and online. To combat this demand, they can look to bring warehouses and supply to their local facilities and move away from large-scale and widespread storage facilities, and instead seek to fulfil both sets of orders from one, single and local facility. This will see delivery and click-and-collect options soon start to take a much stronger grasp of our supermarket experiences. Having the online stock available locally, companies will be able to fulfil their customers’ needs at a much faster rate than ever before.