In a recent InternetRetailing webinar, Inventory where the people are:how hyper-local and micro fulfilment are changing the game in bullet-proofing fulfilment, in association with GreyOrange, we heard from Nigel Lahiri, sales director, EMEA GreyOrange and Tim Owrid, director, FOR Partnership on how to implement micro fulfilment and omnichannel strategies in order to meet customers’ changing expectations.
Here’s a bulletpoint overview of the webinar.
Tim Owrid of the FOR Partnership
Before Covid
- Covid-19 impact has accelerated pre-existing trends, acting as a catalyst for things taking place already
- Automation: larger companies are moving towards automation quickly, with large German and Austrian companies doubling their businesses every five years.
- Robotic companies widely deployed
- Clear air agenda more important. Causal link recently shown between nitrous oxide emissions in diesel and lung cancer. Requires move to electrical vehicles
- Retail: profitability eroding or evaporating in non-food retail. Even food retail profitability under strain.
- Ecommerce expanding quickly.
- Not enough labour – relying on European workers and impacted via Brexit, partly because of decline of pound vs euro. Had the effect of reducing attractiveness of this market to work in.
- Shortage of property: illustrated through details of one property.
- Need for operators to become more creative: example of small, electrical DPD depot.
Impact of Covid
- Switch to clean air likely to accelerate: effect of pollution on the virus.
- Social distancing in warehouse – will depend on the distance required. At 2m the statistical evidence means reduction of employable workforce of 20-30%. “Very significant impact” on third-party operations given the very tight margins these sites are run under – will increase impact on property.
- Effect of emergency warehousing and on-shoring to increase pressure on distribution space.
- Increased trend towards online sales: overall sales down by 12.8%, but online didn’t fall and accounted for 33% of all sales.
Factors driving the growth of micro-fulfilment
- Pre-ecommerce distribution and retail were seen as separate. Operations could be defined as distribution, retail or a combination of the two. Now no distinction between the distribution and the retail sectors – just one sector.
- Distribution sector may overtake large amounts of retail space. Could see another 25% going in the next five eyars.
Summary of drivers of growth
- Stores will appear less safe/desirable
- Demand will still increase – more online sales
- Same-day/late day demand will mean more micro fulfilment needed.
- More stores will close: if sales are stable or decline marginally but more sales online: move away from the high street of 5-10% in volume. Will make a further tranche of stores unprofitable – more store closures.
- Need for flexible supply chain responses. For many situations combination of reduced retail space, inability to fund stores, customer demand changing.
- What type of property will be needed: model of taking what you can find and work with it. 24/7 sites – but hard to retain staff. Suitable for robotics, with platforms allowing remote central control of them.
Nigel Lahiri of GreyOrange
- High-yield fulfilment in the age of immediacy: needs high-yield fulfilment operations
- Margin squeeze: supply chain able to save retailers in terms of making sure have maintained margin in this new world.
- Many current distribution solutions developed for an age before this one.
- Amazon effect: recognised the need to implement technology, including an estimated 200,000 robots around the world.
- Recognised at an early stage need for software supporting these environments.
- Overview of software including GreyMatter Advantage and the use of mobile configurable accessories.
- Example: Cabot Circus: urban delivery hub. How micro-fulfilment worked within the centre, need for flexible solutions.
- Two models of micro-fulfilment scenarios: two scenarios emerging within customer base of Fortune 500/global retailers.
- How automation enables a hyper local customer approach, maximises space.
- Video example of how one big box retailer, Sodimac, put micro-fulfillment into operation.
- Use case example: deployment in Finland of automated solution that manages goods for home delivery and click and collect.
- Vision of how things will develop
- What a fully autonomous distribution operation could look like: up to 600 picks/hour, different use of space, pick-put stations/use of dashboards to show inventory etc.
- Video example showing a range of technologies that can be deployed: from robotic arms to optimising storage and workforce productivity and mobile sorters.
Summing up: how retailers can meet the challenge in the age of immediacy. Flexibility, speed and storage all important.
The webinar ended with a Q&A session. To see the webinar in full, including the slides, speakers and Q&A session, visit the GreyOrange webinar page. To explore InternetRetailing’s previous webinars, click here. www.internetretailing.net/irtv
