How AI and Automation Fuel Walmart’s Ultrafast Deliveries | WSJ Shipping Wars

Summary

Walmart's Alphabot revolutionizes online order fulfillment with a 95% success rate within 12 minutes. The retail giant invests in automation and drone delivery, aiming for 65% store service by 2025. Market Fulfillment Centers (MFCs) minimize footprints and congestion, enhancing inventory accuracy. Walmart's strategy leverages its vast store network for fast delivery, with over 4,000 stores offering same-day delivery. The company also explores AI and ML for supply chain improvements, while balancing traditional e-commerce with next-generation fulfillment centers to meet customer expectations for speed and precision.

Takeaways

• 🤖 Walmart has introduced Alphabot, a robot that efficiently picks items for online orders, significantly reducing the time taken to fulfill orders.
• ⏱️ 95% of orders at Walmart's market fulfillment centers (MFCs) can be picked in under 12 minutes, enhancing their delivery speed in the competitive retail landscape.
• 📈 Walmart aims to have 65% of its stores serviced by automation by 2025, showing a strong commitment to technological advancement in their operations.
• 🛒 The market fulfillment center is designed to have a smaller footprint than traditional fulfillment methods, making it more space-efficient.
• 🛒 Walmart's focus on grocery as a linchpin for their online business has been a significant evolution in their e-commerce strategy.
• 📦 The Alphabot system uses about 175 bots to move items laterally, horizontally, and vertically, streamlining the order picking process.
• 🛍️ Each robot can carry a milk crate-size bin that can hold a variety of items, from small to bulk products, showcasing the versatility of the system.
• 💡 The use of automation reduces the need for human pickers to walk long distances, allowing them to pick items more quickly and efficiently.
• 📈 Walmart's investment in MFCs and next-generation fulfillment centers is part of a broader strategy to improve delivery speed and efficiency.
• 📊 The digitization of Walmart's supply chain and the use of AI and ML algorithms are aimed at improving inventory forecasting and placement.
• 🚚 Walmart's extensive store network provides a built-in advantage for faster delivery, with more than 4,000 stores offering same-day delivery.
• 🛴 Investment in automation is not only about speed but also about precision, aiming to deliver undamaged packages exactly when customers want them.
• 🛒 The shift to using stores for e-commerce fulfillment has required substantial investment in distribution centers to ensure a seamless shopping experience.
• 🔄 The transition to automation is changing the nature of retail jobs, with a focus on roles requiring problem-solving skills and creativity.
• 💼 Walmart's workforce is not shrinking; instead, it's evolving, with associates taking on new roles as cell operators and maintenance technicians.

Q & A

What is the primary function of Walmart's Alphabot?

The Alphabot is a robot designed to pick items for online orders at Walmart's market fulfillment centers, which is key to speeding up Walmart's delivery process.

What percentage of orders can be picked by the Alphabot in under 12 minutes?

95% of orders can be picked by the Alphabot in under 12 minutes.

By what year does Walmart plan to have 65% of its stores serviced by automation?

Walmart plans to have 65% of its stores serviced by automation by the year 2025.

What is the purpose of the Market Fulfillment Center (MFC) in Walmart's e-commerce strategy?

The MFC is attached to a Walmart Supercenter and is designed to have a smaller footprint than other fulfillment methods. It holds a large number of popular products and separates the inventory from the goods on the store floor, reducing congestion and ensuring machine-level accuracy in picking items.

How many bots are there in the Alphabot system, and what do they do?

There are about 175 bots in the Alphabot system that move laterally, horizontally, and vertically to retrieve customers' goods.

What is the capacity of the milk crate-size bin that each robot in the Alphabot system can carry?

Each robot can carry a single milk crate-size bin that can hold a variety of items, from minced garlic to 24-packs of soda.

How does the automation in Walmart's fulfillment centers help speed up the picking and packing process?

Automation brings the product to the picker instead of the picker having to walk to the product, which speeds up the picking and packing process and drives accelerated shipping.

What is the advantage of having the fulfillment facility attached to a store for delivery purposes?

Having the fulfillment facility attached to a store allows for faster delivery options, including customer pickup, delivery by a Walmart driver, or drone drop-off, often within hours, because the facility is already close to the customer.

How many stores does Walmart have in the US, and what delivery service do they offer from these locations?

Walmart has more than 4,600 stores across the US, with more than 4,000 of those stores offering same-day delivery directly from the locations.

What is Walmart's strategy for handling the challenges of fulfilling both physical and online shopping from its stores?

Walmart is making substantial investments in its distribution centers and digitizing its supply chain, utilizing AI and ML algorithms to improve forecasting and inventory placement to ensure the right items are available at the right time for both in-store and online customers.

What is Walmart's plan for expanding its Market Fulfillment Centers and Next Generation Fulfillment Centers?

Walmart currently has seven Market Fulfillment Centers and plans to open over 100 more in the next few years. It is also investing in five large Next Generation Fulfillment Centers, three of which have already opened, to complement its existing facilities.

How does Walmart's investment in automation impact the retail job landscape in America?

As Walmart rolls out automation, it changes the nature of warehouse and retail jobs, requiring workers to transition into roles such as cell operators and maintenance technicians, which involve problem-solving skills and creativity.

What is the significance of Walmart's pursuit of undamaged packages delivered exactly when customers want?

The pursuit of delivering perfect orders is part of Walmart's strategy to invest in digitizing its end-to-end supply chain and automation to ensure right-sized packages, curbside recyclable orders, and the precision required for fully accurate orders upon arrival.

How does Walmart's approach to e-commerce differ from Amazon's, and how do they compete on multiple fronts?

While Walmart still has a long way to go in catching up with Amazon on e-commerce, it is a larger company overall, and Amazon has not yet fully figured out the brick-and-mortar store aspect. This means they are competing in interesting ways, both online and offline.