Walmart is America’s largest grocer, and groceries account for 60% of the retail giant’s sales. The company has an innovative plan to increase its grocery efficiency even further. In July, Walmart announced the opening of five new automated distribution centers across the country.
Automated distribution centers
According to CNBC, each distribution center will have an average of 65,000 square feet, including storage for refrigerated and frozen foods. But the real innovation lies in the centers’ software systems. The software is programmed to automate inventory tasks with “increased accuracy.” Dave Guggina, executive vice president of Walmart supply chain, told CNBC that the automated system will save Walmart money. In addition to reducing the need for human labor, the automated system also predicts which items will sell, so they know how much inventory to keep on hand.
Because of the size of the new distribution centers, Walmart expects that more than half of its products will move to the new location by 2026. At least, that’s the company’s goal. Although Walmart has built a test facility in California, automated robot technology still has a long way to go. According to Popular Mechanics, engineers can’t figure out the programming behind carrying a cup of coffee without spilling it.
The need for automation
Walmart has to deliver fresh food to over 4,600 stores every day, so it’s investing heavily in efficiency. This goes beyond just delivering to stores; every year the company sees an increase in its grocery deliveries. In theory, the automated distribution centers will increase the number and variety of items delivered to your door.
According to Food & Wine, it’s hard to say whether the increased efficiency and higher profit margins will translate to customers in the store. While it’s hoped it will lead to lower prices, that’s impossible to predict.
Walmart recently opened a second facility near Dallas, Texas, including a test facility in California. The company plans to open three more in Wellford, South Carolina, Belvidere, Illinois and Pilesgrove, New Jersey. In addition to the new automated facilities, Walmart plans to add automation to four traditional distribution centers. This will change the employment situation for employees. Most new hires will shift from warehouse workers to truck drivers.
Guggina said this will be the case at the new automated distribution centers. He said employees at traditional Walmart distribution centers are “work athletes” because they lift hundreds of boxes an hour and walk miles every day. In these new centers, he said, they will serve as foremen.
