Article

Surviving Amazon's Grocery Disruption by Rethinking the Supply Chain

By Eric Lamphier,
Surviving Amazon's Grocery Disruption by Rethinking the Supply Chain

Led by Amazon’s e-commerce and digital grocery offerings, a wave of retailers is disrupting the grocery industry. As consumers show a greater interest in fresh food, retailers are responding to shifts in how people shop for groceries by offering more transparency and information about food sourcing. Consumers are also growing more accustomed to online delivery and click and collect, as Amazon and others introduce innovative grocery delivery options.

While grocery e-commerce sales currently only equate to between two and four percent of the market, the trend is moving upward. Online grocery sales are projected to be 20 percent of the market in 2025, as both traditional and disruptive grocery retailers (such as Amazon, Walmart, and Target) continue to hone and mature efficient grocery supply chain capabilities.[1]

This disruption has changed the rules. If grocers do not provide the freshest food from farm to store as quickly as possible, and with as many delivery options as possible, consumers will inevitably turn to competitors that meet these needs.

Driving Supply Chain Efficiency by Integrating People, Processes, and Technology

To execute on an e-commerce strategy and get fresh products to shelves faster, grocery retailers need to run a seamless supply chain operation across the DC. People, processes, and technology must all sync to ensure streamlined efficiencies, real-time optimization, and the capability to handle both traditional and e-commerce orders.

People

When moving to e-commerce, many grocery DCs stumble because of the mindset shift required of warehouse workers. Instead of simply moving around pallets of canned goods or cases of soda, workers must process e-commerce orders (including fresh items) differently. Workers may need to pick multiple individual orders into totes in traditional DCs or even pick orders in a DC that’s more purpose-built for e-commerce (such as a dark store)—requiring more of a grocery shopper mindset in the warehouse.

A grocery DC needs to enable workers and streamline labor by:
  • Engaging workers: Incentivizing performance, providing specialized training (such as in picking perishables), and offering easy-to-use technology (such as mobile devices that prescribe workflows and use images to identify fresh items when picking) all help workers stay productive.
  • Integrating man and machine: Leveraging an embedded warehouse execution system (WES) within your warehouse management system (WMS) can help orchestrate all of your automation and optimize its integration with your workers’ tasks.
  • Optimizing labor allocation and utilization: Demand forecasting helps you optimize regular, temporary, and overtime labor, while also allowing you to assess the impact of different personnel placement scenarios through “what if” modeling.

Process

E-commerce challenges traditional grocery DC processes. A WMS must focus on areas that eliminate warehouse inefficiencies and improve processes, such as:
  • Product traceability: Enabling upstream suppliers with shared visibility into important data helps you manage lots, track events, improve inspection, and address production or shipment issues that impact fresh goods as early as possible.
  • Appointment scheduling and yard management: Delays and missed appointments lead to late goods and setbacks in unloading. Even a few hours’ delay can seriously impact the delivery of fresh goods to your customer.
  • DC layout optimization: Optimizing storage locations and allocation capacity through a multi-temperature distribution layout helps you keep goods fresh and ready for picking.
  • Order Streaming: This innovative concept combines wave and waveless picking simultaneously so that you can continue processing grocery store replenishment orders while fulfilling individual e-commerce orders.
  • Transportation management optimization: From adapting to weather conditions to optimizing unloading and loading, a transportation management system (TMS) can leverage real-time data to make sure you anticipate potential disruptions or demand shifts. Additionally, a TMS offers carrier selection across multiple modes, such as parcel, private fleet, and carrier services.

Technology

The technology running your grocery DC operations can sometimes get siloed and separated, especially as multi-channel order volumes increase. This leads to conflict and confusion. Integrating your automation so that it all works together allows you to more easily plan out next moves, optimize order priority, and streamline your fulfillment. The goals are to maximize throughput and speed fresh goods from the warehouse to the consumer. Increasing your efficiency across all channels and automation tools gives you a competitive edge when delivering fresh items and individual orders.

During peak seasons, the right technology also eases the onboarding of temporary workers. Modern grocery DCs are leveraging leading-edge devices with familiar smartphone-like touchscreens that help workers learn and adapt quickly—prescribing workflows and providing assistance, such as images that help workers identify grocery items when picking. This kind of technology helps workers shift from traditional heavy case movement to focus on individual order picking and the unique demands of grocery e-commerce fulfillment. Such devices also help with change management, quality control, and inventory accuracy.

Rethinking Your Grocery Supply Chain for E-commerce

Your grocery DC already contains the right ingredients to meet e-commerce demand. Now, you need to rethink and optimize the way all of your supply chain operation elements—the people, processes, and technology—work together to conquer the new omnichannel reality. Innovative tools, such as an embedded WES or Order Streaming, orchestrate all order fulfillment activities in a high-velocity warehouse. Without these tools, grocers will struggle to stay competitive when they fail to provide the freshest, most diverse product selection as quickly and conveniently as possible. A streamlined, efficient supply chain is essential—and the tools now exist to get there.

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