But out of adversity comes innovation, and some business leaders have been able to pivot to survive, supported by the flexibility and efficiency of supply chain automation. As vaccines are approved and an end to the pandemic comes into sight, the lessons learnt certainly should not be forgotten as they will shape the future of business for years to come.
Specifically, within the grocery industry, adaptation has had to take place at lightning speed to keep a nation fed during lockdown. The industry was able to meet unprecedented demand by pivoting their offering to provide more e-commerce delivery slots than ever before, thanks in part to automation solutions which made such a shift possible.
Reckoning with Retail: Adjusting to Meet New Demands
For retailers who were committed to bricks and mortar, the lockdowns were especially difficult. But even for companies with business models built around online sales, there are still challenges. In retail, the surge in online shopping has driven the industry into a race to the doorstep, where rapid delivery is the most significant factor in expanding sales volume.
After a summer of disruptions, this year’s holiday season was unlike any other before it with celebrations altered to accommodate the pandemic.
Black Friday certainly looked different. With social distancing requirements limiting the traditional flooding of stores by consumers, Cyber Monday was much more cyber than usual.
The big challenge came in fulfilment. Adapting to and coping with enormous spikes in online purchases required efficient supply chains capable of managing huge volumes of orders, as well as even greater rates of returns.
Traditionally retailers have turned to third-party services and adding staff in fulfilment centres to address peak demand, but this year with social distancing still in force this simply was not practical. Automation is proving itself to be crucial in providing the flexibility needed to respond. Micro-fulfilment solutions, for example, enable retailers to meet the speed at which consumers placed online orders and maintain the best possible experience. Likewise, Automated Guided Vehicles (AGVs) allow retailers to process orders with reduced manual intervention, protecting workplace safety and minimising human-to-human interaction in the warehouse while also achieving significant improvements in shipping speed and accuracy.
Feeding a Nation in Crisis: Supporting the Grocery Industry Through Its Biggest Challenge to Date
A key shift took place within the grocery industry as millions of people sought to buy their essentials online to avoid venturing out to supermarkets, many out of the necessity to shelter in place. From February to March 2020, grocery delivery apps saw a 218% surge in downloads (Apptopia) and by the end of April 2020, the e-commerce share was 12.4% of the total grocery market. (Kantar)
The industry did not disappoint, altering their outputs to meet the new demand for contactless grocery deliveries. For example, in March national chain Tesco increased its online delivery slots to 1.5 million, up on the previous capacity of 600,000. In addition, supermarkets have kept shelves stocked when mass stockpiling caused unprecedented demand.
As the COVID-19 pandemic began, grocery companies hired thousands of people to address the peaks as demand spiked, but quickly found that this wasn’t enough to manage the surge in orders nor was it practical given the specific challenges such as the need to limit social interaction in distribution centres and the necessity to deep-clean facilities between shifts. Again, automation proved to be the solution, presenting ways to circumvent to the social distancing warehouse challenge through robotics and warehouse design.
Dematic’s recent contract win with Reitan Distribution in Denmark is an excellent example of the potential of grocery automation. Reitan Distribution supplies groceries to more than 900 stores throughout Denmark, including more than 340 of the chain's own REMA 1000 stores and convenience stores including 7-Elevens. Approximately 130,000 cases will be picked, packed and distributed every day from the new system with robotic systems handling a significant proportion of daily operations.
Not only does automation serve an important function in keeping workers safe, but it can also greatly increase warehouse capacity when it is needed most. For example, the Dematic Micro-Fulfilment solution, provides compact fast and flexible order processing using an engine designed to add capacity and flexibility to the supply chain, enabling retailers to fulfil online orders from existing retail store space.
Expecting the Unexpected: How We’re Preparing Our Customers for Unprecedented Times
The COVID-19 pandemic may be an unprecedented challenge, but it certainly wouldn’t be wise to consider it as a one-off disruption to grocery supply chains. Online product fulfilment was already considered fundamental to the future of grocery, but now its importance has grown with the flexibility it provides. Grocers need to be able to handle dramatic fluctuations in demand at a moment’s notice.
Warehouse Management Software (WMS) is one way to stay ahead. Sophisticated WMS systems such as those provided by Dematic can bring the entire intralogistics supply chain — fulfilment, operations, maintenance and analytics — into one comprehensive ecosystem, helping to quickly and effectively respond to consumer demand.
This was one of the reasons why Dematic recently acquired Digital Applications International Limited (DAI), a UK-based software company specialised in logistics automation solutions — the software equips retailers with the data and insights they need to forecast changes in the market and adapt to shifting demand.
Whilst the past year has been one of the most challenging to date for the grocery industry, from adversity grows innovation. Already we have seen the emergence of creative solutions to solve complex problems, a true testament to the collaboration between technology providers and grocers themselves. This creativity will need to continue into 2021 as the landscape continues to adapt to the COVID-19 pandemic and eventually recover from it. Looking to the future Dematic will continue to stay on the cutting edge of logistics technology, drawing on its 200 years of experience to support its customers, whatever this new year may bring.
Andy Blandford, Senior Vice President and Managing Director of Northern Europe, Dematic
2020 was the year no one expected. The world changed significantly for almost every business in every sector this year, and our job as an intralogistics innovator has been to help guide and support our clients as they navigated the storm. The pandemic has been a threat for many businesses, with lockdowns creating economic uncertainty and preventing consumers from buying in-person.