Inside Logistics

Fast food

Walmart Canada opts for micro-fulfillment to speed up its e-commerce


June 16, 2021
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Just a couple years ago micro-fulfillment was the flavour of the month. Every major integrator had a “solution” on display at the big shows like ProMat and Modex.

Dematic’s micro-fulfillment shuttle system directs totes to the picker who selects items for orders.

But like so many other solutions, it was not immediately clear that there was a real problem for it to solve. Sure, e-commerce was growing, and online grocery was becoming more popular. But by and large, consumers remained devoted to selecting their own produce and walking the aisles piloting a cart.

Enter Covid-19, and suddenly the rules changed. Now everybody who can is ordering online, and it’s a struggle for retailers to keep up. Fulfillment technology orders are soaring as grocers work to stay ahead of demand, and their competition.

Walmart Canada was ahead of the trend. In 2019 it started looking at options for in-store fulfillment of online orders. When the pandemic hit, the project accelerated, and the grocery giant settled on an off-the-shelf automated micro-fulfillment system from Dematic.

“The need for something to be in place quickly became ever more important, so we didn’t have the luxury of trying to develop something over years,” said Christoph Buchmann, account manager at Dematic Canada. “It really had to be something that would be operational very soon.”

Scarborough pilot

Walmart is now in the process of installing a pilot 22,000-square-foot micro-fulfillment unit at its Scarborough West Supercentre in Toronto. The unit will be retrofitted into the existing store, and will have five automated kiosks to dispense orders directly to customers waiting in their cars. It is expected to be ready to fulfill its first orders later this year.

Designed to accommodate 20,000 SKUs, the Dematic unit will hold ambient and chilled items. It will be used as one piece of a three-prong picking strategy for orders, Buchmann said. When e-commerce orders arrive, they will be picked from a combination of the automated unit, the store floor and a fast-pick area for promotional items.

“The automation will be a goods-to-person station, picking the items that are in the micro shuttle,” Buchmann said. “At the same time, we’ll have someone who’s instructed to pick from the promotional or fast-pick area – that could be Pepsi or toilet paper or what’s on sale – and then there might be some items coming out of the store.”

The software will guide everything to be consolidated and then buffered. While the fulfillment can come from different areas, it is all managed in the automated system. The software then has the ability to release the complete order to the kiosk when the customer arrives.

Buchmann noted that although customers are required to book a window for pick-up, life happens, and they may not show up as expected. The system has the flexibility to release orders on demand as the customer arrives and scans their order confirmation code at the outdoor kiosk.

The unit Dematic is supplying to Walmart is shorter than the normal 18-foot minimum height.

Automatic for the people

The system has been spec’d to fulfill 1,000 orders a day. “It allows us to fulfill at speed,” said Olivia Perdana, Walmart Canada’s director of omni-store of the future. “So, when compared to the more manual days of fulfillment, we believe the automation will allow us to significantly increase how quickly we can fulfill those customers’ orders. That will result in not only more efficient operation, but also a better customer proposition. We believe that by locating it in a store, we’re able to be close to our core urban customer in the downtown Toronto area.”

Smooth sailing

While the Dematic unit is an off-the-shelf product, this one has been scaled down to meet the needs of the existing Walmart store in Scarborough. Buchmann explained that the typical micro-fulfillment unit stands 18 to 34 feet tall, but this one is less than 18 feet tall.

The build has gone smoothly so far, he said, in spite of the challenges posed by construction during the pandemic. “Thankfully we have quite a large service and project execution organization located in Canada, so we didn’t experience any delays or challenges,” he said.

The engineering has been iterative, however. “You might have an idea, and trying to solve the problems related to that idea, you can’t necessarily anticipate the consequences that might come out of some of these decisions,” Buchmann explained. “As we were hit with different challenges, we really turn them into opportunity, saying ‘okay, what can we learn from this, how can we leverage this, and how can we benefit?’”

In designing a unit to handle 20,000 SKUs, the details of handling some individual items get overlooked, he said. There are products that can be handled in a chilled environment even though they don’t need it, but there are others that cannot be stored chilled.

Buchmann recounted how they realized that storing olive oil in the cold for too long can change its appearance, making it look unappetizing. “It’s the macro versus the micro picture that was one of the challenges of understanding the big picture against what we’re trying to do, but then trying to find the examples that could maybe challenge or break that assumption.”

All in on automation

While Walmart isn’t alone in adopting new automated fulfillment strategies, it is committed to building its capabilities. The micro-fulfillment pilot is just part of a $3.5 billion investment in improving its e-commerce and store facilities to meet changing consumer demand.

“Innovation is not a department, it’s a mindset and one everyone at Walmart Canada takes very seriously because that’s what our customers want,” said Sam Wankowski, the company’s chief operations officer. “We are a business that is focused on innovation so we can stay at the forefront.”

Buchmann points out that 80 percent of grocery chains in North America are pursuing a micro-fulfillment automation strategy. “I think there’s a very high level of confidence that this is the right strategy for grocery supply chain in general, going micro-fulfillment. Obviously it’s innovative, it’s new, and you learn, and it might morph slightly in the future, but I think in general that there’s a high level of confidence that this is what the industry wants to do.”