Inbound Logistics | June 2021

chain at DHL. “During the pandemic, they needed to add more resources at the store level to pick orders and bring them to the customers. They had to acquire the labor for those activities during the pandemic.” But managing e-commerce grocery deliveries isn’t only about having the optimal number of employees. Managers are finding ways to maximize efficiency, regardless of headcount. One is utilizing the right order fulfillment strategy. “The most rudimentary option is leveraging stores for fulfillment,” says Jeremy Neren, CEO of GrocerKey, a provider of e-commerce grocery technology and in-store fulfillment solutions. “Grocery retailers can design a pick-and-pack strategy, in which an employee traverses the aisles in the most efficient manner possible. They can also break the store down into zones, and reduce footsteps that way. “They can even move fulfillment out of the store entirely, and into a “dark store” or a room with dedicated inventory,” he adds. “That strategy is not disruptive to the consumer and it’s wage optimized for fulfillment.” This strategy can help to reduce costs, but grocers are still limited by a worker’s efficiency. Typically, a worker can pick only 60 orders per hour, according to data from fulfillment solutions provider 6 River Systems.

Ramping up e-commerce fulfillment also meant accommodating cohorts of consumers who did not engage in online shopping in the past. In its Beyond the Cart: A Year of Essential Insights report, Instacart notes a 9% rise in senior citizens who utilized its services between the first and fourth quarters of 2020. “More people who weren’t previously buying online are entering this space,” says Sodero. “The challenge is serving more people with different tastes and preferences, and with different delivery requirements.” It can be a blow to the bottom line if grocery retailers aren’t careful. “Depending on their strategy, estimates are that grocers can lose anywhere from $5 to $15 per order, based on order size,” says Mario D’Cruz, senior director of strategic planning for Honeywell Intelligrated, a material handling automation and software engineering company based in Mason, Ohio. The uptick in online ordering has forced grocers to grow their payrolls, but maintaining an adequate labor supply since the onset of COVID has not been easy. Grocery retailers added 500,000 new employees from 2019 to 2020, according to a Food Industry Association report titled Receipts from the Pandemic . If food retailers were able to hire for all of their open positions, they would add another 100,000 workers to the fold. “What grocery managers are wrestling with most is scaling up labor,” says Michael Keck, senior director of supply

software and services supplier. “With microfulfillment, about 6,000 to 7,000 items move through at such a rate that in three days a grocery retailer can turn inventory over 100%.” To achieve these speeds, microfulfillment centers utilize automation. In many centers, shuttles run up and down aisles to retrieve goods. From there, a conveyor brings items to warehouse workers, who then sort them into individual orders. Some shuttles have the capability to scale shelves. The goal of automation is to reduce a worker’s movement through a facility. “Automation brings the items to the pickers, instead of having pickers get products from the shelves,” says Inbody. Grocery retailer Kroger has partnered with Drone Express to deliver groceries to customers by drones flown by certified drone pilots under FAA approval.

OVERCOMING THE LAST MILE Another source of stress on

e-commerce grocery delivery is the last mile. Notoriously expensive and unwieldy, the journey from a warehouse to a customer’s doorstep has caused headaches for retailers for years. And during the pandemic, when many consumers couldn’t venture into a grocery store, final-mile strategies had to keep pace with e-commerce orders. Problems like complex routes and high costs have only accelerated.“On top of the usual challenges, the newest last- mile challenge is keeping up with pace and volume,” Baker says. To meet these challenges, some retailers turn to third-party delivery services. Companies such as InstaCart, Shipt, or UberEats can take some of the pressure off grocers to operate their own fleets in-house. “Third-party delivery services are able to scale much quicker because they use their driver communities’ assets,”


To maximize productivity even more, some grocery retailers are establishing microfulfillment centers. These mini warehouses tend to be located close to consumers and house popular items that turn over quickly. At 10,000 or 15,000 square feet, they may be smaller than your average fulfillment center, but the velocity gains are enormous. “If you have 10 people collecting groceries on the floor today, microfulfillment can bring their rate up to 75 orders per hour, which reduces the cost of the basket,” explains Matt Inbody, chief disruptor of micro enterprises at Dematic, a materials handling systems,

Third-party delivery services such as Shipt take some pressure off grocery fulfillment challenges by handling shopping and delivery to customers.

32 Inbound Logistics • June 2021

Powered by