Much has been made about the spiking e-commerce demand since the onset of the pandemic, and 91 percent of retailers reported they felt prepared to manage the surge in holiday orders, according to a survey from XPO Logistics. At the same time, 57 percent said they planned to offer sales earlier than in previous seasons in yet another acknowledgment that they needed to find alternative ways to manage the online rush.
These retailers certainly have a lot on the line, as 85 percent of consumers believe that their online holiday purchases will arrive on time. In fact, according to Rick Faulk, CEO of Locus Robotics, 95 percent of industrial buildings in the U.S. still remain totally unautomated, leaving a potential gap between how quickly the fulfillment center is operating and how fast it can actually turn goods around for shoppers.
The move to more automated processes such as robotics comes at a time when despite feeling prepared to handle an increase in orders after months of record e-commerce growth, worries continue to persist across many businesses. In the XPO Logistics survey, retailer respondents shared that they had practical concerns about managing record volumes during the pandemic, citing inventory levels and technology among the factors most likely to come under pressure.
“The reality is, the growth in online ordering has put significant strategic and operational challenges on that model,” Faulk told Sourcing Journal. “Pressures to increase productivity, pressures to deal with the high turnover, and these are operations that can be measured in double digits a month. There’s the Amazon Effect. If you ordered something today, you want it tomorrow.”
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Faulk, whose Locus business offers automated warehouse robots equipped with tablets and designed to pick and pack any type of box, bin or container, also noted that these businesses carry many more SKUs than they did as little as one year again due to the online growth, and they’re dealing with steeper seasonal peaks.
As e-commerce orders continue to pick up, with Faulk saying that Locus clients in some cases are selling 4 times online what they sold last year, it appears that these sellers are very willing to go the third-party route to assist them on the back end. Locus alone has almost crossed the mark of fulfilling 250 million units for its global partners, which include DHL, Geodis, Boots UK and third-party logistics provider Quiet 3PF, which partners with apparel brands like Outdoor Voices and Mack Weldon.
According to the XPO Logistics survey, 62 percent of retailers have added or plan to add outsourced supply chain support from third-party logistics and transportation providers, while 60 percent have added or plan to add warehousing support, either in-house or through third-party providers.
“For more than seven months, we’ve been steadfast in supporting our customers’ supply chains during Covid-19, while maintaining the utmost safety for our workers,” said Malcolm Wilson, CEO of XPO Logistics Europe, in a statement. “Now we’re seeing an unprecedented level of new interest from e-commerce and omnichannel retailers as they turn to outsourced logistics. Our technology and scale are immense advantages for these customers in managing the consumer experience.”
In many cases, outsourcing makes sense, especially for retailers that might not want to invest in a full in-house service that doesn’t generate significant ROI aside from the holiday season. In the case of Locus Robotics, the company offers “seasonal bots” to its existing accounts, so that retailers can be more flexible or scalable with their present labor force. With this program, retailers can have the seasonal bots air shipped to the warehouses, where they can be used for 60 days before being shipped back to Locus.
“We allow them to scale up very quickly, where hiring labor is very difficult to do,” Faulk said. “All these buildings are competing for the same exact labor. That labor pool is not expanding, it really is shrinking. With the economy growing, a lot of the folks that were working in these buildings could get attracted to working for Instacart or Uber, and they’re all drawn from the same exact labor pools.”
With so many retailers looking to either bring in outsourced supply chain or warehouse support, the need for solutions that integrate with each other is pivotal to smoothening out the automation process.
“We always integrate with a partner’s warehouse management system, and we’re also looking at how we may integrate with other automated solutions they may have on site like automated box-making machines and that sort of thing,” Faulk said. “We’re integrating and operating with other robotics businesses as well.”
The company recently introduced a replenishment function to its robotics fleet, in what Faulk described as the “reverse of the picking function,” in that the robotics now bring items onto the floor to a specifically designated spot, or they carry in items from a truck.