The Convenience Craze and the Opportunity (or Not) for Automation

By John Gargasz

One of the highlights of GroceryShop 2021 in Las Vegas was Jon Fortt from CNBC interviewing Tony Xu CEO of DoorDash. Jon also hosts the weekly CNBC segment ‘On the other hand,’ where he argues both sides of the same issue, so this blog will take the same approach in reviewing the rapidly changing Convenience or ‘Q’ market and how automation may apply.

Let’s begin by looking at the last-mile delivery market for food and grocery – it earned revenue of approximately $25 billion and is expected to cross $72 billion in 2025, driven by the COVID-19 pandemic and new customer shopping behaviors. Online food retailers and convenience delivery companies that offer speed and variety are experiencing tremendous growth.

The likes of GoPuff, Getir, DoorDash, and others are among the current favorites of the venture capital market with tremendous funding and lofty goals for scale. Many of these players are transitioning from pure delivery companies to actual retailers with physical locations offering convenience SKU assortments ranging from roughly 1,000 to 5,000 items. For example, GoPuff recently acquired BevMo for $350 million in exchange for coast-to-coast business expansion and 161 store locations useful for acquiring new customers and supporting their local, manual micro fulfillment efforts.

Instant Delivery for Grocery
Instant Delivery for Grocery

 

The reality is that these convenience players are scrambling for user adoption, often underwriting orders and deliveries with promotions. There will be many failed ventures along the roadside as the economics of buying customers eventually drains the VC accounts. But there will also likely be a couple of big winners at the end of the day as well.  DoorDash in particular is on a tear. They recently introduced DoubleDash — a new innovation that lets their existing 20 million restaurant customers add items from nearby stores to the original order for that last mile delivery.

Regardless of who emerges, the economics of replenishment and order fulfillment for these convenience operators must improve. They are opening small footprint (about 4,000 square feet) dark stores that are largely replenished and fulfilled manually by 4-5 people per location. There are even stories of employees going to other retailers and buying goods to stock their stores. Ouch!

So how can automation help this sector?

Alert Innovation, a leader in e-grocery fulfillment automation, regularly gets requests to provide its automation capabilities to convenience locations, but robotic automation costs money and if only five employees are fulfilling small basket sizes, with limited assortment at primarily peak hours of the day in small, manual micro fulfillment centers (MFC), it’s hard to make the numbers work.

That said, there is absolutely a place for automation in convenience. The replenishment of multiple convenience outlets from a mid-sized micro fulfillment center within a 30–45-minute radius of the convenience locations is certainly viable and eliminates the replenishment chaos of these small sites.

A mid-sized automated MFC using the Alphabot system by Alert Innovation makes manual fulfillment at the local convenience location much more efficient with intelligent, less than case replenishment eliminating the need for full automation at each small convenience site.

And the Alphabot system offers new technologies that reduce the transport cost and carbon footprint from the automated MFC to the convenience location all the way through to the last mile delivery. So, yes, automation makes sense for the convenience market but not exactly in the manner those companies may be envisioning.

But now let’s look at convenience from the grocer’s perspective.

Convenience and grocery shopping typically serve two different shopping trips. One trip is to get groceries for stock up and fill in. The other trip is driven by impulse and cravings such as candy, beer, or a sandwich at 11pm. Convenience, by definition, demands a premium.  Major cities have been the epicenter of this convenience trip market, proving that shoppers will spend billions for door-to-door deliveries.

As grocery retailers adopt automation technology at the store-level to better-serve their loyal shoppers, they are also installing a capability that makes them a quick-ship convenience outlet at minimal incremental cost, opening a tremendous opportunity for scaling their business with new “convenience” trip shoppers while improving their operational profits on their traditional trip shoppers.

E-grocery automated fulfillment systems like the Alphabot system operate 24×7 with minimal labor. That is their core value proposition. And these systems have peak demand and off-peak demand. For example, shoppers typically are collecting their large orders in the morning, afternoon/early evening during the week, and on weekend mornings. This creates an interesting opportunity for repurposing the automation system to fill convenience orders late at night and early in the morning, which are ‘off peak’ hours for the automation system when the grocers have excess automation capacity to fulfill the convenience demand with very little incremental cost.

And replenishment from distribution centers is already an area where grocery excels, especially when direct store delivery items are incorporated. These set-ups are often called Hub + Spoke models and allow retailers to use their existing inventory to satisfy a great radius of customers.

So there you have it – one huge opportunity for growth from two different perspectives.

 

(source: “Global Last-mile Food and Grocery Delivery Growth Opportunities” Report by Research & Markets: Wikipedia – DoorDash)

Alert Innovation Announces Leadership Transition: John Lert Becomes Executive Chairman, Fritz Morgan Named CEO

BOSTON, MA, December 20, 2021 – Alert Innovation, a leader in grocery automation and micro fulfillment systems, announces today a transition in leadership roles as the company begins to scale deployments of its technology. Founder John Lert will become Executive Chairman and hand the CEO reins to Fritz Morgan, who has been serving as COO.

“I had this transition in mind when I asked Fritz to help me lead Alert,” said Lert. “I recognized during our very first meeting that he has the intellectual capacity, the leadership skills, experience in leading disruptive technology-product companies to scale, and most importantly the alignment with our core values to become my successor in leading the organization.”

Lert added, “Since joining 18 months ago, Fritz has confirmed those expectations, greatly strengthened leadership across all teams and playing an essential role in elevating the performance of the company. At this stage in Alert’s growth, and with the market opportunity in front of us, he is simply the most qualified person to lead this extraordinary company.”

Morgan received a BS in Physics from Clark University and a master’s degree from Carnegie Mellon in Electrical & Computer Engineering with a focus in Robotics. In the 1990’s, he made key contributions both technically and as an executive leader at Color Kinetics, the company that sparked the shift to LEDs that has transformed the $100 billion-dollar global lighting industry, helping to lead that company in scaling globally and going public. Prior to joining Alert Innovation, Morgan served as Executive Vice President/CTO at DEKA Research and Development, where he led a team of 800 engineers developing and commercializing cutting-edge technology projects encompassing a vast array of engineering and scientific disciplines.

“Alert has a tremendous opportunity to transform the retail grocery industry and I am eager to continue partnering with John and the entire team to develop the technology roadmap and organization necessary to scale our business,” said Morgan.

As Executive Chairman, Lert will lead the Board of Directors in the governance of Alert Innovation and devote much of his time to invention and product innovation. Lert will also continue to engage publicly as a visionary thought leader in the transformation of food retailing using automation technology.

Nearly three decades ago, Lert began thinking about a new kind of supermarket that would feature a fully automated packaged-goods market to replace the self-service center store, combined with an optional, checkout-free, self-service fresh market. That vision, which he named Novastore, led him into automated materials-handling technology, and he became an early pioneer in the use of free-roaming mobile robots to automate order-fulfillment. Lert founded Symbotic in 2007 in partnership with Rick Cohen and C&S Wholesale Grocers to develop his invention of a robotic case-picking technology, and he served as its first CEO. Lert went on to found Alert Innovation and, with Co-Founder and co-inventor Bill Fosnight, invented in 2015 a new robotic technology they named Alphabot. In 2016, Alert Innovation partnered with Walmart to bring Alphabot technology to market and has grown under Lert’s leadership to become the 350-person company it is today.
“I couldn’t be prouder of Team Alert, and I feel privileged to continue to work as part of this group,” said Lert. “I look forward to continuing to devote my talents and energy to helping Fritz and the team achieve our vision.”

John Lert and Fritz Morgan
John Lert and Fritz Morgan

About Alert Innovation, Inc:

Alert Innovation® is a thought leader in Retail and Grocery automation, driving innovation that improves lives by transforming how retailers operate and people shop. Alert Innovation is an industry leader in robotic e-grocery fulfillment. The Alphabot® system, designed by the Alert Innovation team is a unique automated fulfillment solution that utilizes patented omnidirectional robots in a temperature-controlled system for fresh, efficient, and high-quality grocery fulfillment. Alert Innovation also designed Novastore™, a store concept utilizing the Alphabot system, delivering a dynamic and efficient shopping experience. For more information about Alert Innovation visit www.alertinnovation.com.

# # #

Media Contact:
RAM Communications
Ron Margulis
ron@nullrampr.com
908.337.0020

Alert Innovation Opens New Gamma Lab For Extensive R&D Testing and Demonstrations

Facility will help drive the future of retail automation

BOSTON, MA Alert Innovation, a leader in grocery automation and micro fulfillment systems, has launched the Gamma Lab, an extension of its robotic R&D facility, tripling the test area and providing a platform for technology advancement and partner solution demonstrations.

The new Gamma Lab facility includes a small-scale and functionally complete configuration of an Alphabot System micro-fulfillment center (MFC) and provides a test space for engineers to examine the system using numerous analytical tools to drive system enhancements. The Gamma Lab’s capabilities extend to cover electrical, thermal, mechanical and software to speed testing and deployment of advancements in alignment with the organization’s development roadmap.

“The new lab provides an expanded platform for Alert Innovation to more rapidly test and demonstrate new technology and continuous improvements that enhance automated e-grocery fulfillment,” said Fritz Morgan, COO at Alert Innovation.

The Gamma Lab is the ideal environment to showcase the Alert Innovation multi-year and future-proof technology roadmap with current and potential clients. In addition, the lab provides a platform to integrate and test partner technologies for fast and seamless assimilation into the Alphabot system.

“We are constantly working alongside leading tech vendors to enhance the Alphabot System with solutions that feature artificial intelligence (AI), last mile delivery, e-commerce software, sustainability and more. The new Gamma Lab helps us advance our vision of automation at the store-level and beyond,” said John Gargasz, Chief Sales and Marketing Officer at Alert Innovation.

For more information about Alert Innovation visit www.alertinnovation.com.

Alert Innovation Gamma Lab

About Alert Innovation, Inc

Alert Innovation® is a thought leader in Retail and Grocery automation, driving innovation that improves lives by transforming how retailers operate and people shop. Alert Innovation is an industry leader in robotic e-grocery fulfillment. The Alphabot® system, designed by the Alert Innovation team is a unique automated fulfillment solution that utilizes patented omni-directional robots in a temperature-controlled system for fresh, efficient, and high-quality grocery fulfillment. Alert Innovation also designed the Novastore™, a store concept utilizing the Alphabot system, delivering a dynamic and efficient shopping experience. www.alertinnovation.com.

# # #

Media Contact:

RAM Communications
Ron Margulis
ron@nullrampr.com
908.337.0020

Alert Innovation Strengthens Its Team with Three New Female Leaders

Boston-based robotics company prepares for a strong growth year  

BOSTON, MA, October 21, 2021 Alert Innovation, a leader in grocery automation and micro fulfillment systems, announces the addition of Peggy Goranson as Vice President of Software Engineering, Amy Higgins as Vice President of People Operations and Cristina Rodrigues as Senior Director of Marketing.

“Our business is growing at lightning speed and we are honored to bring together the best talent in the industry to lead our expansion.” said John Lert, Founder and CEO of Alert Innovation. “With about 100 new hires planned this year, we are creating a powerful work culture that encourages team collaboration, diversity, personal initiative and accountability, and effective communication.”

 

  • Peggy is a transformational engineering leader with a proven track record of delivering solutions to Fortune 500 customers. Her mission is to build a world-leading software development organization that delivers reliable and robust performance for customers.

 

  • Amy is a seasoned expert in change management and scaling successful teams for technology companies worldwide. She is leading the strategy for organizational design and infrastructure, developing valuable cultural programs, and recruiting a first-rate team.

 

  • Cristina is an experienced brand strategist who has fueled growth at Fortune 500 companies and several fast-growing technology startups. At Alert Innovation, she is elevating the brand and driving incremental growth with global marketing strategies.

 

Alert Innovation Leadership

 

These three join an already strong group of women leaders at Alert Innovation including Heather Multhaupt, Vice President of Team Services, leading the implementation of efficient company-wide policies and systems; Stephanie Waite, Director of Systems Engineering, driving the seamless integration of Alert Innovation’s multifaceted product lines; Tracy Foucault, Director of Supply Chain, strategically managing the organization’s supplier relationships globally for continuous business; and Rosa Ciprian, PhD, Director of Electrical Engineering, leading the team of electrical engineers responsible for Alert Innovation’s robotic systems.

Learn more about new career opportunities at www.alertinnovation.com.

About Alert Innovation, Inc

Founded in 2013, Alert Innovation’s mission is to improve people’s lives through innovation, starting with retail, by transforming how people shop and how retailers operate. Alert Innovation has brought to market the Alphabot® Automated Storage and Retrieval System and Automated Each-Picking System and is creating a new kind of automated supermarket called Novastore™. More information is available at http://www.AlertInnovation.com.

Media Contact

RAM Communications
Ron Margulis
ron@rampr.com
908.337.0020

Why Your MFC Needs Three Automated Temperature Zones

By John Hennessy

Over 20 years ago, John Lert, co-founder of Alert Innovation, had a vision of using automation to make supermarkets more profitable and the supermarket shopping experience more enjoyable for customers. Turning that vision into reality has been his life’s work.

If you understand supermarkets, you understand that realizing John’s vision involves solving a suite of complex problems.

One of the primary challenges that Alert Innovation needed to address was that grocery orders contain a mix of products from ambient, refrigerated, and frozen temperature zones. And, unlike a shirt or a book, even some ambient supermarket products are temperature sensitive and can suffer damage from extended exposure to heat or cold.

The problem to solve: how can a micro-fulfillment center (MFC) automation system fulfill orders while maintaining product quality, shelf life, and safety.

Temperature Control Matters

As mentioned, even shelf-stable items require temperature and humidity control to prevent product damage. Heat-activated detergent pods can release if temps get too high. Nutritional gummies can quickly become a singular blob above 90 degrees. And anything with chocolate can lose its shape and appearance at similar temperatures. So any automated order fulfillment system needs to keep both stored items and completed orders in a fully climate-controlled environment.

Refrigerated items without proper temperature control can lose days of shelf life, suffer from quality deterioration, and eventually spoil and become unsafe. The amount of time spent outside the proper temperature range is the culprit. The process of manually picking refrigerated items from a store floor, taking them somewhere for consolidation and staging, and then transporting to a shopper’s car or delivery van requires a lot of time and is full of opportunities for refrigerated product spoilage.

Isn’t it easier to pick frozen manually from the floor?

Frozen items are fairly sturdy, but they are still subject to deterioration in quality resulting from time spent at the wrong temperature such as a picker’s cart or while being stored or staged for pickup as part of a finished order.

A common misperception is that frozen items are easy to pick manually. But according to Dave Crellin, former Head of Online Operations at Sainsbury, “Picking frozen product from a shelf has a raft of additional complexity which makes frozen amongst the slowest of picking areas – the Alert Innovation solution circumvents many of these low-level inconveniences and standardizes the process to stimulate efficiency within this area and overall.”

_ _ _ _ 

And frozen items are a growing segment of the online basket as evidenced by IRI’s research: In 2020, frozen food sales rose 21% in dollars and 13.3% in units, with nearly all categories seeing double-digit sales gains as consumers stocked up amid the COVID-19 pandemic, according to AFFI’s and IRI’s latest report with FMI-The Food Industry Association, “The Power of Frozen 2021,” released in February. The top three frozen categories in terms of dollar sales growth were seafood (+35.3%), poultry (+34.7%), and appetizers (+28.9%).

_ _ _ _ 

Grocery retailers need a temperature-controlled location not only for order picking but also for all the order fulfillment steps. Each phase of the order fulfillment process – picking, storage, consolidation, and dispense – leads to more touches, more labor costs, and more possibilities for product damage or errors.

 

MFC automation with Alphabot
Alphabot by Alert Innovation MFC

Solution

The Alphabot System by Alert Innovation is the only automated fulfillment system that offers three temperature zones for tote storage in a single, integrated system. Ambient, refrigerated, and frozen inventory items along with finished orders are kept in their own temperature zones within the system at all times.

The process is straightforward. Products are first loaded into totes and then placed into storage in the appropriate temperature zone. The totes are then picked from the frozen, refrigerated, or ambient storage zones respectively, transported through picking workstations where ordered items are transferred into order totes, and then returned to their original temperature zone for storage. Completed order totes are also stored in the appropriate temperature zone pending dispense. When a customer or delivery driver shows up, multiple robots retrieve all the required order totes from the various temperature zones and dispensed to associates, drivers, or directly to customers.
28 items ordered. 28 items delivered.

There’s one other benefit gained by managing items from all temperature zones in one automated order picking and dispense system — order accuracy and complete order fulfillment. When orders are picked from the store floor, there is a risk of errors or out of stocks. Retailers never know exactly what will be available and what will be out of stock at the time the order is picked.

An automated order fulfillment system works like an SKU banking account. There is a precise count of the items (SKUs) put into the system, as well as which items have been ordered and in what quantity. Orders placed are tracked against inventory and there is total visibility to what’s been reserved but not yet picked and what’s been picked up, so the balance of each SKU left to sell is always available and accurate.

Is a shopper going to stay loyal if they place a 28-item order but only receive 25 items and two of the 25 items are substitutions? Keeping items from all temperature zones in the automated system delivers accurate e-Grocery orders.

Summary

For the highest product quality, freshness and safety, all e-commerce items should be stored in the proper temperature within an e-grocery automated fulfillment system. The benefits are many:

  • Reduced time outside recommended temperature for product quality, freshness, and safety,
  • Improved e-grocery order accuracy,
  • Fewer touches and labor from order consolidation, resulting in a ~40% improvement in ROI, and
  • Happy, repeat, e-Grocery shoppers.

For more information on the benefits of MFCs with complete temperature control, contact John Hennessy at john.hennessy@nullalertinnovation.com.

Complete Temperature Coverage and End-to-End Automation Give Alert Innovation MFCs a 40% ROI Edge Over Competitors

Several other advantages of the Alphabot system identified, including labor savings and cold chain compliance

BOSTON, MA, September 16, 2021 –  Alert Innovation, the leading supplier of e-grocery automated fulfillment systems, delivers 40% greater ROI over traditional pick-to-order automation systems.  Unlike others, Alert Innovation’s Alphabot system uniquely has three integrated temperature zones – ambient, chilled and frozen – all served by a single fleet of robots. This enables end-to-end automation from order storage to consolidation and dispense delivering labor savings and cold chain compliance.

The combination of a comprehensive three-temperature zone system with order storage, consolidation, and the auto-dispensing of finished orders can generate an incremental $1.8m in annual savings and reduce labor needs by up to 40 full-time employees.

“Our solution offers all of these advantages because it was designed from the start to automate e-grocery fulfillment all the way down to store level,” said John Lert, Founder and CEO of Alert Innovation. “The scope of labor savings is proving to be especially beneficial in today’s tight labor market.”

The fleet of Alphabot robots travel across all three temperature zones for product storage and picking, and for staging finished orders, which dramatically increases system performance and productivity. In contrast, other systems require secondary storage and labor-intensive order staging because they can’t store completed orders in their system. And Alphabot is the only MFC (Micro-Fulfillment Center) system that integrates frozen picking and storage. Other technology platforms pick frozen items manually from the store floor and stage in secondary locations, which adds to labor costs.

“By keeping products in the appropriate temperature zone until delivery to shoppers, we’re able to ensure product freshness, quality, and cold chain compliance,” explains John Hennessy, Sr Director of Sales at Alert Innovation.

To further reduce the labor required to deliver completed orders to shoppers, Alert Innovation developed the auto-dispense capability that features Alphabot robots retrieving order totes from all three temperature zones and delivering directly to shopper’s curbside. By driving customer traffic to the store, the grocer eliminates last-mile delivery costs that can be $10-12 per order. Alphabot also supports bulk order dispense for hub-spoke operations or direct-to-home delivery.

Note: Alert Innovation is exhibiting at Groceryshop 2021 in Las Vegas September 20-21 (booth #516). Learn more at the booth with a unique Oculus Virtual Reality tour of the Alphabot system.

Alert Innovation Alphabot System
Alert Innovation – Alphabot System

 

About Alert Innovation, Inc

Alert Innovation® is a thought leader in retail and grocery automation, driving innovation that improves lives by transforming how retailers operate and people shop. Alert Innovation is an industry leader in robotic e-grocery fulfillment. The Alphabot® system, designed by the Alert Innovation team, is a unique automated fulfillment solution that utilizes patented omnidirectional robots in a temperature-controlled system for fresh, productive, and high-quality grocery fulfillment. Alert Innovation also designed the Novastore™, a store concept utilizing the Alphabot system to deliver a dynamic and efficient shopping experience. www.alertinnovation.com

 

Media Contact:
RAM Communications
Ron Margulis
ron@nullrampr.com
908.337.0020

Alert Innovation Adds Hershey’s Chief Digital Officer to Retail Advisory Council

Collaborating with Leading Grocery, Retail, and Technology Influencers

BOSTON, MA Alert Innovation, a leader in grocery automation and micro fulfillment systems, strengthens its Retail Advisory Council (RAC) with the addition of Doug Straton, Chief Digital Officer at The Hershey Company.

With a successful career growing top global brands such as Unilever, LVMH, TAG Heuer and L’Oréal, Straton adds his experience to the RAC’s vast knowledge of online consumer behaviors, and best practices for omnichannel e-commerce.

“Grocery shoppers have shifted their spending to online channels dramatically over the past 16 months. In response, many of our retail partners are embracing automation,” said Straton. “I’m eager to provide a CPG perspective to the groundbreaking work at Alert Innovation, in particular the Alphabot platform that allows retailers to successfully fulfill orders that include temperature-sensitive products like chocolate through its system.”

The RAC is an alliance of executives and academics with expertise in grocery, retail, consumer behavior and e-commerce, and was established to influence development efforts at Alert Innovation focused on improving omnichannel grocery experiences. In addition to Straton, members include:

  • Peter Fader – Professor of Marketing – The Wharton School, University of PA
  • Chris Haimbach – US Head of Sales, Commercial Strategy & Operations, Consumer Health Care – Bayer
  • Ann Raider – Executive, Global Retail – IRI
  • Peter Larkin – Former President & CEO – National Grocers Association

“We are thrilled to welcome Doug to the RAC, and look forward to his valuable contributions and guidance as we expand our roadmap of automation solutions for grocery retailers,” said John Lert, Founder and CEO of Alert Innovation.

Learn more about the Alphabot system at www.alertinnovation.com.

About Alert Innovation, Inc

Alert Innovation® is a thought leader in Retail and Grocery automation, driving innovation that improves lives by transforming how retailers operate and people shop. Alert Innovation is an industry leader in robotic e-grocery fulfillment. The Alphabot® system, designed by the Alert Innovation team is a unique automated fulfillment solution that utilizes patented omnidirectional robots in a temperature-controlled system for fresh, efficient, and high-quality grocery fulfillment. Alert Innovation also designed the Novastore™, a store concept utilizing the Alphabot system, delivering a dynamic and efficient shopping experience.

www.alertinnovation.com

Media Contact:

RAM Communications
Ron Margulis
ron@rampr.com
908.337.0020

Alert Innovation Launches e-Grocery.com - A Global Resource for Retail & Grocery Automation

New website is a valuable source of information for grocery e-commerce and store automation

BOSTON, MA, June 30, 2021 Alert Innovation, thought leader in grocery automation, launches www.e-grocery.com, an online educational resource for the global e-commerce and store automation community.

As grocery and retail brands begin to improve their bottom line with new technologies, robotics, and warehouse automation, the entire supply chain industry is changing rapidly. Supply chain operations are evolving into more efficient engines that integrate new computerized tools and employ new micro-fullfimment centers on-site and/or with ancillary fulfillment centers.

With so many changes, employees and business partners are forced to learn an entirely new vocabulary related to the updated value chain. e-Grocery.com is an online resource, updated in real-time, developed to educate the community and accommodate the fast-growing demand for information on new topics related to e-commerce in the grocery business.

Alert Innovation is very excited to launch this new resource and guide for our business community,” said John Lert, Founder and CEO of Alert Innovation. “Our goal for the e-grocery.com site is to broaden the understanding of grocery e-commerce and store automation for improved conversations that continue to propel the industry forward.”

e-Grocery.com features a comprehensive vocabulary list of terms, phrases and acronyms that cover numerous topics in global grocery, retail and supply chain automation. The site uses a unique balance of multi-media including imagery, animations and videos to educate audiences on various terms and processes. Future plans include more resources such as industry white papers, best practice guides, and trend-spotting links for the industry.

The e-grocery.com site is continuously being updated and welcomes the addition of new terms through an online form. For more information, visit www.e-grocery.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

About Alert Innovation, Inc

Founded in 2013, Alert Innovation’s mission is to improve people’s lives through innovation, starting with retail, by transforming how people shop and how retailers operate. Alert Innovation has brought to market the Alphabot® Automated Storage and Retrieval System and Automated Each-Picking System and is creating a new kind of automated supermarket called Novastore™. More information is available at http://www.AlertInnovation.com.

Media Contact:

RAM Communications
Ron Margulis
ron@rampr.com
908.337.0020

Is Your Micro Fulfillment Center Working for You?

If you’re operating a Micro Fulfillment Center (MFC), you probably set it up in reaction to several unexpected changes. Your ecommerce order volume was exploding due to COVID. Your labor costs to manually pick orders were hurting your margins. You had to do something to control your order fulfillment costs.

The good news is that you did something. You replaced manual picking with automation. That change showed you that not only can ecommerce order fulfillment be profitable, you can also provide a much better service to customers when you have full control and visibility of inventory in your MFC.

Another bit of good news is that you are a leader. You are among the few who have firsthand experience operating an MFC. And as things have settled down, you can now use the time and experience you’ve gained to evaluate where you and your MFC stand. Is it doing all it can? Is it configured correctly? Is it being used optimally? Are you missing anything that can add value?

Defining an MFC

MFCs popped up quickly leading to a variety of definitions. For the purposes of this discussion, we will define an MFC as an automated system for grocery ecommerce order picking that is co-located at a supermarket. The MFC handles item storage, order picking and order dispense for a large percentage of items in an ecommerce order. Certain items are still picked from the floor. Some MFCs, such as the Alphabot® system by Alert Innovation, also handle completed order storage and automated order dispense to shoppers, which deliver additional labor savings.

Equipped with this definition, we’ll help you evaluate how to make sure you are getting the most from your MFC.

eGrocery Micro Fulfillment Center

Did you Get the Size Right?

Any time you do something new, there’s a bit of guesswork. Add in the ecommerce order growth projections and trend disruption caused by COVID and you were basically flying blind when you sized your MFC. Thus, it’s possible you undersized your MFC.

The first challenge of sizing an MFC is determining the number of SKUs it can hold. Not every MFC is easily expandable, but with some systems you can increase item storage capacity independently of throughput, and vice-versa.

When sizing our Alphabot system, we encourage as much storage as possible in the initial design. This expands the assortment you can offer your shoppers and storage is cheapest to add at the initial build.

The other challenge with MFC system sizing is how many orders per day you can manage. You need to consider how fast you can get product into the system, how many items per hour you can pick both on average and at peak times and how fast you can get completed orders ready for shopper pickup or delivery.

With our Alphabot system you can efficiently increase orders per day from your MFC by adding robots to align with increasing demand. You may also be able to add order picking workstations or an automated picking arm.

Is Your MFC Reliable?

If your MFC requires frequent maintenance downtime or experiences failures that prevent order fulfillment, you’ll upset shoppers and won’t get the return you expected. To increase reliability of any system, the reduction in parts that need maintenance or can fail is paramount. This means eliminating lifts, conveyors, gears and other moving parts. Whatever the engineers can do to remove the risk of a single point of failure or the need for maintenance improves MFC reliability, lowers your cost of ownership and lets you serve your shoppers quickly and reliably.

Our Alphabot system was designed from the ground up with no moving parts in the structure to reduce maintenance and failure points. If there is an Alphabot failure, only that Alphabot and that specific location are affected. The rest of the Alphabot system will continue to operate.

As a reference, your MFC uptime should be over 99.5% with no major failures and a maintenance schedule that shouldn’t exceed 6 hours a month. If your mileage varies a lot from these benchmarks, you should think about MFC project 2.0.

Is Your MFC Achieving Maximum Labor Savings?

An MFC should cut your order-picking labor cost by 80% or more compared to manual picking. We’ve calculated millions of dollars in labor savings across a year at the store level. These savings are based on 80-100 hires that don’t need to be made when an MFC replaces manual order picking.

Our Alphabot system delivers additional savings from storing finished orders and automating order delivery to shoppers. These capabilities combine to improve labor savings by more than 40% beyond a standard automated picking system.

Does Your MFC Eliminate Order Delivery Costs?

Last mile costs are an ecommerce profit killer. Target estimates they save 90% when a shopper picks up an order at the store. Average last mile delivery costs are estimated at around $10 per order.

You can eliminate last mile delivery costs through marketing programs that encourage at store pickup. You can further reduce delivery costs and time through automated order dispensing, which, as offered by our Alphabot system, removes the labor of associates consolidating and delivering orders to shoppers.

Is Your MFC Causing Warehouse Congestion?

Most MFCs hold completed orders outside the system. This approach requires additional storage locations to stage those orders. Since most orders also contain frozen and refrigerated items, secondary refrigeration units is needed.

The added storage and refrigeration equipment, combined with order consolidation, leads to warehouse congestion. And failing to keep products in their proper temperature range while picking, staging and transferring will impact product quality and shelf life.

The Alphabot system uniquely supports three temperature zones including frozen. Items and completed orders are stored in the system in their appropriate temperature zone until ready for customer pickup or delivery to home. This approach maintains maximum freshness, food safety and customer satisfaction. The Alphabot system also automates the delivery of completed orders to shoppers. By adding completed order storage and automated order dispense to the system, warehouse congestion is eliminated.

Is Your MFC delighting Your Shoppers?

Two of the biggest shopper complaints of manual ecommerce order picking (aside from picking carts clogging store aisles) are out of stocks and substitutions. It’s common for as little as 65% of a shopper’s order to be available from in store inventory through manual picking. Since an MFC is a closed system, both out of stocks and substitutions can be eliminated through near-perfect inventory visibility.

If your MFC is still having out of stocks and requiring substitutions, you need to review your methodology for determining the assortment that gets loaded into the system and how you determine and communicate available inventory to your shoppers.

Is Your MFC Generating All the New Sales it Can?

When an MFC is first installed, the focus is on labor savings. But MFCs can fulfill eight to ten times as many ecommerce orders as manual pickers, offering you the opportunity to capture new ecommerce business.

Like the stores they support, the more orders processed by your MFC, the better the ROI. Make sure you are using your efficient MFC to increase ecommerce sales and market share, not to just satisfy existing ecommerce order demand.

Our Alphabot system offers the ability to add Alphabot robots to increase order throughput. This is an economical way to capture more ecommerce sales from an existing MFC.

Improve the Value Your MFC Delivers

An MFC is a first step in an automation journey. As defined, it handles product storage, order picking and order dispensing for pickup or delivery. It can also automate order dispensing, which rewards you with significant additional labor savings, in some cases 20 percent or more.

What about a better process to break down cases to place items into your MFC? Have you considered how much labor you can save by automating inventory replenishment?

Are you getting full order picking volume from your MFC? For example, could you benefit from picking overnight but have trouble staffing? An automated picking arm might be a valuable upgrade.

Is Your MFC Future-proof?

As we’ve learned with the unexpected explosion of grocery ecommerce, you can’t predict the future. But you can select an MFC that is designed to be future-proof by design.

Your MFC should be able to expand capacity, increase order throughput and add new automation elements easily and economically as technologies evolve. You can’t anticipate what will change. You can however select an MFC that’s designed for change.

Summary

As MFCs and their supporting automation capabilities continue to expand, keep an eye on your labor costs and where you have delays today. There may be ways to get even more value from your MFC.

The combination of a future-proof MFC and your store locations gives you the tools you need to be a winner in this new game.

Robots and the Human Condition: Labor versus Robots, Who’s the Winner?

The COVID-19 pandemic has been a trying time for everyone and we can all agree a lesson learned is that humans crave in-person social interaction. We have also found a desire to get back to basics – games with the family, getting back to nature, walking the dog. Things that are fundamental needs from our 3 billion+ year evolution.

At first glance, you may say that automation, robots, and AI are further distancing humans from each other and our basic needs, but the data tell a different story.

Jobs and e-Grocery

In 2021, Amazon added 500,000 jobs, Walmart added 170,000 personal shoppers to their workforce and Instacart added 350,000 shoppers.

Job growth from ecommerce, specifically online grocery ordering and delivery, has been extraordinary by any measure. Experts can debate the sustainability of post-COVID online grocery demand (see Fig. 1), but the trend line has been set, and it is here to stay. According to a Brick Meets Click study, 69.3 million U.S. households placed one or more online orders in March 2021 alone.

Figure 1, Source: Mercatus

Automating grocery fulfillment increases grocery store revenue and margins, improves order accuracy and increases speed of delivery. The improved profits are a result of maximizing the efficiency and productivity of the existing workforce using automation. This increased employee efficiency creates a slower rate of increase in jobs over time but that rate still continues to increase as the sector expands.  Prior to barcode scanners, for instance, warehouse and retail employees spent hours and days counting inventory by hand with a great margin of error. Industry automation and revolutionary technology made the process more efficient and accurate, and enabled employees to spend more time engaging shoppers.

As online grocery continues to expand, the total number of workers needed will continue to rise. It’s true that other sectors may experience job losses, but grocers will generate more same store revenue, and let’s not forget that human to human interaction is still going to be critical to their success. If traditional grocers fail to adopt automation technology, Amazon will make them extinct. A review of the general merchandise sector over the past decades proves that.

Labor Shortages

The COVID economy has created a huge chasm between the haves and the have nots. But as the pandemic winds down, it is clear there are more jobs than workers in many sectors.

Figure 2, Source: WSJ 4/17/2021

Economists surveyed by The Wall Street Journal project U.S. gross domestic product—the value of all goods and services produced—will grow 6.4% this year, measured from the fourth quarter of last year to the same period of this year. That would lift output to nearly 4% above its pre-pandemic level measured in the fourth quarter of 2019 (see fig. 2).

Meanwhile, economists expect employers to add 7.1 million jobs in the 12 months ending in December 2021, a gain of 5%.

The economy grew at a 4.1% rate in the fourth quarter of 2020, and employment demand is on the rise.   Many of the positions that automation replaces are the most challenging to fill and have high turnover.    The costs of constantly recruiting training and then losing employees is a heavy burden on retailers.  While the average employee turnover for all U.S. industries is around 19 percent, the rate in the retail industry is just above 60 percent, according to the National Retail Federation.

Looking past the current economic cycle and pending labor shortages, there is an even more pressing macro trend. There has long been a concern that human population growth would outstrip the capacity of the planet, but we now face population decline.

Wikipedia: 4/16/2021 

Up until the beginning of the industrial revolution, global population grew very slowly. After about 1800 the growth rate accelerated to a peak of 2.1% annually in 1968; but since then, due to the world-wide collapse of the total fertility rate, it has declined to 1.1% today (2020).[2] Long-term projections predict that the growth rate of the human population of this planet will continue to decline, and that by the end of the 21st Century, will reach zero.[2]

Examples of this emerging trend are Japan, whose population is currently (2015–2020) declining at the rate of 0.2% per year,[2] and China, whose population could start declining in 2027 or sooner.[3] By 2050, Europe’s population is projected to be declining at the rate of 0.3% per year.[2]

Possible consequences of long-term national population decline can be net positive or negative. If a country can increase its workforce productivity faster than its population is declining, the results, both in terms of its economy, the quality-of-life of its citizens, and the environment, can be net positive. If it cannot increase workforce productivity faster than its population’s decline, the results can be mostly net negative.

Automation presents an opportunity to increase the productivity of each worker and raise the standard of living while offsetting current and impending labor shortages.

Quality of Work and Career Development

Alert’s mission statement starts out, ‘Our mission is to improve lives through innovation….’ Alert automates e-grocery fulfillment and other e-commerce verticals by designing robotic systems to perform tasks normally performed by humans. For grocery customers, it’s simple to see that we are improving lives by reducing the cost of e-grocery fulfillment and getting those orders to you faster and more accurately.

When meetings end early, the meeting organizer often says, ‘I’m giving you time back.’  Automating the grocery shopping experience does just that at scale. The average shopper in the U.S. spends 53 hours a year buying groceries, not including transportation time. And about 30% of the population are active grocery shoppers according to FMI data. So, if everyone shifted to e-grocery shopping in the U.S., we would be giving back 5.25 BILLION HOURS per year. Over the course of a lifetime, each person would get back 3,100 hours which is almost two years of work, play, family time or education!

But would a retail grocery worker agree that automation in the form of Alphabot is improving their lives?

There’s no question that I have achieved a privileged position in the workforce, but I have also landscaped, washed dishes, and maintained heavy equipment. I know both the rewards and the demands of physical work; it can wear you out. I was recently chatting with a worker, a retail grocery veteran who is using the Alphabot platform and asked what she thought of the system, she responded, ‘this is the best job I have had in my 14 years!’

Staffers working with robotic systems are affectionately called bot wranglers. The implication is that the robots are working for you, not the other way around. This is Alert’s goal. Robots increase productivity, eliminate repetitive tasks, and make work better. Retailing often has the perception of a dead-end job. While it is true that retail tends to be an entry level job into the workforce, most retailers provide education, training, and career development.Alert Innovation Academy  Alert developed the Alert Innovation Academy to train existing retail employees to work with the Alphabot system. Alert Innovation Academy has a career development trajectory that graduates workers from operators to robotics tech 1, tech 2 and even systems operation manager. Associates can start stocking shelves and become a robotics expert!

Beyond the retail grocery worker, third party technical support and service companies are also trained via the Alert Innovation Academy to expertly maintain the Alphabot platform. This is just one part of a whole new ecosystem that automation drives – manufacturing, engineering, quality, service and more. Alert strives to turbocharge this ecosystem and corresponding job growth in the U.S.

And what happens to the grocery experience?

The immediate impact of automation improves the shopper experience on many levels – aisle congestion from gig shoppers goes away, order accuracy goes up and deliveries are faster. Looking further down the road, there is a tremendous opportunity for grocers to redeploy employees in the store so they can focus on experiential shopping. This is a concept at Alert called Novastore. Human interaction with the butcher, the baker, the team in produce, in store cafes and cooking demos. It is back to meeting basic human needs of shoppers and real workers engaging in real interactions in person.

So, are robots good?

If you are familiar with Peter Diamandis’ book ‘Abundance’ or are a student of psychology, you will appreciate that we humans tend to look at things with a half glass empty perspective. The fear of potential loss is much greater than our appreciation of potential gain.

However, historical data tells us that things keep getting better. If you look at the following charts, we are working almost half the hours today as in 1870 and wages have increased over 20 fold and poverty is down 80%.

So are robots good? They are the continued progression of electricity replacing candlelight, and cars replacing horses. They deliver more productivity, higher quality work and an increased standard of living, giving us back time to engage with customers and get back to basics of building a better future together with few downsides.