July 20, 2024

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Walmart to open five automated distribution centers

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Automated distribution centers for Walmart grocery business.

Courtesy: Walmart

Walmart said Wednesday that it will open five automated distribution centers for fresh food across the country, as the retailer chases efficiency and its online grocery business grows.

The discounter’s new facilities are roughly 700,000 square feet on average. Chilled and frozen areas have automation that stores and retrieves perishable items, such as strawberries and frozen chicken nuggets that are later sold at stores or added to customers’ e-commerce orders.

Walmart is the nation’s largest grocer, but it is modernizing its supply chain to keep up with customers who are increasingly picking up orders in the parking lot or getting groceries delivered to their doors. Store pickup and delivery drove the company’s 22% e-commerce gains in the U.S. in its most recent quarter.

The retailer has been automating supply chain facilities across the country, including distribution centers that handle shelf-stable items and fulfillment centers that help pack and ship online orders. Automation, along with higher-margin businesses like advertising, is a key reason why CEO Doug McMillon said in April 2023 that Walmart would grow its profits faster than sales over the next five years.

In an interview with CNBC, Dave Guggina, executive vice president of Walmart’s supply chain, said the automated facilities give the company a more precise picture of its inventory and allow it to get groceries to stores faster.

“We know what we own, in what quantity and where it is, all in near real time,” he said. “And we know that at a level of proficiency that is significantly improved than what we’ve been able to achieve with manual processes or legacy software.”

That allows Walmart to operate more cost-effectively by better predicting demand and reducing money spent on “safety stock,” extra product kept in a warehouse or back of the store to avoid running out completely, he said.

The high-tech facilities also allow more…

2024-07-10 08:07:47

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