What you’ll learn:
- What Walmart’s recent tech advancements have entailed
- How the new fulfillment center will help the company and its customers.
Walmart has been aggressively investing in efforts to bring goods closer to the people. One of the most recent efforts has been through a Walmart high-tech fulfillment center in Bentonville, Arkansas. Other companies have tried similar strategies, such as building microfulfillment centers in communities near large customer segments. Fulfillment technology is typically a major part of these centers.
The idea is that when the products people buy are as close as possible to those customers, last-mile deliveries will go more smoothly. Here’s a look at what Walmart’s doing and what people can learn from it.
Existing Infrastructure Supports Fulfillment Center Plans
Supply chain executives often wonder how to cost-effectively bring items closer to those who buy them. Succeeding might mean turning existing infrastructure into fulfillment centers. For example, Amazon representatives had discussions with shopping mall executives about turning former department store spaces into fulfillment centers. It certainly makes sense to capitalize on the infrastructure that’s there rather than building new facilities.
Walmart did something slightly different. In February 2022, the company announced its emphasis on market fulfillment centers (MFC). In short, it means Walmart makes some of its stores double as fulfillment centers. It’s also notable that the Bentonville Walmart high-tech fulfillment location is in the state where the company got its start. That detail solidifies a recognition that technology was a significant driver in the company’s current success.
One best practice for opening fulfillment centers is to assess which locations are best based on the number of potential or current customers living close to them. In Walmart’s case, an internal analysis revealed that 4,700 stores are within 10 miles of 90% of the U.S. population. So, it made good business sense to ensure those locations were important parts of the company’s last-mile plans.
That has paid off, too. Walmart revealed a 170% jump in 2021 orders coming from its stores. Each location has a compact and modular warehouse either added to a store or built inside it. The MFC holds thousands of Walmart’s most popular items. The MFC concept heavily relies on fulfillment technology. Instead of a Walmart employee walking from shelf to shelf to complete a customer’s order, robots inside the facility will retrieve most items. However, Walmart’s workers still play an essential role in hand-selecting products like seafood and produce.
Pilot Projects Can Justify Further Fulfillment Technology Investments
Walmart opened its first MFC in 2019. It used that New Hampshire location as a testing ground to examine the viability of opening more centers soon. Some of the main takeaways were that people could purchase more orders in less time, which could also be picked up or delivered within the hour. Those findings confirmed that the MFC concept was efficient. Plus, each MFC handles orders for multiple stores, making that location have a ripple effect in the surrounding area.
Even then, the company had its sights set on fulfillment technology. That’s why the company collaborated with several tech partners that had innovative products to support the company’s goals and turn the decision-makers’ visions into realities.
Walmart clarified that the pilot store would allow store associates to learn what worked best for specific store environments. Moreover, the company tested automated pickup points. Those let customers or delivery drivers pull up to a dedicated area, scan a code and grab the appropriate merchandise. A pilot project provides the ideal opportunity for testing new options in a real-world environment before making further investments.
The Walmart High-Tech Fulfillment Push Was a Steady Process
When most decision-makers ramp up technology utilization, the associated changes don’t happen overnight. Before Walmart opened its high-tech fulfillment center in Arkansas in May 2023, it laid the groundwork about a year earlier by opening what it called next-generation fulfillment centers. The company planned to open four within three years, and the first to become operational was in Joliet, Illinois.
Details from the company indicated these fulfillment centers would be the first of their kind and would allow Walmart to take its order completion efficiency to new heights. One of the innovations in those facilities was an automated, high-density storage system. It brought the formerly 12-step process down to five.
These facilities are likely much safer for employees, too. Federal statistics show 5 out of 100 full-time warehouse workers become injured or ill at work annually. However, higher levels of automation generally result in employees having fewer dangerous or strenuous tasks. Tests showed Walmart’s new storage system enabled people to fulfill double the number of orders daily, and it gave the store double its previous capacity.
The New Walmart High-Tech Fulfillment Center Should Bring Quick Benefits
When leaders approve technology investments, they typically want the assurance of eventual payoffs. The good thing about the Walmart high-tech fulfillment center in Arkansas is that the people involved expect to see near-immediate benefits.
Store manager Ryan Simpson explained that this MFC would achieve substantially higher numbers of orders filled per day, and that customers would get substituted products less often. That second benefit is presumably because the MFC enables easy access to the most in-demand products.
Prathibha Rajashekar, senior vice president of innovation and automation at Walmart, also commented on the new fulfillment center, saying that the time-saving element of this new facility would help store workers and customers live better. Rajashekar also said this Walmart high-tech fulfillment center would benefit people no matter how they shopped, and that the company would advance as a result.
This new center utilizes fulfillment technology through the Alphabot, which Walmart first tried in 2019 during its New Hampshire store trial. Tech startup Alert Innovation developed the product specifically for the retailer. The Alphabot uses automated carts inside a 20,000-square-foot space to accelerate grocery order picking.
The Alphabot retrieves refrigerated, frozen and ambient goods, then sends them to a workstation. Once there, an employee checks all the products for accuracy and delivers the order.
Progressing Along the Road of Technology
The Walmart high-tech fulfillment center in Arkansas could not have happened without the previous and continual tech investments elsewhere within the company’s store network. Moreover, many of the things learned at this new center will certainly inform us what happens in the future. Even the most successful tech rollouts have positive and negative aspects. When Walmart’s executives get feedback from all relevant parties and take the time to evaluate what worked or didn’t, they can apply what they learned to their next projects.
