The retail industry’s steady march toward warehouse automation has kicked into high gear recently, driven by the coronavirus pandemic and a resulting acceleration of online ordering for just about everything. As retailers struggle to keep up with an ever-increasing volume of orders and escalating last-mile delivery demands, warehouse automation is quickly turning into the trump card for those looking to get a leg up on the competition—especially in the fast-paced and competitive e-grocery market.
Dutch online supermarket Picnic is a prime example of how this trend is playing out. A relatively new player in the European e-grocery market, Picnic has embarked on a project with global systems integrator TGW Logistics Group that it says will revolutionize operations at its Utrecht, Netherlands, fulfillment center, creating a highly automated, robotic facility that will speed delivery, help eliminate waste across its supply chain, and allow the company to more quickly expand its customer base across The Netherlands and Germany. Underway now, the project is scheduled for completion next year.
“[Our] robot-assisted distribution center in Utrecht, in combination with our electric cars, is the foundation of our unique ‘farm to fork’ strategy ...,” explains Picnic co-founder Frederik Nieuwenhuys, emphasizing the company’s technology-driven approach to delivering fresh products to consumers. “The partnership with TGW … brings together two teams with knowledge of the latest technology and software.”
The Utrecht center will be Picnic’s first highly automated fulfillment center and will serve 150,000 families per week in the central region of the country. At its core is a shuttle-based automated storage and retrieval system (AS/RS) comprising roughly 40 aisles and more than 200,000 storage locations, driven by an energy-efficient conveyor network and featuring ergonomic picking stations. Importantly, the shuttle system will automate all three temperature zones (ambient, chilled, and freezer storage) in the facility. The building itself is essentially an ambient warehouse with a chilled cell built inside for refrigerated items and a frozen cell built inside the chilled cell, and the shuttle system features a standalone block for each zone. As the engine that drives the system, the AS/RS will shape Picnic’s automation strategy moving forward, allowing the company to “bolt on” new solutions for picking, packaging, and shipping as they become available, TGW’s chief executive officer for Northern Europe, David Hibbett, explains.
“[Picnic] views the solution in a modular format,” Hibbett says. “The [AS/RS] is the power behind the overall system, so that’s the engine; it’s the thing that all the other areas are connected to. Then there are peripherals around the engine—picking, bagging with robotic technologies, and so forth. [Picnic] values the flexibility to connect and disconnect technologies to the system as new offerings become available. That view helps make this system unique.”
It also underscores the value of a high-tech AS/RS solution to a growing e-commerce grocery business.
Founded in 2015, Picnic is an online-only supermarket that offers free delivery to customers on predetermined routes. Orders can only be placed via app and must be received by 10 p.m. for delivery the following day. Deliveries are made by electric vehicles in a milkman-like fashion to maximize travel efficiency. Because of the routing format, the business maintains a customer waiting list; routes are added as soon as there are enough customers in a particular area to make it profitable.
The business model allows for a nearly just-in-time inventory strategy that keeps stock levels low and product freshness high: For example, Picnic can do much of its product ordering once it knows what it will need for the next day’s delivery. Many just-in-time items are delivered multiple times throughout the day, with the first delivery in the early hours of the morning, or at night—fresh bread, for example. Items that can be stored for longer periods—dry packaged goods, cleaning products, and so forth—are still stocked ahead of time. The AS/RS helps by prioritizing inbound items as needed.
This strategy makes the fulfillment process especially challenging and ripe for automation, company leaders say. Picnic has developed its own warehouse control systems and is integrating them with TGW’s FlashPick piece-picking solution to power the automation project in Utrecht.
Products are picked in two ways: either at a person-to-goods station (fragile or bulky items, for example) or at a goods-to-person station (everything else). At the person-to-goods station, the operator takes items off a series of adjacent pallets, directed by a pick-to-light system, and places them into an order tote to complete the order. For the goods-to-person workflow, operators use TGW’s ergonomic picking stations, where a tote containing items and the order tote to be picked into are presented side by side to the operator, where they will then pick and place the items. The goods-to-person picking stations have robotic piece-picking capabilities that can be added in a subsequent phase of the project, Hibbett explains.
Once items are loaded into customer totes, the totes are then re-stored in the shuttle for order consolidation according to route. A robot-assisted loading system in the shipping area will help employees load the totes into Picnic’s fleet of electric delivery vans.
Automating operations across temperature zones in the warehouse helps speed the fulfillment process while also optimizing warehouse space, Hibbett adds. With a shuttle-based system, there’s no need for the bulky storage racks and equipment typically found in rerigerator and freezer space, company leaders explain.
The system also uses less energy than a typical refrigerator/freezer setup, Hibbett says. And because all three temperature zones are shuttle-based, orders flow together through the system for consolidation, entering the shipping area at the same time.
“So the processing time of an order is greatly reduced,” Hibbett explains.
A company’s ability to speed order processing and delivery has become a critical success factor in the increasingly competitive online grocery business, which has experienced a surge in demand due to the coronavirus pandemic. This summer, industrial real estate firm Jones Lang Lasalle IP Inc. said it expected overall U.S. e-commerce sales to jump from $602 billion in 2019 to $1.5 trillion by 2025, driven largely by online grocery sales. The firm also said that its industrial leasing activity for e-commerce operations grew to 50% this year alone, up from 35% of all leasing activity before the pandemic.
A separate study this past spring by material handling systems provider Honeywell Intelligrated showed that more than half of U.S. companies are open to investing in automation to accommodate growth in e-commerce (66%) and the grocery, food, and beverage business (59%). And a broader geographic study by logistics firm XPO Logistics, released in July, showed that a majority of consumers in the United States and the United Kingdom plan to maintain their newly acquired online buying habits even after the pandemic subsides.
For integrators like TGW, this all adds up to continued demand for automation that it says will likely keep simmering for years to come.
“Everybody’s struggling with capacity and how to do this [e-commerce] economically,” Hibbett says. “[The pandemic] has created a boost in market share for online grocers. Currently, companies like Picnic are gaining significant traction and growth. What was moving quickly anyway has accelerated. This [situation] is like an accelerant; it’s like pouring fuel on a fire—and it’s burning pretty hot at the moment.”
Hibbett emphasizes that the flexibility of the AS/RS is a key advantage as Picnic develops its automation strategy. The robot-assisted loading system is a case in point: Picnic and TGW are jointly developing the system based on Picnic’s desire to improve ergonomics and ease the process of loading its electric delivery vans.
Under Picnic’s fulfillment model, customer orders are delivered in totes, which are loaded into racks (also called “frames”) that make their way through the fulfillment center before being loaded onto trucks for transport to local hubs. The “frames” are similar to what you’d see in a typical e-grocery delivery vehicle, Hibbett says, but are lighter weight and sit on a set of wheels for easy maneuvering. Once the racks arrive at the local hubs, they’re loaded onto the electric vans for final delivery. Picnic wanted to develop a robotic system that could handle and load the heavy frames into the vans.
“They asked us to come up with designs for a robotic system that could do that for them—load frame after frame,” Hibbett explains, adding that the system includes technology that will sequence the totes in the order in which they will be delivered to homes.
The robotic frame system includes cells that operate for both frame return and loading. It works like this, according to Hibbett: Returned frames are loaded onto a transport conveyor, where they are checked for structural integrity and held in place for unloading. A “pusher” then pushes the empty totes out of the frame and onto a load handler; the totes ascend to a mezzanine level, where they are pushed off onto the conveyor system and taken to storage. The empty frame then automatically moves into the position for loading, where several load handlers collect completed order totes from the mezzanine area (the totes have been sequenced from the shuttle system) and insert them into the corresponding slot in the frame. Once it’s filled, the frame exits the station to be collected by an operator and marshaled in the dispatch area.
As Picnic’s needs change and technology advances, the partners expect to work on similar projects that can “bolt on” to the engine that is the AS/RS.
“They continuously look for areas where they can utilize robotics,” Hibbett says. “So it’s an ongoing journey.”
Sustainability is another important part of the journey for Picnic. The company says it is committed to finding ways to increase energy efficiency and reduce waste in its fulfillment centers. The Utrecht fulfillment center features roughly 215,000 square feet of solar panels that will be used as a power source, for example; this is part of the company’s broader solar initiative, which includes the use of solar panels to help power its electric vehicles.
“It’s a different challenge,” Hibbett says, referring to Picnic’s online-only business model and its drive to become more efficient and effective at all levels. “And automation is vital to making it work.”