Online grocery service shows what it takes to build a fully automated robotic fulfillment system from the ground up—and become a technology-driven company in the process.
Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
Leaders at online grocery company Home Delivery Service (HDS) say they are ready to reveal an e-fulfillment system that will change the way food delivery is done, rivaling the likes of Amazon and Wal-Mart, and taking advantage of the growing popularity of online grocery shopping, especially in the last year. The concept has been in the works for nearly 10 years, driven by the need to get the technology behind it just right before attempting to deliver a single item. Later this spring, HDS plans to launch a full-scale pilot of its fully automated, robotic, touchless warehouse fulfillment system, bringing the company one step closer to its goal.
“In order for us to not just be another [dotcom] copycat, we have to have something of a moat for our business. Something that [makes us] highly efficient and very profitable,” explains Aravind Durai, HDS’s vice president of automation and a founding member of the company. “The moat we have decided on is our own design and build of the e-fulfillment technology. We believe the efficiency gains and cost savings we will achieve and the service level we can deliver to customers [are] built upon the framework of [our technology].”
The technology is called RoboFS. Driven by robotics and packed into a smaller footprint than most online fulfillment systems occupy, RoboFS will allow HDS to operate “lights out” fulfillment centers (FCs) across the country, where orders are untouched by human hands until they arrive at the customer’s doorstep, company leaders claim. The system has inspired the confidence of a handful of investors, one of which is IT products distributor Ingram Micro, which will pilot and host full-scale demos of the system at its 500,000-square-foot omnichannel fulfillment center in Plainfield, Indiana. The journey to get to that point offers a glimpse at the work involved in building a fulfillment system from the ground up—and proof that automation is reshaping the way work gets done in warehouses and distribution centers everywhere.
SHIFTING GEARS
HDS is the brainchild of Louis Borders, co-founder of Borders Bookstores and founder of the now-defunct dotcom-era online grocery business Webvan. As Durai explains, Borders was an early leader in supply chain automation, and he founded HDS to provide a fast, personalized online shopping experience for a wide range of goods. The company will be rooted in grocery but will also include access to other products that can be purchased within the same order—like shopping at an online mall.
Pallets and cases are broken up in the receiving area, and products are put into as many as eight separate bins within each tray. Using an automated storage and retrieval system (AS/RS), the trays are stored in high-bay racks and removed as needed for picking.
Although the concept may sound familiar, Durai insists it’s different from the Amazon or Walmart approach to online shopping—primarily because HDS is leading with fresh grocery delivery and offering access to other branded merchandise as an add-on. Its primary competition is not Amazon, but your local grocery store, Durai explains.
The company’s business model calls for the establishment of small, highly automated fulfillment centers in urban and suburban markets. At 150,000 square feet, the FCs will be larger than the microfulfillment centers many supermarket chains are developing but considerably smaller than a typical Amazon DC. And there will be no retail outlets. HDS will store roughly 100,000 fast-moving stock-keeping units (SKUs), including chilled, frozen, and ambient-temperature items, for same-day or “express” one-hour delivery. Add-on items will be filled as part of the customer’s next order, via one- or two-day delivery. So your groceries arrive first; your new sneakers a couple of days later.
Creating a fulfillment system to accommodate that plan turned out to be a bigger challenge than Durai and his colleagues expected—and the exercise ended up turning the tide in the company’s mission.
“This is a tough nut to crack,” Durai says of coordinating fast fulfillment and last-mile delivery of perishable items. “When you combine it all, it’s a challenging problem to solve.”
After researching the systems and equipment required for the job, he says, the company “came away with the realization that the product we wanted does not exist. We had to make instead of buy.”
Durai and his colleagues ended up engineering a system from the ground up—and becoming a technology company in the process.
PUTTING THE BUILDING BLOCKS IN PLACE
The fulfillment system Durai and his colleagues have built uses robotics and advanced proprietary software to create a just-in-time fulfillment system that keeps throughput running smoothly. An artificial intelligence (AI)-based warehouse management system (WMS) coordinates the movement of mobile and articulated robots (the latter used for picking) and smart conveyors to create the lights-out fulfillment process, which encompasses everything except receiving and shipping dock activities.
The system uses standardized transport trays to move items throughout the facility. Pallets and cases are broken up in the receiving area, and products are put into as many as eight separate bins within each tray. Using an automated storage and retrieval system (AS/RS), the trays are stored in high-bay racks and removed as needed for picking. Autonomous articulated robotic arms pick products from the trays to fill orders. The breakdown of pallets and cases is the only manual part of the fulfillment process, according to leaders at Indiana-based material handling equipment manufacturer Shuttleworth, which designed the AS/RS and tray-movement system. Once products are placed into the AS/RS, they aren’t touched by human hands until the consumer opens the HDS reusable delivery tote to remove them.
“When a pallet of goods comes in, we break it down into storable or pickable levels and then feed the storage area or the robotic pick area,” explains Ken Tinnell, vice president and general manager of Shuttleworth, adding that the development of the entire project has been purposefully slow. “They [Louis Borders and his colleagues] pulled together a vision of the company and have very patiently been moving this forward. In that timeframe, we’ve engineered a little, shown a little, and grown and gathered momentum over time.”
ROLLING IT OUT
The RoboFS uses standardized trays to move items throughout the facility. Pallet and case breakdown is the only manual part of the fulfillment process, according the manufacturer, Shuttleworth.
The RoboFS demo will go live later this spring at the Ingram Micro facility, with plans to showcase the technology for a wider audience. Ingram Micro is one of a few initial investors in the system, and the company will have exclusive rights to use RoboFS—specifically for its IT, mobile device, and connected-device distribution business and logistics services, according to Eric Schelm, Ingram Micro’s director of business initiatives.
Durai explains that HDS plans to sell the RoboFS fulfillment service to companies in noncompeting industries—anyone in the grocery industry is excluded—and that it won’t sell it to any of those companies’ competitors for 10 years. Early investors like Ingram Micro have ponied up millions to get in on the technology. HDS had raised about $38 million to develop the system as of this spring, Durai says.
“[Our] technology is being built to service the grocery e-commerce [business], but in the process of developing it, we have talked to many other people about it [because] supply chain fulfillment is a problem that vexes everyone,” Durai explains.
Although it’s been a long time coming, the Ingram Micro pilot project is finally ready to go. As for HDS’s own e-commerce grocery business, the company says it plans a full-production launch sometime in 2022. Right now, it adds, the focus remains on testing and demonstrating the fulfillment technology.
“It’s ready, it’s working, it’s real,” Tinnell says, again emphasizing the long steady road the partners have traveled to get to this point. “Some companies that I work with rush through the design—because they have to, to get to market. They have to react to market pressures. Because this [project] has taken a longer time, this design has been seasoned over the course of several years … As a result, it’s going to market a whole lot better than any other, similar type of project I’ve seen in my career.”
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.