Online grocery delivery is on the rise and shows no signs of stopping. Innovations in e-grocery services have made our lives easier, safer, and more efficient, but have also permanently impacted our food supply chains. What are the challenges our food system faces with this new way of life and how might these technologies help us bring our dinner home?
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Grocery delivery has boomed since COVID hit. Gone are the days of waving at the milkman from the kitchen window as he dropped your glass milk containers off for the week. Recent innovations will soon allow online supermarkets to bring food to your door in a sophisticated, temperature-controlled, bacteria-killing environment. How will they maintain perfectly chilled meat, produce, dairy, and other perishables?
The New “Big Box”
Walmart offers an option: together with HomeValet, they are testing temperature-controlled smart boxes that can be stationed outside your home so your groceries are delivered contact-free at any time of day, even without having to be home. According to HomeValet, the UV-C LED disinfection method creates “an inhospitable environment to microorganisms such as bacteria, viruses, molds, and other pathogens.”
To the right: the smart box technology uses a UV-C light inside the box, where items are sanitized before removal to ensure cleanliness before you bring them inside.
Like HomeValet, many grocery retailers are experimenting with different ways to meet growing consumer demands, like providing online ordering, mobile apps, and QR (Quick Response) codes that let consumers pick up goods curbside, drive-through, via same or next-day home delivery, or even in secure lockers at convenient locations. While these options are exciting to see and are a welcomed change in efficiency and safety, they have significant implications for the greater supply chain.
Supply Chain Disruption Demands Flexibility
Here’s some context: shifts brought on by COVID-19 have put tremendous pressure on (and new opportunities for) our food supply chains. According to a customer research study, 54% of consumers bought fresh food online this past year, and 70% of shoppers intend to continue online grocery shopping for the foreseeable future.
What’s more, over 100,000 restaurants and bars in the US have closed permanently due to COVID, according to the National Restaurant Association. Fewer restaurants, lower bar-food demand, rising demand at the grocery store, and new delivery options create a market where grocery supply chains must be more flexible than ever.
Flexibility needs to come in many shapes and sizes: personal shoppers must know how to pick out the perfect tomato, shipping and packing technologies should be designed to handle last-minute shifts in distribution networks, and inventory planners need to keep track of what will be stocked in-store and what can ship directly to consumers. It is surmised that this need for elasticity will remain a critical component of a successful supply chain, even long after Covid has gone away.
We’re probably not taking off our masks and heading to concerts anytime soon. These changes may last years, making grocery delivery here to stay for the foreseeable future.
E-grocery businesses can only be effective if automation at the warehouse and distribution centers have the capability to shift from a business-to-business channel to a direct-to-consumer model. With 80% of consumers having grocery-shopped online since the start of Covid, being able to shift from one channel to another is critical. Significant automation is needed for delivery as well. With over 40% of essential items now being ordered online (think toilet paper), the delivery portion of supply chains has to accommodate larger volumes, as well as extra hours for cleaning and sanitizing.
A Look at Several Solutions
Now picture yourself picking up your favorite soup, and it’s the last one on the shelf. Behind you comes a little self-driving robot, scanning labels on shelves, checking stock levels, and alerting employees of low inventory. That is exactly what Simbe Robotics has developed. Schnucks Markets in the Midwest is one of the first to use the technology.
Meantime, Broad Branch Market — in partnership with Starship Technologies — has integrated their automation system with six-wheeled self-driving robots that have sensors aiding delivery to customers.
Almost 2,000 Walmart stores use Brain Corp’s robots to clean and sanitize, opening up employee hours for the workforce to focus on stocking and shipping online grocery orders.
Knock, knock! Who’s there? Robots with your food order!
Some major grocery chains are partnering with inventory management kings to help with grocery shipping and fulfillment. Amazon assists with same-day delivery at Whole Foods and Kroger’s, which are both rapidly expanding their networks to meet rising grocery delivery demands.
Other fulfillment solutions include the expansion of robotic handling. Albertsons Co., for example, has created a series of “micro fulfillment centers” providing a scalable model for rapidly filling thousands of grocery orders daily. These are large warehouses with integrated picking, packing, and shipping robots that provide more efficient work than human workers can offer in-store. The centers store popular items that have historically bottlenecked at a shipping level due to shipping delays. Having this type of inventory in an automated store warehouse has helped to avoid that bottleneck and helped turn the product around to consumers faster.
Thank goodness I can find my two-ply and burger meat in-store anytime now!
Narrowing the Transit Window
For the first time, in 2019, a self-driving truck delivered goods from Cupertino, CA to Quakertown, PA, almost 3,000 miles away. Plus.ai, based in California, has developed this truck to help out when there’s a shortage of drivers and provide a touchless option.
Talk about a change from the neighborhood milkman, now we will be waving to cars with no drivers! I’ll take it if it means increased safety, and increased turnaround time!
Much like the fulfillment challenges, narrowing the time to get products from the processor to the warehouse to the distribution center to the grocery to the consumer has created logistics strains. With next-day air shipping raising expectations for greater speed and “panic buying” necessitating a need for quick processor-to-retailer turnaround to keep shelves stocked, the previously ‘easy’ delivery planning is a thing of the past. Having speed-to-shelf also depends greatly on having inventory in the right locations, and having those locations align with available trucking capacity.
The ground-based transportation industry, which moves goods from processor to retailer to consumer, is under unique stress. They are dealing with staffing challenges due to nationwide emergency drivers needed elsewhere, drivers leaving the industry for higher-paying jobs with better benefits, and drivers making important decisions about pausing their employment to preserve their health amid Covid concerns. Trucking connects all links in the food chain.
Agility with Inventory
The key to addressing each link in the chain is to have end-to-end inventory visibility. This allows the entire supply chain to react quickly to demand without chain-wide disruption. A major component to this is labor flows and resource allocation—or identifying how to be most efficient. This will allow for our food orders to reach us faster and increase our likelihood of reordering. One way grocers are doing this is by cutting their product offerings. Because consumer brand loyalty has all but gone out the window with COVID — with over 75% of consumers having changed brands during the pandemic due to convenience, or availability — consumers are now just taking what they can get as grocers are implementing a more streamlined product offering.
According to a report cited by Food Dive, “the average number of product offerings in grocery stores declined 7.3% during the four weeks ended June 13 … The drop came across a range of product categories, with frozen down 8.5%, deli slipping 7.7%, meat posting a decline of 7.1%, and dairy falling 6.6%.” For example, some grocery stores now offer only four choices of toilet paper, where prior to COVID they carried about 40 varieties.
By trimming away less profitable products that may be more complicated to produce and/or ship, factories and distribution networks can cut down on labor and time. Room on grocery store shelves is then opened up to products and inventory that is more reliable and can quickly meet consumer demand. A good example of this comes from PepsiCo, which decided to stop producing one-fifth of its products during COVID for efficiency reasons and will maintain a 5% reduction in its Frito-Lay snack division.
The Bottom Line
COVID has accelerated changes in consumer needs and expectations all across the food chain, nowhere more so than food delivery. The industry is adapting with innovative technologies and practices that will make online grocery shopping and e-delivery a growing part of how we bring food from dirt to dinner today – and tomorrow.