MHI Solutions Improving Supply Chain Performance
Higher Education
A logistical challenge for retailers and a business opportunity for the material handling industry
BY AND , RESEARCHERS, RENSSELAER POLYTECHNIC INSTITUTE
In 2020, about 40% of Americans tried an online grocery service, resulting in a year-over-year increase of 193%.1 While not all these customers kept shopping this way, many people did. Consequently, omnichannel services, such as click-and-collect, buy-online, pickup-in-store (BOPIS) and home delivery are demanded at higher rates than before the COVID-19 pandemic, and their popularity is expected to continue to rise.2, 3
Such omnichannel services shift order fulfillment, previously completed by the shoppers themselves, to retailers. Retailers have deployed different distribution strategies in their support of omnichannel services, with the most common being store fulfillment, where online orders are fulfilled from inventory on store shelves; and microfulfillment, where smaller, typically highly automated distribution centers are added nearby customers. Regardless of strategy, retailers are struggling to find a cost-effective solution.
Even without last mile delivery responsibilities, and even after charging a service fee, many grocery stores incur negative margins for their curbside pickup services.3, 4, 5 As order fulfillment is currently a labor-intensive process, the rising labor cost6 as well as the current and projected labor shortages7 present further challenges. Thus, at least with today’s current material handling offerings, retailers should let shoppers shop.
Current challenges for retailers to economically provide omnichannel services is a business opportunity for the material handling industry to introduce new and innovative solutions.
With funding from The Raymond Corporation University Research Program,8 our team of engineers at Rensselaer Polytechnic Institute and Karlsruhe Institute of Technology9 designed, built and deployed an automated robotic platform to pick goods in a store environment and created economic and simulation models that integrated our robotic solution’s performance with data from online and in-store customers. Our research demonstrated that with the development of new robotic technologies, it is operationally and economically viable for retail stores to provide omnichannel services. We have also explored innovative ways to deploy automated mobile robots and tap into in-store customers to help with order fulfillment processes in retail stores.10, 11
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