Walmart’s new technology intensive warehouse that is 40% more efficient

An article in titled “Walmart’s grocery warehouse worker of the future will have a STEM background” discussed the new warehouse in Shafter, California that will use automation to get eggs, diary and frozen goods to warehouse employees pick rather than having workers lift over 2,000 cases per shift. The result is an estimated 40% increase in product movement, and lower costs. Will Walmart use these cost savings to decrease consumer prices or increase it thin margins for grocery ? Will the additional skill levels required to operate these warehouses result in current workers getting upskilled or a newer type of warehouse employee ?

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55 Responses to Walmart’s new technology intensive warehouse that is 40% more efficient

  1. Hee-kyoung Han says:

    Considering the low entry barrier of grocery industry and the local retailers that have high competitiveness in freshness and customer accessibility, it is hard for Walmart to decide to use the economic benefit to increase its thin margin of grocery items. However, the cost saving will help the compnay to lower the consumer prices, and this make Walmart more attractive to its customers as well. Related to the skills required to operate new warehouse environment, I don’t think it is necessary to hire new type of upskilled warehouse workers. “Warehouse work” requires many different skills and knowlege and operating automation systems is just one of them. Since there are already skilled employees working in warehouses, I think it is good enough to utilize current workforces with proper trainings even for the new operating systems.

  2. Ryan Ma says:

    For all the new technology, there is an initial development cost along with an implementation cost. Like the Amazon cost, where the initial costs were about 15-20 million per facility. The savings may not be passed along right away. It would first have to cover the return on investment which may take a few years especially when this new facility is the distribution center for about 200 stores. Once the costs associated have been recouped, it may choose to increase its margins for better quarterly earnings. Upskilling workers would be more valuable in the long term to avoid turnover rates and be cheaper to retain skilled workers than having to train new employees and giving higher hiring bonuses.

  3. Hsing Chiao says:

    The result of automation result is an estimated 40% increase in product movement, and lower costs. For Walmart, in my opinion, it will use these cost savings to decrease consumer prices, because “low price” is the goal of the company and that is what make Walmart so competitive to other retailers. With the new operation system, the additional skill levels of its labors are required undoubtedly in order to operate these warehouses. It can be both current workers getting upskilled by Walmart training or a newer type of warehouse employee, depended on the cost of the labors.

  4. Li Yize says:

    It will decrease product price or increase it margin because the operation cost decreased. For the new technologies, company like Walmart would like to use it to lower cost or get more margin. Lower cost will make the company more competitive and flexible whether to lower price for large market share or increase net income.
    Of corse new technology will require a high level skills for workers and managers. At the point of company, the extra training fee and new technology implement fee will be considered carefully when apply the new technology. Because it would have a huge impact on company internal operation, external relationships and even if brand image.

  5. Sumit Singh says:

    I agree that the warehouses of the future will have a much more skilled and qualified workforce as compared to today. Upskilling is the only way to go for the current workers as they shift to more “quality” work than “quantity” work. We already see that Amazon has reskilled their warehouse workforce to shift to becoming independent drivers, making last mile deliveries for them.
    Regarding passing on the benefits of the automation, I feel that Walmart as a brand has always done that, and surely it sill continue to do so. The grocery market has always operated with thin margins and Walmart relies on the huge sales volume and excellent sourcing strategies to maximize profits.

  6. Archit Bimal Shah says:

    The article mentions SVP Tim Cooper, who said the new technology in automation in the distribution center will allow to reduce the cost of moving materials and thus pass on benefits achieved in savings to customers. Although I believe they will try to increase profit margins slightly, as groceries are important in retail space for competition, one can expect the passing of benefits to customers.

    The skills of a worker in a warehouse will definitely need an increase. The Walmart SVP Cooper states that they are going to focus on STEM employees and train their existing employees. Although this will depend on how much is the cost of training an existing employee, hiring an already skilled employee, and the complexity in the new system. I suspect that initially, the focus will be on hiring rather than training employees for the new systems and as the systems mature and become simple to operate, training will become a focus, but it all depends on how fast we want to implement and develop the systems.

  7. haocai1227 says:

    Like I have commented on the last blog, for big companies like Walmart, it’s never too early to start using new technology. Although the amout of this fix cost investment might be huge at the beginning, however, with the increase of efficiency and reliability in logistics/warehouses, eventually they will make profit in the long run, because big companies have enough economic strength to afford to wait for the long investment return times.
    One of the benefit of using automation to replace human is that the labor costs an be saved and machines are easier to manage. In this case, 40% increase in product movement can be achieved, thus the lead time will also decrease and the warehouse may have more room for placement.
    Whether Walmart will use these cost savings to decrease consumer prices or increase its thin margins for grocery is depended on the relationship between supply and need for eggs. The possible strategy can be adopted as following. If the price sensitivity of eggs is low, then Walmart can increase its thin margins. If not, then Walmart can decrease consumer prices to sell more.
    This action may lead to the requirement for new skills, but since the need for new skills comes out, the employees or potential applicants will have the motivitation to learn. What’s more, Walmart can also offer skill traning programs to its employees.

  8. Gokul Siddharthan J says:

    The cost savings realised from automating processes will be shared between what the companies priorities are. Companies like Walmart are able to track the costs incurred on each product and thus they know where they can spend their savings. If they decide to cut the prices of one product they can do so. They can also decide to use the savings realized as profits or investments in new technology or shareholders dividends.

    The workers in these warehouses definitely need to be trained to do other tasks, as their previous activities are taken over by automation. This is where training comes in. Walmart can use the savings it realizes to invest in training workers in new areas and thus retain them. This training cost will be in turn less than the onboarding or acquisition cost of a new employee. Nowadays, an employee with education in those relevant skills comes from college and demands higher pay. They are somewhat overqualified for the role they take because not all they learn in college is used at work. So Walmart can train its employees with just the skills it requires for accomplishing the tasks and save money in that regard.

  9. Li Zhao says:

    Walmart is already well-known for its low prices. It need not rush to lower prices more given that some labor cost can be saved from automation. Money saved by applying automation should be invested in technology improvement or purchasing new automation equipment and employee training. Of course, some employees who can only do routine repetitive work will lose their jobs when automation disrupt the industry. However, industry innovation and transformation won’t wait for anyone. They can still be hired but they have to get new knowledge and skills for adaption to changes in the industry. That’s why I think money saved should be invested in employee training and improvement.

  10. Yu-Ting Hung says:

    Like the Amazon Kiva robot problem, Walmart Automation will reduce costs. However, the cost of implementing new technologies is high and it takes a long time to make a profit. Savings may not happen immediately, but in the long run, Walmart will eventually use these cost savings to lower consumer prices and increase its competitiveness in all retailers. In order to maximize the performance of Walmart’s business, hiring technicians is the best choice. Not only because they can use the system correctly, but also because they have the skills to maintain the system without the need for professional help, hence, reducing waiting time and keeping machines running.

  11. Jayasri says:

    For the past few years, Walmart is investing in technology to improve its operation and supply chain performance improvement. The high-tech grocery distribution center for its perishable goods is one among them. A computer algorithm (WITRON technology) helps in palletizing to individual stores. Obviously, this algorithm will maximize the space utilized in the transport and thereby increases the efficiency of the system. The savings will be passed to the customers to incentivize them for shopping at Walmart. It also creates new jobs for STEM professionals and alleviates the physical weightlifting from the workers in the DC. In addition, Walmart also has invested in other technologies like automatic pickup, automated floor scrubber etc, to increase workers’ efficiency

  12. Abhilasha Satpathy says:

    Not only warehouses, even other jobs of the future will have more skilled and qualified workforce as compared to today. Companies like UPS and Amazon are already re-skilling their workforce in areas other than their current job roles. Initially, the cost of training all their employees would be much higher than hiring new employees with desired skill sets. However, with time, training their existing employees might come into play. Since higher skills will be required for most of the jobs in the future, it may not necessarily mean higher pay for the workers. It will just become the new benchmark. Implementing automation in these Walmart warehouses would be an expensive affair, thus it might not translate into immediate savings for the company or lower prices for the customers, but with time, this technology will become cost effective and scalable. These cost savings will improve the company’s bottomline and might result in lower prices for the customers.

  13. Shih-Feng Chiu says:

    Automation has become more and more popular in various industries recently. Like Amazon, Walmart, or Libraries…, it is the time for us to embrace technology and develop a more cost-saving business! In my opinion, Walmart has already established its “EDLP” golden reputation, which means for those who come to Walmart have a known that they sell their products at very low prices.
    Therefore, Walmart should definitely think about how to transfer this cost saving to their margin, to increase their total profit. For the employees, it is necessary to have skillful experts to manage these “automation workers”, and can solve the mechanical problems at once when there are some technical problems appear in order to minimize the possible loss.

  14. Dan Sun says:

    Walmart’s overall strategy is a guide to whether to decrease consumer prices or increase the thin margins for grocery. Both seem reasonable to me. However, we have to consider by introducing new technology in work, the cost coverage and worker behavior adjustment need time. Also, how will consumers act to the price reduction, will they expect the same to other types of products in Walmart is also under a long-term consideration. As for the second question, I prefer the former choice – get workers upskilled. Experienced workers have already known the business and daily operation they are in, if they are trained to get used to the new technology, they will work more efficiently than those who are newly hired without any industry experience. Also, up-skilled workers will highly likely to have a sense of belongings instead of a sense of urgency, because they know company will train them, thus, they can work with more energy and stabilization.

  15. Krishnajit Bhattacharyya says:

    Similar to Amazon, Walmart’s use of robotic automation in Warehouses will no wonder increase its profitability by driving down costs. Walmart’s policy of “Everyday low prices” is important in this case to be considered. Walmart, like most retail chains, drives its profit from volume rather than margin. That is, the small margin in groceries coupled with the magnanimous volume gives Walmart its profit. So, given its policy of low pricing, I opine that Walmart will decrease consumer prices rather than increase its margin. The low prices will further increase demand and thus bring more revenues to Walmart. Moreover, the new set of skills required will result in both a) upskilling of existing warehouse employees, and b) requirement of new employees with understanding of robotic automations.

  16. Shane Bryant says:

    I found the actual article interesting in how Walmart plans to use this method and technology to spearhead their global efforts to reduce supply chain costs in the perishable food commodities. An SVP for Walmart logistics, Tim Cooper, mentioned that these cost savings would be passed along to the consumer. Although increasing their margins might sound like a good move, I think passing the price savings on to the customers help with customer retention and it forces other players in the market to adapt. I also believe Walmart holds their current warehouse workforce to a high standard; Walmart would probably plan to upskill them rather than let them go in favor of higher skilled workers. The article mentions Walmart’s Supply Chain Academy where they pan to educate their workers on STEM related concepts that Walmart plans will provide dividends for them in the future.

  17. adityavats31 says:

    Walmart is a brand that can be associated with high quality and efficiency. The news that Walmart wants to implement automation to reduce the ever challenging physically demanding work of its employees says a lot about the ethics of the company. Automation is always an error free, efficient and robust option against humans, thus implementing automation will be profitable for any company.

    However, implementing automation technology in large scale requires huge initial investment and considering the towering competition of ‘Amazon’, which is already investing gigantic amount on automation to make its systems more efficient, Walmart shall have to spread its automation in maximum warehouse and retail outlets. Saying so, discharging the profits to its customers will have to wait until the initial operating costs are not obtained by Walmart. Later once the initial investments are recovered, and to fight the competition, Walmart may transfer the same to its customers for better reliability.

    It is highly considerate of Walmart to provide for learning and development for its current employees, that may lose their jobs, due to implementation of automation in Walmart. With better up-gradation these employees can perform several other tasks such as feeding data on the machines, checking the inventory thus processed by the robots etc.. This will upskill the employees and enhance their overall employability.

  18. Aanchal Narula says:

    Walmart’s approach to order fulfillment by reducing the physical stress for workers and increasing product movement using automation itself speaks for their goals and in my opinion the cost savings would translate to more efficiency and lower consumer prices. The only concern is – any level of automation and innovation requires high initial investments. They are trying to use the better skills their employees can offer than just their physical strengths. By providing an opportunity to get trained by their academy, I think the current employees will definitely benefit.

  19. RUI LUO says:

    Maybe that is a good technology could be applied to the warehouse management. But in my view of opinion, I don’t really think that Walmart will decrease the consumer price. First of all, if a big company decide to make product’s price lower, the most reliable explanation is that they need to attract more customers from their competitors. For the group size of a big company like Walmart, I don’t think there are any necessities to do so, or to say, reducing the price won’t be the priority using after they earned more profit.

    By the way, what mentioned above in this article is that they are trying to apply this technology on the resorting of Perishable Categories, not to say those things are so fragile and hard to be stored, even this new technology can take care everything and help them to save in the resort labor work, that money will be enough to make up lost money if they adjust the price, I doubted it.

    And there is another thing couldn’t be ignored, is applying this technology may bring some customer satisfaction problems. Just as I mentioned before, those products are perishable and fragile, robots or system may not differentiate whether those products are eligible or not. This question actually could be fixed by the AI, but that could be another huge investment.

  20. Ke Wan says:

    With current usage of new technology is hard for Walmart to decrease consumer prices or increase its margins of grocery stroage, cause this new technology need a high volume of investment. Also, only test the technology at a fixed location will limit its imporvements.
    However, once the techonoly can be improved universal, the margin cost of Walmart will be significant reduced.
    Also, at the developing period for this tech, the newer type of warehouse employees will be more needed by Walmart. However, once the tech could be developed more easy to operate, the cost of upskilled current worker will be lower than hire a new employee.

  21. Pauleth Charris says:

    As warehouses become more automatized, the labor requirements will be higher with technical skills to attend the need of new warehouse machines. We will expect an increased value of labor work as well as a new type of tasks and skills. As long as Walmart keep offering the lowest prices in the market, there is no need to use the cost savings to decrease prices. If service gets improved and quality is not compromised then WH technology will affect positively customer service. However, Amazon and other retailers are getting closer to offer the same prices as Walmart. The savings then will be key to generated competitive advantages.

  22. Lakshman Rajagopal says:

    The savings resulting from greater automation is unlikely to be all passed down to the customers. A look at Walmart competitiveness, their choice of metrics, and the performance improvement desired over their competitors, will give a better idea of investment of these savings. These metrics will probably lead to reduction of retail prices of the products, or to better time and quality of delivery of products.

    To Walmart, hiring new employees with knowledge of the technologically advanced warehouse systems, would probably be easier and provide more cost benefit than training existing employees. But, as with the case of truck drivers, the industry as a whole should take steps towards training employee,s whose jobs might be displaced.

  23. Debashis Tarafder says:

    I believe that Walmart will use the cost saving to reduce the consumer price rather than increase the thin margin for grocery. Walmart is competing not only with brick and mortar stores but also with e-retailers, who are getting much more efficient every day. e-grocery stores are proposing not only lower price but also quick delivery and freshness of grocery products, and thus getting more market share. Therefore Walmart needs to keep on offering lower prices for grocery items to attract future customers. Walmart can increase its total profit by increasing the sales volume even with lower consumer price.
    Automation in the warehouse would definitely increase the speed of operation, but I believe that the basic principles to operate an warehouse would remain the same. It is also evident that the speed of adoption of new technologies vary among different age groups of worker. So, upskilling of the existing warehouse employees is highly desirable, but at the same time a new set of warehouse employees would immerge with new set of technology skills.

  24. Akshara Anand says:

    Retail is a supply chain intensive industry and according to Tim Cooper, an SVP for Walmart’s logistics in the West, “grocery is the tip of the spear in the retail battle”. It is not surprising to see Walmart investing in its grocery vertical, seeing that profits are already thin, and other players in the market are already investing heavily to provide better prices.
    According to Cooper, the cost savings realised from implementing automation would be transferred to provide lower prices for the end customer. This technology would be an enabler in the long term to do what Walmart does at a reduced cost.

    There are currently 42 Walmart-owned grocery distribution centers for perishable goods in the U.S, with each location having anywhere from 350 to almost 700 workers. Most of the workers are order fillers. Walmart is focusing on “upskilling” these employees to use this automation technology by training them instead of changing the workforce to candidates with a STEM background. Walmart is in the early stages of starting up a Supply Chain Academy. It plans on using this to provide its workforce to perform better by upgrading their skills, which in turn would benefit the company in the long run.

  25. XUAN DONG says:

    There is trade-off in this situation. With automation, Walmart could reduce the production cost, product movement by eliminating the waste in the process; however, hiring STEM background workers is way more expensive than those current unskilled workers. The increase in payroll expensive is continuous cost. Basically, cost-wise, with automation in place, Walmart would face the fixed lump sum initial investment cost as well continuous increased payroll cost. There is another issue. It is also harder to replace skilled workers than those unskilled workers. Walmart would pay more attention on retaining workers than ever before. This move most likely will result in newer type of employee. As other people already mentioned, for most professional tasks, it is more cost-saving to hire skilled workers than to train current unskilled workers.

  26. Siddharth Sourabh says:

    There is definitely an opening here for employee advancement and given Walmart’s not so good reputation as an employer, this can be a good opportunity to invest in employee benefits while preparing them for the transformation. As closely as we follow Walmart’s model, it does strike that Walmart will let some of the cost saving effects of automation to trickle down to consumers through everyday low pricing.The concern remains the same as with Amazon’s Kiva robots, the automation can deliver 2000 cases of milk, eggs and dairy to warehouse employees but can warehouse employees stack them as fast as they receive the inventory? things to think about before going hoorah over automation.

  27. Apurva Hardikbhai Desai says:

    Automating the warehouse will surely improve productivity and provide Walmart a sharper edge. Having said that automating the warehouse and employing stem majors or training the current employees will require heavy investments. Thus automating warehouses will have to be a gradual process. Thus, in the short run, it might want to increase its margin but in the long run, Walmart shall be able to further lower prices and provide better service to its customer.

  28. Keshav S Nair says:

    Automating the warehouse not only improves the bottom-line, but it also improves the top line due to quicker fulfilment of products. Walmart has prided itself on offering low prices every day, therefore I would assume they would pass on some of the benefits to consumers while improving their margins as well. With regard to the employees, it would force unskilled workers to invest some time and resources into upskilling and understanding how to operate the new picking machines effectively. Walmart should help its workforce upskill, and that will go a long way in retaining qualified workers for such roles.

  29. Abhishek Chokshi says:

    With increasing automation in warehouse, the jobs requiring manual labor is going to decrease. Thus, a large number of employees currently working on such jobs will have to be upskilled. This is a very heavy investment for Walmart. Thus, Walmart can leverage more profit by not passing the benefits initially to the customers till it recovers a proportion of its huge investment, after which it can gradually pass these benefits. Furthermore, upskilling the large amount of employees with lesser skills is going to be a difficult task. Instead Walmart will likely employ STEM background people by letting the others go.

  30. Longyu Guan says:

    Walmart’s success highly depends on its low-cost strategies. It is obvious that introducing this new automation warehouse system will help Walmart to increase the product movement and lower the cost. However, the investment of building a new warehouse with the new system or renovating the old warehouse would be large, and this process takes time. In addition, in order to operate new system, Walmart has to pay more on hiring STEM background workers. Also, Walmart needs to consider the extra training cost for current workers. Due to the huge amount of investment, I believe that it is better for Walmart to increase its margins in the short run. For the long run, Walmart could decrease consumer prices to be more competitive in grocery industry.

  31. Mengying Song says:

    Wal-mart’s success in controlling costs is conspicuous. Actually, Wal-mart’s distribution centers have been highly modernized, with 85% of the goods processed mechanically, greatly reducing the cost of manual processing. If the automation way has the versatility and can even apply on eggs and any other products which have special characteristics, it will further reduce labor costs and improve corporate profits. But I think because Wal-mart already has the basis for mechanization, which means the existing workers already have some basis for operating mechanized systems, thus the cost savings can be used to train existing workers to get upskilled. Because one of Wal-Mart’s premises has always been to make profits to customers, customers may benefit from Wal-Mart’s this decision in the long run.

  32. Walmart may reinvest the cost savings from 40% increase in product movement before lowering cost, as consumers are very price sensitive once the cost is driven down, it would be quite controversial to raise it if necessary, if there is any other automation and process optimization plans to be carried out. Once it has completed its current on-hand innovation plans then the savings could start to be stably reflected on its product sales price. The savings could also be spent on upskilling current workers, as Ryan has mentioned it would be better to train current workers as they were trained to a certain level and tacit knowledge and skills are only to be learnt in the working environment.

  33. Li-Ren (Ivan) Syu says:

    Walmart currently lead the commodity market with its lowest price policy, such advantage of being a “great value” product won’t change until its competitors such as Korgger, Target or Amazon reach the same price level. However, the more important question for them is the development of eCommerce. It can be expected that online grocery shopping will be the next big thing toward the industry, Walmart definitely need to keep on investing solutions for producing and delivering fresh products in the shortest time to catch up with customers new shopping experience.
    I think the implementation of automation process could always lead to shorter lead time, higher efficiency, and it required abundant engineer to make this happen. Not only the machine will start to take place of site operators, operation manager and industrial engineer will expected to have the basic understanding of automation and system implementation. Meanwhile, all the continuous improve policies will be replaced by technical benchmarking for better systems, equipment or layout which means more technical oriented improvement instead of operational improvement.

  34. Ravleen Kaur says:

    Automation has helped Walmart to increase productivity of material flow. Greater efficiency means reduction in inventory and reduced operation cost and will result in more revenue. Given the value proposition of Walmart” Everyday low prices “Walmart would pass some benefit to the customers and at the same time increase its thin margins. It will also boost Walmart’s competitive advantage. Automation will require upgrading the skills of current workers by conducting employee skill enhancement programs.

  35. Sanjula Sinha says:

    Walmart is known for low prices, hence the margins for daily groceries and goods are almost bleak.
    With the increase in savings due to automation, the initial cost of technology adoption will be a barrier to keep their margins healthy. Even the probability of passing the same to consumers is low because consumers prefer quality over savings in these products. Lower prices in such products may make the customers question its quality. Though this remains a question of iterative market research, it could be safely said that the pricing would be more linked to competition and not the savings due to technology.
    New technology always demands new skills, but as the technology in the discussion is replacing the delivery frequency on the shop floor and not the methodology, there is no need to change the warehouse floor employees.

  36. Deboleena Sen says:

    Given Walmart’s EDLP model, decreasing consumer prices further might wage a serious price war amongst grocery retailers. However, the cost savings can be used to increase the hourly wages and improve the benefits of entry-level Walmart workers running their stores. The savings can also be directed towards training employees such that they can generate more savings from increase in product movement. Putting hourly workers on a path of advancement will be an investment in the human capital that will be capable of efficiently handling latest technologies in the warehouse and realize further savings. The following article captures how Walmart has advanced from being just a giant retailer to a place focusing on workforce development:

  37. Jilan Liu says:

    Whether Walmart will retain the cost saving or pass it to consumer largely depends on the competition level that Walmart faces. Regardless, the improvement of warehouse  efficiency will certainly help Walmart. Speaking of the transformation, considering the potential pressure from labor union and the corporate social responsibility that Walmart need to take. It is more likely that Walmart to make reasonable effort on training its current works to be able to operate theses new warehouses, not to mention hiring a skilled, well educated employee would be more costly than provide additional training to a current unskilled employee.

  38. Keqian Hou says:

    It is unnecessary for Walmart to lower grocery’s price. Walmart is already very competitive in pricing. By using the automation technology, quite a lot money can be saved. My opinion is that Walmart should use the savings on its labors. It is possible that many low-skilled workers will be laid off, but definitely not all of them. The works who will still work here need to be trained. Such that they are able to work with the automation system without making any errors. Walmart also needs to hire STEM background employee to its warehouse to operate the system and perform maintenance. Employee with STEM background will be much more expensive than regular workers. The spending on wages and training will be huge. So I would say it is unnecessary to drop the price further, in stead, Walmart should invest the savings into its employees.

  39. Srijan Saurabh says:

    Walmart will always focus on reducing the consumer’s price. After the latest head-on with Amazon, I believe Walmart’s prime focus is going to be on consumer retention rather than increasing margin as Walmart’s method of business is always based on the economics of scale. Current employees are low wedged low skilled and are not expected to perform analytical jobs. With the introduction of the new operation methods, I believe Walmart is going to hire new employees who have a proven academic/professional track record.

  40. Shubham N Srivastava says:

    Since current Walmart prices are already much lower than its competitors, it is highly likely that management is looking forward to increase company’s profit margin. It will give the company a window of possibility also to reduce the price of a particular good whenever company wants to push any competitor out of the market.
    It seems like it would be very routine job for the employees (with new technology), it wont be much hard to learn and adapt the processes. Hence employees would have to enhance their skill set but different employees would not be required.

  41. Kartik Misra says:

    Change in technology requires a new methodology of working and skills. Most of the employees who were earlier working at the warehouse for picking and loading may have to change their skill set to be more viable to the company’s operations.

    Since the product movement has had a 40% increase, this means greater number of loading bays and trucks would be required to move the stock. Furthermore, because of fast picking and distributing to the various Wallmart outlets, the inventory levels at the store can be reduced from the present levels, this will entail savings due to inventory holding cost. As more number of items are perishable in nature, further savings will be observed in avoidance of stocks getting perished.

    Since Wallmart is already famous for serving low priced groceries, the further cost savings should add up to the bottom line of the Wallmart’s books.

  42. Yuang Wang says:

    Wal-Mart is always focused on lowering consumer prices. But in my opinion, I don’t think Walmart will lower consumer prices. Wal-Mart’s market competitiveness is sufficient to guarantee customers, and lowering prices will not result in significant revenue changes for Wal-Mart. Rather than lower product prices, spend more on inventory management, such as fully utilizing automated warehouse management models, training employees to use and operate more advanced systems and machines Would be better.

  43. Pardha Sai Vangavolu says:

    Just like in the case of Amazon, any significant investments in technology and the associated cost savings would take some to generate an ROI for Walmart. However, the sooner Walmart will be able to provide reduced prices for its consumers the better it will be for the company to ace competition from other firms such as Aldi, a private labelled grocery chain which is brutally efficient and cost effective.
    Use of newer technologies will definitely require Walmart to up skill the skill sets of its employees. Since, Walmart has already developed core competency in training its warehouse associates at back-office store spaces – called as ‘Walmart Academy’, it would be able to impart similar training for technology implementations as well.


    Walmart is the highest-grossing grocery store with 22 billion dollars in revenue. Definitely there will be technological developments in future and automation and robots will do the pick and place of thousands of units instead of manual labor. There would still be need of humans to control and maintain these robots. For this to happen the workers in the warhouse have to be upskilled and also new highly skilled STEM-educated workers are needed for improving and implementing this new technology. Walmart can use those profits to cover the skill gap by educating the existing workers and paying the new workers.

  45. Junaid Imtiaz says:

    A 40 percent increase in product movement and lower cost is a significant improvement. Initially the setup cost and capital investment will be large but nothing daunting for a firm with Walmart’s resources. Overtime the savings and efficiencies will recoup the investment and will no doubt improve the competitive edge of Walmart which focuses on being the leader in margins which are dependant on efficiency and cost savings. Walmart has a very impressive inventory management structure that is based on an extensive pricing and cost structure, so it is able to tailor the prices of individual products as needed based on goals. It has the option of balancing the cost savings to both reduce prices for certain products while increasing margins overall. Walmart already has skilled warehouse employees who have had training in adhering to processes and are used to process improvements that have been implemented over the years. I believe upskilling is a perfectly feasible option, and is more feasible then completely revamping the workforce.

  46. Aishwarya P B Naga says:

    I think Walmart should invest the money which they get from implementing the new technology to improve the technology for some time. The technology has to be stabilized and must be verified on a timely basis to see if the customer service levels are properly met. Once the system is stabilized then Walmart can focus on improving the margins.

    The employees must be up-skilled to meet the requirements of the on going trends. This will help Walmart in the long run as it is easier to train the old employees rather than hiring new employees and training them.

  47. Aloma Aurelia DSouza says:

    In the short term, it may be difficult to translate the benefits obtained directly into savings since the cost invested to implement the automation would need to be recovered. However, in the long term these savings should translate into consumer savings. This would result in increased customer satisfaction and improved business for Walmart.
    The employees would need to be upskilled to meet the new standards set by Walmart. This would also help increase process efficiency and improve profitability for the firm.

  48. Gautam Venugopal says:

    Shafter, California using automation to get eggs, diary and frozen goods means that the workers either need to be up-skilled or as the article suggests, any new worker needs to be from the STEM background to quickly integrate himself into the system. While the projected savings is 40%, it may not be available immediately, owing to the automation costs, cost to up-skill current employees and training costs of new employees. This implies that Walmart may not readily make the savings available to the customers, since there are additional costs that needs to be covered before the automation savings really show up. Automation makes sense for Walmart due to the large volumes of eggs, diary and frozen goods, among other products that they sell. They can drive down prices to get the competitive edge once their competition achieves similar level of efficiency.

  49. Shekar Sankar Raman says:

    Automating warehouses has become a new trend in the industry that contributes to the increase in efficiency, and Walmart is not the first one to board the ship. The fact that Walmart is bold enough to implement the system having thought of the risks that come with it is impressive. With the grocery business being a free market, there is increased competition from other large retailers and even small mom and pop stores, competing with factors like freshness. This means that even with the automation of grocery warehouses, it would be difficult increase the already thin margin. So the savings achieved with automation would translate to consumer prices which would reduce.

    When it comes to skill set required for the warehouse worker, I think the new worker would a current employee who is upskilled which would mean doing jobs more technical and sophisticated compared to the forerunner. That is the current worker would evolve through training, to take up responsibilities that may require him to have a STEM background which Walmart is currently working on investing in. Walmart’s Academy is taking steps towards training their warehouse workers and other in-store employees to better integrate themselves with the new systems and also help them grow professionally.

  50. Walmart focus on consumer price is intact & it committed for everyday low price.
    To maintain this, Walmart continuously need to work on cost optimization. Warehouse & inventory plays a crucial role in retailer like Walmart’s financials.
    There is definitely a limit to get continuous low price from supplier. In this scenario, Walmart need to bring the saving with efficiency improvement.
    Coming with new technology for warehouse & inventory management is the one way to work on his strategy. The saving come through this will help Walmart to improve margin & maintain low cost. Warehouse staff management will be going to be a challenge after this implementation. One side it will create an opportunity for STEM graduate, but on other the issue will raise for current labor force. Multiskilling of current workforce to prepare them to handle such new technology may be the one way to tackle this, but its not going to resolve the overall problem. But definitely this new technology is going to reduce the overall requirement of labor resulting in major contribution for cost saving & efficiency improvement.
    Whenever any such new technology come in picture, human aspect is the one that we really need to think & take care more precisely.

  51. Aishwarya says:

    The market is competing on close margins, as Walmart brings in technology to reduce warehouse costs other competitors both online and offline are speedily automating their warehouses. When technology no longer remains a competitive factor one of the players will reduce prices with the cost reductions, which will force all players to pass the efficiency savings to customers.
    The workforce will upskill as their jobs are automated and can apply themselves to value-added services such as optimizing inherent processes, quality adherence and coordination.

  52. Yeqi Wu says:

    That is possible that Walmart get increasing margins for grocery with this new warehouse. if Walmart choose to use the high technology warehouse, they could respond customers quicker and let goods fresher, which would attract customers to shopping in Walmart and then Walmart could get higher revenue. Walmart not need to increase the response speed and decrease the price at the same time. Also, after switching to this new warehouse, Walmart need a newer type of warehouse employee, since the work content of this new warehouse is totally different. Employees need to have knowledge about how to use the new system and control the warehouse system, instead of picking up inventories.

  53. Brandon K Black says:

    If walmart is smart then they will train their employees to increase their skills. It is a loss on any business when they let go a whole working class in order to hire a more skilled working class when automating their processes. I also believe that walmart will most likely split the savings between increasing their margin and lowering the price to the consumer. It is important to stay competitive in the cutthroat grocery market, so being able to lower the cost and increase their own margins would be a huge win all around.

  54. Vrinda Chopra says:

    As the original article rightly mentions that in retail business supply chain is the lifeblood. It relies on moving goods from point to point as fast as possible and with the lowest cost. So, if Walmart is able to reduce costs by technology intensive warehouse practices, it would be beneficial. As grocery is low margin commodity business and there is no customer loyalty towards one brand but rather price driven, Walmart should consider passing on the savings to customer as that would help them retain their customers with players like Kroger and e-commerce players in market. For the skill set of the workforce, already Walmart has Walmart Academy associated with many of its locations. Thus training the existing workforce would be the best bet ahead as developing a new workforce is very difficult and costly affair. By making the warehouse jobs less physically demanding, Walmart can focus on training the workforce for the changes ahead.

  55. Sounak says:

    Walmart already has a motto of low price everyday. In fact, most of the products sold by Walmart are cheap relatively to other competitors. However, eggs, dairy and frozen goods are kind of daily products, and the price for these products do not vary across competitors. With the 40% increase in this product category and lower cost, Walmart should decrease consumer prices to attract consumers for these daily consumable products. This will initiate a competition with its competitors,
    and everyone reducing the price of the daily goods will become favorable for the consumers. With the introduction of this new tech, the current workers should get up-skilled or newer type of warehouse employee should be hired.

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