A look at the increasingly complex business of grocery fulfillment

WITRON HAS huge experience with large-scale, centralised automated warehousing for the grocery sector and its CEO Helmut Prieschenk spoke with Noyes founder Marco Prüglmeier about optimising logistics for Q-commerce in cities.

Noyes is a pioneer of robot-operated urban mini-warehouses.

Prüglmeier says: “We don’t want to reinvent the warehouse outside the city.”

The Munich-based company wants to integrate a goods-to-person functionality into its small warehouse and relies on ultra-dense storage because urban storage areas are more expensive. In terms of technology, Noyes relies on small robots (35 x 35cm) that operate on different rack levels. 

Noyes founder Marco Prüglmeier

“The more decentralised you think of a solution, the more you have to think of automation differently. We have to think about the noise in the stores, about accessibility, and maintenance”, explains Prüglmeier. 

“The challenge for Q-commerce companies in small stores is storage space. “It is often not enough, but we manage to store items in a dense manner.”

“But it’s not just the metropolis that challenges our logistics experts and customers. New supply concepts are also needed in rural areas. Neighbourhood stores or supermarkets without staff will soon be reality,” predicts Prieschenk. 

Witron CEO Helmut Prieschenk

Witron recognises the demand of retail customers for Q-commerce solutions. “Of course, our retail customers ask for such a solution – they are permanently searching for potential new distribution channels. But depending on the country, on average 90% of the main business is still done in the store, and the remaining 10% is then distributed across very different channels and technologies. There will certainly be a market shake-out.”

On the one hand, there is new technology, and on the other hand, customers are asking how the new business processes will pay off and how sustainable they are. 

Prüglmeier says: “It is important to think holistically end-to-end along the entire supply chain, for all distribution channels – store, click + collect, home shopping, and smart stores. In the best case, we should also think backwards, from the end customer to the distribution centre. We have to bundle transport routes to the maximum and therefore consolidate delivery orders in advance in the best possible way. Basically, however, the decisive factor is always what services the customer is willing to pay for – and particularly how much.

Speed

“Anything that needs to be delivered in less than two hours can only be managed if the goods are already in the city,” explains Prüglmeier. That’s why urban storage systems are needed. The team doesn’t want pallets there. The Noyes technicians prefer cartons, totes, or small load carriers. The logistics centre outside the city picks for the decentralised unit and supplies the small hubs in the city centre. The individual boxes of the nano warehouse are stored “and come out again as needed for the picker”, says Prüglmeier. And the founder is already looking ahead: “In a second step, we think of item picking with robots.” 

Robot delivery

The sustainability of the business model is important to Prieschenk: “Our customers demand sustainability in both the environmental and social field. Business can’t be done at the drivers’ expense. The business case has to be technically sound; it has to be economically viable, and it has to be ergonomically, ecologically, and socially sustainable. And we have to keep an eye on food waste”. 

Prüglmeier agrees: “In the environmental sector, we are looking at new cooling concepts to save energy, and in the next year or two we will have delivery bots. Maybe it’s not the ten minutes, but delivery times over two hours are not accepted by customers.” Prüglmeier is certain that different distribution channels will emerge for retailers in the future.

“New delivery concepts are also changing our warehouse logistics. The various elements must interact with each other physically and in terms of IT to avoid isolated solutions for transportation, distribution channels, or different product groups. Otherwise, the business model will not scale.” 

Witron offers rail transport to customers. Communication and data exchange between the bot, truck, or rail with the logistics centre are crucial. “Also the data exchange of the destination to be supplied with the logistics centre is decisive,” adds Prieschenk.

There is particularly one question that concerns Prieschenk in terms of Q-Commerce: What is the consumer loyal to today and tomorrow? To a retail brand, to a brand product, to a price, to a service time, or to a network? Does the customer care who the product comes from if it is delivered at optimal costs and at the exact time?

Is Noyes a competitor or a partner in the market? 

“They are part of it, in a big platform,” says Prieschenk.

Omni-channel logistics

For Witron, the platform concept has long played a decisive role in omni-channel logistics – moving away from the one-dimensional silo concept to a holistic end-to-end supply chain that fully integrates all players and distribution channels. This has resulted in a solution known as OCM (Omni Channel Machinery). 

“OCM is an integrated retail platform. It includes a high-performance omni-channel logistics centre, interfaces to all horizontal and vertical players, and, in addition, an optimiser that makes it possible to easily and efficiently manage the generated network according to different priorities – by time, costs, performance, transport, or volume,” summarises Prieschenk. 

However, Witron does not want to develop a new route scheduling system or a new order management software, and certainly not act as a service provider between the retailers and their customers. 

“We combine existing technologies, develop a platform from the supplier, over the warehouse, through to the store or end customer, create transparency within the retail network, and enable data exchange between all parties involved”, promises Prieschenk “all the way to the store and to the end customer, and that’s where a Noyes solution can also be a hub.”

For more information, visit www.witron.com and www.noyes-tech.com