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ASCM Insights

Amazon Robots Set to Transform Whole Foods’ Warehouses

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Since Amazon announced its intention to buy Whole Foods Market on June 16, news outlets have been exploring all the ways this combination of companies will influence online retailing and grocery strategies. This week, Bloomberg highlighted how Amazon may transform Whole Foods' warehouses with its robots. 

The Bloomberg article quotes Gary Hawkins, CEO of the Center for Advancing Retail and Technology. “The easiest place for Amazon to bring its expertise to bear is in the warehouses, because that’s where Amazon really excels,” he says. “If they can reduce costs, they can show that on the store shelves and move Whole Foods away from the Whole Paycheck image.”

According to Bloomberg, Amazon’s entire grocery strategy relies on automation technology, which could be put to work in Whole Foods’ 11 distribution centers plus its seafood processing plants and the kitchens and bakeries that supply prepared foods. 
In Amazon’s own warehouses, thousands of robots help process a very wide variety of goods, Spencer Soper and Alex Sherman write for Bloomberg. Amazon’s distribution strategy now includes some specialized warehouses.

“Most inventory is in its largest warehouses within driving distance of big cities, but as it tries to deliver products faster, the company is utilizing smaller delivery hubs in cities packed with the kind of products people want quickly, like a phone charger or a toothbrush you forgot to pack on a trip,” Soper and Sherman write.

Interestingly, while Amazon makes wide use of its robots, it also has hired many human beings as well. Bloomberg reports the company had 351,000 employees at the end of March, which is up 43 percent from 2016. Further, Amazon CEO Jeff Bezos has committed to hiring 100,000 new employees in the next 18 months.

One thing Amazon gains through its acquisition of Whole Foods is customer access to fresh produce, vegetables and meat. “A big challenge for Amazon will be applying its logistics know-how regarding durable, long-lasting products like books, toys and tablets to delicate perishables like strawberries and steaks that have to be handled gingerly, stored at different temperatures and inspected frequently for signs of spoiling,” Soper and Sherman write.

Maximizing value

One area where both companies’ supply chain professionals are paying close attention is cold chain, which is defined in the APICS Dictionary as follows: “A term referring to the storage, transfer and supply chain of temperature-controlled products. Industries in the cold chain include food and agriculture, pharmaceuticals, and chemicals.”

Amazon surely will create efficiencies in its cold chain and beyond for Whole Foods. “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” said John Mackey, Whole Foods co-founder and CEO, in a statement.

You can learn more about Mackey and Whole Foods by attending APICS 2017, which will take place October 15-17 in San Antonio. Mackey, who has built Whole Foods into a $14 billion Fortune 500 Company, will deliver one of the keynote addresses at the conference. To learn more about APICS 2017 or register, visit apics.org/apics2017.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer at ASCM, the largest nonprofit association for supply chain and the global leader in supply chain organizational transformation and innovation. Prior to this, he was the managing director for the Operations Consulting Group of American Express Tax and Business Services. His leadership roles have included project management, business process redesign, and individual and organizational alignment. Eshkenazi may be contacted through editorial@ascm.org.

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