Adapting to changing shopping habits became vitally important in 2020, with the Coronavirus pandemic transforming how consumers engage with and purchase household goods and groceries. To cope with a sudden surge in online orders, FMCG brands were forced to rapidly reconsider their business model – while also grappling with additional warehouse safety measures such as social distancing.
Here, Greg Downey, robotics business consultant at OW Robotics outlines how custom robotics solutions proved to be a worthwhile investment in 2020, playing a vital role in keeping the FMCG sector moving, allowing businesses to rapidly adapt to both new and existing challenges.
Meeting changing customer demands
For a number of years, shoppers have been seeking greater convenience and value for money, with experts warning time spent in supermarkets would dramatically reduce given the benefits of services like click & collect and home delivery.
Now, with buying habits unlikely to ever return to what they were pre-pandemic, investing in smarter warehousing technology is a sensible decision and one that will undoubtedly pay off. This is especially applicable to FMCG brands looking to bolster their online presence, finding an alternative route to market aside from the wholesaler or retailer and selling direct to the consumer. With this decision comes the vital need to facilitate quicker reliable fulfilment, efficient picking and packing and the ability to handle single and small multiples of order items.
One of the most reported big name brands to trial the direct to consumer approach was Heinz, launching Heinz to Home in 2020. This online service allowed consumers to purchase bundles of products online, direct from Heinz and have the order delivered direct to their front door. Likewise, in an attempt to bypass the traditional channels, Pepsi launched snacks.com and pantryshop.com back in May 2020, a move that would undoubtedly have prompted a rethink of their warehouse or logistics partnerships, with pick rates and order fulfilment taking over from pallets and bulk distribution.
The FMCG digital boom
At the height of the first national lockdown back in May 2020, Kantar reported that UK grocery sales through digital channels had increased by a staggering 75%, with nearly one in five British households ordering groceries online – 1.6 million more than the previous year. The same report highlighted Ocado’s success, with the online specialists’ market share increasing to a new high of 1.6%, up from 1.3% in 2019, and their overall sales rising by 32.5%.
A report by OW Robotics also highlighted how recent technical improvements, spurred by increased demand during Covid-19, allowed Ocado to increase the number of picks per hour to between 600 and 700 – a possible factor behind this impressive growth. This is far higher than human pickers could achieve in even the most efficient warehouses, with one UK Amazon worker, in one of the few remaining non-Kiva distribution centres, claiming that colleagues could achieve a maximum of 250 manual picks per hour.
Experts predict that over the next few years we will see an increasing number of FMCG brands investing in their own omni-channel offerings – potentially bypassing wholesalers and retailers altogether, with robotics and automation playing an important role in facilitating transformation and providing the customer experience consumers have come to expect.
Without the right technologies in place, they may struggle to meet consumer expectations, resulting in reputational damage and a loss of consumer confidence.
Improved efficiencies
Prior to the Coronavirus pandemic, a reluctance to embrace new technologies had left UK warehouses facing a never-ending struggle of keeping their labour costs down while maintaining an efficient overall operation. However, this was something managers were forced to address last year – often needing to make bold decisions when technology became their only option.
Now, with the prospect of implementing new direct to consumer models an increasingly attractive prospect, many organisations are considering a complete overall of their warehouse and business model – realising that custom robotic solutions are both more accessible and affordable than they once thought.
Experts predict that automation is only going to become more valuable to warehousing firms, with goods to person robots able to provide more efficient single touchpoint fulfilment, as well as assisting with things like order returns. When an order is placed or a return processed, your enterprise resource planning (ERP) or warehouse management system (WMS) will transfer it to the robot control system, directing the robot to the appropriate location, assisting with faster order fulfilment and also an overall reduction in labour costs.
Alongside these efficiency savings, custom robotics can help increase a brands competitiveness, able to offer faster order fulfilment and delivery – so much so, that most businesses enjoy a typical ROI of between 12 and 24 months.
Micro-fulfilment
As well as smarter warehouses and distribution centres, over the next few years experts are predicting a rise in the number of micro-fulfilment centres (MFCs) and according to Interact analysis, the grocery industry will be the largest source of automated micro-fulfilment centre investments, accounting for approximately 50% of revenue generated by 2025.
These small, highly automated facilities are perfect for rapid order fulfilment, as they can be built in urban areas – much closer to the consumer, or located within existing retail stores to facilitate same-day delivery or collection.
Enabling them to future-proof their business model for the omni-channel world, strategic partnerships with robotics companies can give FMCG brands access to the latest systems that deliver value, without the R&D costs as well as driving far more efficient ways of working.
Shifting operations and implementing a direct-to-consumer business model will certainly bring logistical challenges, however one thing is clear, robotics is only going to gather pace over the coming years and those who adapt quickly can seize the opportunity and significantly grow their market share.
To find out more about how ready the UK warehousing industry is for the robot revolution, read our report.
