Industry View: “In Fulfilment, the Mothership Should Play the Central Role”

18th May 2020

Logistics BusinessIndustry View: “In Fulfilment, the Mothership Should Play the Central Role”

Witron North America CEO discusses central warehouse v. micro fulfillment:

Karl Högen knows the question too well: “What does Witron do in the area of micro fulfillment?” More and more customers from the US, Canada, but also in Europe ask him this question at industry events or they pick up the phone and call him. The competition pushes the topic. “I understand the customers. Everyone is looking for a solution for their e-commerce business, but I do not believe in efficient automation in the store or in a small warehouse for e-commerce goods. Rather, the mothership, the central warehouse, must become more intelligent and play the central role. For the foreseeable future, robots will not be able to pick tomatoes in the store in an economically viable way.”

An automated small warehouse behind the sales shelves is not economically viable to operate and maintenance and servicing alone makes it unprofitable for most companies. In addition, “The employees would have to empty the delivered pallets, open boxes, pack, store, pick and package them again. The effort is enormous and how do the stores map the peak to average?”

Processes that can be carried out cost-efficiently and flexibly in a central omni-channel logistics centre. “Leading-edge systems are optimally adapted to the complexity of the tasks and offer maximum agility: Supply of all distribution channels from one logistics center, changing business processes, very high throughput in both the store and digital business. In addition, they have end-to-end supply chain intelligence that optimally integrates the DC into the customer’s entire logistics network. Symbioses are used – master data, inventories, transport routes, etc. – internally and externally – vertically as well as horizontally. From the supplier, to the logistics centre, via transport to the store or to the end customer. And at the same time, this is a sustainable future solution where surplus goods and waste are significantly reduced by bundling them in a central logistics center”, explains Karl Högen in detail.

AIO as a solution

Didn’t Witron engineers work on an automation of the supermarket shelves ten years ago, a prototype was located in the nearby supermarket of the Witron plant!? “That was a different plan, we still have it in the drawer, but here, we are talking about the e-commerce business. We are pushing a different approach.” AIO – All-in-One is the answer from Parkstein and the first customers such as Migros in Switzerland, Axfood from Sweden or Coles in Australia trust in the solution. “We are also talking to other American and European companies.”

The approach: The All-in-One can handle store business, the delivery of orders to the stores as well as e-commerce right to the customer’s front door. The extraordinary fact about AIO is that proven basic technologies are merged to one integrated system – and thus the synchronization of different systems and multiple handling of inventories is completely eliminated. Furthermore, AIO is able to react flexibly to market changes inherent to the system. AIO can handle both store and online business. The online business accesses the same stock, but has separate packing stations. Processes that are handled in two separate sections in a conventional warehouse logistics environment and need to be consolidated extensively are covered by the system in only one integrated warehouse logistics system. The result: significant efficiency, performance and quality increase of the picking and packing processes as well as considerable investment savings. Witron heralds the end of extensive consolidation processes.

The end of consolidation

Pilot customer, Thomas Kissling, from Migros Verteilbetrieb Neuendorf AG in Switzerland, sums it up as follows: “We want scalability in the e-commerce business.” The system should grow with the customer. “Being able to breath with the daily business, react flexibly to changing market volumes. Agility and scalability are the central keywords here”. In addition, Kissling sees further benefits in automation: “Ergonomics – because physically heavy work is eliminated. Sustainability – by reducing transport costs due to optimally packed load carriers and by reducing inventories. And of course high cost-efficiency – by reducing package costs per pick”. The Swiss experts no longer need micro fulfillment.

But Högen wants to go one step further with his customers – he wants to turn his mothership, the central warehouse – into a platform. “We need to communicate more with our customer’s customer – with the store. We know the store layout, special offers, but the storage area in the store is still largely a black box for us. “We need to share data and information from the central warehouse with stores, with the carriers.” The logistics center plays a central role in the supply chain. It becomes the platform, the brain of the entire process chain.

The warehouse makes recommendations

“We continue to focus on the stores. The customer sets the pace, there will be no push warehouse. But in the future, the logistics center will make recommendations to the customer, will suggest alternatives to increase efficiency in the warehouse and delivery processes – both to the stores and to the front door”, Karl Högen is sure. “It is not about push, it is about transparency and optimal capacity utilization of the supplier, on the trailer, in the logistics center, and in the store – or in online retailing right through to the consumer”, explains Högen.

Listen to the podcast to find out what else Karl Högen is planning and how he sees the development of the North American market.