As the winter holidays approach, Amazon and Walmart are touting the speed and efficiency gains they’ve seen recently with changes to their fulfillment strategies.
This holiday season marks the first holiday season for Walmart customers. start to feel the benefits The company announced this week its retailer’s “next generation supply chain.”
Walmart has already opened three next-generation fulfillment centers in Joliet, Illinois. McCordsville, Indiana. and Lancaster, Texas. A fourth facility is scheduled to open next year in Greencastle, Pennsylvania. Last month, Walmart announced its next plan. 5th Next Generation Fulfillment Center The 900,000-square-foot facility in Stockton, California, is scheduled to begin operations in 2026.
Earlier this year, Amazon completed the transition from a single fulfillment center in the U.S. to eight different regions in an effort to reduce costs and optimize delivery speeds.
Amazon’s move to regional fulfillment networks has exceeded the company’s expectations and has had a “bigger impact than we optimistically expected,” President and CEO Andy Jassy said in a statement. This was stated at the third quarter financial results conference. last week.
Here’s what the two companies recently shared about the status of their fulfillment pivot:
Walmart values convenience, availability, and accuracy
With three next-generation facilities currently in operation, Walmart’s supply chain, distribution and fulfillment executives David Guggina, Jennifer McKeehan and Parvez Moussani say they are increasing the number of next-day delivery orders. He said he was able to “significantly increase” the number.in Recent company blog posts.
The three centers, totaling approximately 1.5 million square feet, stock a wider range of popular items, including clothing, toys, electronics and more.
The company is expanding its distribution center automation technology to make deliveries to stores faster and more efficient, and says more than 15% of its stores will receive items from automated distribution centers this year. .
In addition to the next-generation facility, Walmart also announced that it will install seven automated marketplace fulfillment centers within the retailer’s stores, scheduled to be operational by Thanksgiving. Stocking “thousands of our most popular products,” these centers will have a separate inventory from store shelves, with a particular focus on assortment needs to fulfill pick-up and delivery orders. says the blog post.
“This approach increases accuracy and minimizes the need for substitutes, providing customers with a more accurate and satisfying shopping experience,” executives said in a blog post.
The blog post also noted that Walmart has once again expanded its same-day delivery hours. In September, the retailer said it would deliver products to customers who ordered by 9:30 p.m. Orders placed before 10pm will be shipped the same day. This holiday season, customers can enjoy late-night delivery service at his 4,000 stores until 10:30 p.m.
With the latest updates on fulfillment and delivery, Walmart is relying on staffing to meet delivery commitments.
What Walmart wants Employees take on more last-mile deliveriesDoug McMillon, president and CEO, said this at the Goldman Sachs Global Retailing Conference in September.
Changes in Amazon’s fulfillment network exceed expectations
Amazon has been looking to right-size its national fulfillment network over the past year after an initial surge in e-commerce demand due to the pandemic leveled off.
Previously, Amazon had to ship products from all over the country if the local center didn’t have them in stock, which took longer to deliver. By shifting to a regional strategy,he gets a profit Jassy told analysts that this could take many forms, including improved inventory levels and improved connectivity between various facilities and delivery stations, resulting in shorter delivery routes and faster delivery speeds. Ta.
“We continue to make steady improvements in fine-tuning our placement algorithms to enable fulfillment within more regions and further consolidate into fewer shipments,” Jassy said. I did.
Although Amazon is no longer focused on leveraging new real estate to rapidly expand its operational capacity, its goal of increasing delivery speed remains the same.
“The shorter the distance traveled and the fewer touches, the lower the cost of service,” Jassy said. “But perhaps most importantly, shorter distances and fewer contacts means customers can receive their packages faster. We continue to be on pace to provide the fastest delivery speeds to our Prime customers.”
Amazon continues to reduce fulfillment spending and focus on other ways to reduce fulfillment complexity and costs, as well as streamline operations and speed up deliveries to Prime members.
The drive includes using placement algorithms to optimize inventory levels within the company’s regional network, which the CEO said is helping drive cost savings. Jassy also pointed out that Amazon has changed many of its connections with fulfillment and sortation centers to more direct connections between fulfillment centers and delivery stations, which means “regions have more local inventory. The easier it gets,” he said.