Ocado aims to slash labour costs 40% through new 3D printed robots, "virtual distribution centre"

Grocery retailer Ocado Group has revealed a host of automation efforts ranging from the "world's lightest and most efficient grocery fulfilment" robot, which has more than 50% of its parts 3D printed, through to what it described as a "virtual distribution centre" that will allow it to reduce the need for regional distribution centres

It’s been 20 years since Ocado Group made its first delivery this week from a distribution centre in Hemel Hampstead. And CEO Tim Steiner was keen to emphasise how much the world had changed in that time.

“Customers shop for a variety of different missions and want to receive delivery when it suits them,” explained Steiner at an event to announce the innovations known as Ocado Re: Imagined. He added: "“Customers want good value, which really requires the retailer to have low operating costs and an ultra-efficient last mile.”

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However, retailers are constantly having to make logistical trade-offs and ultimately the consumer pays a premium or sees substitutions. Ocado is looking to overcome these issues with the announcement of innovations such as the pre-production of a series of automation platforms and Ocado Orbit -- its name for a system whereby multiple smaller footprint warehouses share this "virtual distribution centre” underpinned by Machine Learning algorithms that aim to create what it describes as a "seamless supply ecosystem."

"The innovations that we are announcing will help reduce labour costs by 30% in the medium term and 40% in the long term, as well as removing some of the most physically demanding jobs,” claimed Steiner.

Ocado automation drive aims to slash labour costs

Traditionally, foods are delivered to regional distribution centres and then shipped to each store within a network. However, this could mean that a customer might end up with longer delivery timeframes or substitutions due to a limited choice of stock. If smaller warehouses or stores want to take on more stock, then they could see higher costs which in turn will be passed onto the consumer.  But Ocado Orbit, the company’s virtual distribution centre, is looking to change this.  By taking a “fundamentally different approach” Ocado designed a solution unique to the demands of online grocery, according to Chief Product Officer Hannah Gibson.

“At the heart of this approach are our large ultra-efficient automated warehouses,” she said: "[Orbit] brings together the efficiencies for large ranges and higher-order accuracy of a large warehouse for a network of smaller sites. This allows sites to offer the entire combined range of the network, allowing consumers access to 10,000s of productions, but short lead times.” (Ocado will use AI to optimise product distribution.)

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The move comes as Ocado Group commited to “significant investments of around £50 million in 2022” in a carrier of areas to support strong growth and as retailers ramp up automation efforts: Deloitte’s 2022 Retail Industry Outlook, notes that automation in distribution was the top priority for 33% of retail leaders.

(Behind that lies the fact that "many retailers are now in a tough spot [when it comes to labour]: 83% are investing most heavily in employee recruitment and retention" the 2022 outlook notes.)

Lightweight robots bring efficiency

Ocado further launched two new robotic innovations—the 600 Series bot and the On-grid Robotic Pick—to bring more efficiencies to online grocery shopping. In pre-production, the 600 Series bot is the world’s lightest and most efficient grocery fulfillment bot, Ocado claimed, and is built using additive manufacturing.

Over half of its parts are 3D printed, which makes it cheaper to build and operator than its predecessor, the 500 Series bot, the retailer said. It will be installed into simpler, more cost-effective buildings as well as micro fulfillment centres which are located nearer to the customer. In turn, the bot is enabling Ocado to build lighter grids quicker and in parallel, meaning they can be built in weeks and not months and at a lower cost.

The robots can be built into any sized building: "Because the 600 Series bots are highly energy-efficient and require a lot less power to achieve the same throughput from the same footprint, new sites will require less chill equipment, lowering energy consumption levels and overall construction costs,” explained Steiner.

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The much smaller bots will make site design easier and mean that technology can be built into simpler buildings. The Ocado automation drive will also see it launch its On-grid Robotic Pick, automating the picking and packing of customer orders directly from the grid. The arms will pick tens of thousands of products of varying shapes, sizes, weights and fragility, as well as pack them densely into bags with human precision and accuracy. The bot arms will use machine vision, deep reinforcement learning and advanced sensing, meaning that they can pick and pack grocery items without prior knowledge of what the products are.

“Today we pick over 500 items in an hour as a single station with multiple sations working in parallell to take just a single customer order,” explained Gibson. “This parallel approach is what allows us to process last-minute orders 10 to 15 times faster than any store-based operation. “[For longer lead time orders, we] store them anywhere in our grid and the only in the morning decide which van route to put them on and when for any new last-minute orders that customers might want in the next couple of hours.”

The company confirmed that the Re: Imagined Ocado automation innovations would go live by the end of 2022 and be deployed in customer fulfillment centres by the end of 2023.