To increase profits, Walmart is increasing the use of automation throughout its supply chain. At a Florida investor event, Walmart displayed an automated distribution centre that employs gigantic robotic claws and rolling robots in lieu of human workers. Walmart intends to add the same automation to each of its 42 regional distribution centres in the future, thereby improving inventory management and shelf stocking. By the end of January, approximately one-third of stores will have automated distribution facilities. Walmart’s automation strategy is part of a larger plan to increase profits, as CEO Doug McMillon anticipates that profits will grow faster than sales over the next five years as Walmart expands its higher-margin businesses, such as advertising, last-mile delivery, and fulfilment services.
At an investor day, Walmart exhibited an automated distribution centre that utilised gigantic automated claws and rolling robots in place of human employees. The retailer is concentrating on automating inventory management, shelf stocking, and online order fulfilment. In the future years, the company intends to automate all of its 42 regional distribution centres and eventually two-thirds of its stores. Walmart’s automation strategy is part of a larger plan to increase profits, as CEO Doug McMillon anticipates that over the next five years, profits will grow faster than sales.
Expansion of the initiative to automate
By the end of January, approximately one-third of Walmart’s stores will have automated distribution facilities. Last year, Walmart acquired a minority stake in Symbotic, a warehouse technology company, with intentions to implement their technology in all of its distribution centres. The company did not provide a timeline for implementing the change. John David Rainey, Walmart’s chief financial officer, stated that the company expects its capital expenditures to be slightly higher than last year, between 2.5% and 3% of sales, with approximately 90% of capex allocated to high-return areas such as e-commerce, supply chain, and store investments.
CEO’s profit-increase strategy
McMillon stated that he expects Walmart’s personnel to remain roughly the same size, but its composition will change. Walmart may require fewer workers to unload pallets at warehouses, but more to deliver online orders to customers’ homes. In the future years, the retailer’s revenue is projected to increase approximately 4% annually. As Walmart expands its higher-margin businesses, such as advertising, last-mile delivery, and fulfilment services, McMillon anticipates that profits will grow faster than sales over the next five years.
The impact of automation on the workforce
Some of Walmart’s 1.6 million positions will become obsolete as a result of its automation push, but David Guggina, executive vice president of Walmart U.S. supply chain operations, stated that employee retention has considerably increased as work has become less physically demanding. It may require fewer individuals to unload pallets at warehouses, but more to deliver online orders to customers’ doors. Following a surge in online sales in the early years of the pandemic, Walmart has recently laid off hundreds of employees at e-commerce facilities across the country. McMillon anticipates that the retailer’s personnel will remain roughly the same size.
Source: ©Christopher Dilts/Bloomberg via Getty Images ; CNBC
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