After a three-year planning phase, Kroger has finally put its state-of-the-art automated warehouse concept, known as the Customer Fulfillment Center (CFC), into operation.
The supermarket giant and Ocado, one of the world’s largest online grocers, are introducing the CFC model in Monroe, Ohio, a city north of Cincinnati. Kroger laid the foundation stone for the high-tech customer fulfillment center with an area of 55 million US dollars in June 2019.
The CFC model combines vertical integration, machine learning and robotics with an affordable and fast fresh food delivery service. In May 2018, Kroger and Ocado entered into an exclusive partnership to introduce CFCs in the United States. The facility leverages proprietary technology solutions focused on artificial intelligence (AI) and advanced robotics and automation to create more seamless and efficient fulfillment, picking and delivery functions for enhanced digital media trading opportunities in the US
How it works
In the highly automated CFCs, over 1,000 robots move around huge 3D networks that are controlled by proprietary air traffic control systems in the unlicensed spectrum. Known as “The Hive”, the grid contains containers of products and ready-to-use customer orders.
When customer orders are near their delivery times, the robots retrieve products from The Hive, which are presented at picking stations for items to be sorted. This process is controlled by algorithms that ensure items are packaged intelligently. For example, fragile items are placed on top, the bags are evenly weighted, and each order is optimized to fit into the smallest number of bags, reducing plastic consumption.
After packing, the orders are loaded into a temperature-controlled Kroger delivery van, in which up to 20 orders can be stored. Machine learning (ML) algorithms dynamically optimize delivery routes, taking into account factors such as road conditions and optimal fuel efficiency.
The Monroe CFC carries thousands of popular grocery products, can fulfill orders up to 90 miles away, and is one of the models designed for the flexible Kroger delivery network, which will also include smaller facilities as well as spoke locations. The CFC can process thousands of orders per day and support the fulfillment of collection orders.
Kroger expects to open a second CFC in Groveland, Florida, a city west of Orlando and a new region for Kroger in the spring of 2021. Kroger has also announced plans to open CFCs in Dallas. Forest Park, Ga. (Atlanta); Frederick, Md .; Phoenix; Pleasant Prairie, Wis .; and Romulus, Me. (Detroit); as well as the Pacific Northwest and West. As the network expands, Kroger will announce additional locations.
From spring 2021 CFC Monroe and Groveland will start to fulfill customer orders. After ordering via Kroger.com or the Kroger app, customers in regions where CFCs are present will receive their groceries from a Kroger Delivery employee in a temperature-controlled delivery van. The employee ensures freshness and satisfaction of the orders, manages order changes and informs customers about their loyalty benefits such as earned fuel points and savings on digital coupons. The network will continue to use third-party stores and partners to deliver certain orders.
At every CFC, employees on site support the delivery processes and help with the processing, packaging and loading of orders. The Monroe CFC will employ nearly 400 people who will focus on customer service and engagement, engineering, operations, inventory and quality management, and transportation.
“2020 was a pivotal year for grocery e-commerce. Kroger’s digital business was over $ 10 billion – with a record 116% increase in digital sales,” said Rodney McMullen, chairman and CEO of Kroger. “We are incredibly proud to reach this milestone that strengthens our position as one of the leading e-commerce companies in America. The momentum we are experiencing is precisely aligned with the development of Kroger Delivery, which is the constant change in the Food consumer behavior underpins the need for entrepreneurial and modern e-commerce and last mile solutions – today’s real competitiveness.
“The introduction of the first CFC marks a historic milestone for the food retail industry in the US,” said Tim Steiner, co-founder and CEO of the Ocado Group. “Since signing our partnership in 2018, the Ocado and Kroger teams have worked closely to lay the foundation for the advancement of their state-of-the-art fulfillment ecosystem across the country and to help Kroger reach customers anywhere, anytime.”