Walmart showcased its supply chain innovation to financial analysts on Tuesday at its Brooksville, Florida, regional distribution center. There, automated forklifts unload trucks and large robots sort cases and ferry them through the 1.4 million square foot distribution center. Such automation helps the company react more quickly to consumer demand and improve its delivery service with consistency and predictability. It also reduces the amount of physical labor involved while increasing pay, said John Furner, chief executive officer of Walmart US. And it helps lower costs, meaning a better return, he added.
Chief Executive Office Doug McMillon has covered this ground before. In December, he told investors that automated warehouses eliminate a lot of time workers spend in the back room of stores sorting merchandise. Along with investments in advertising and fulfillment services, “that’s when you have a more attractive income statement,” he said.
So, less monotonous work and more pay, but lower overall costs — the unspoken tradeoff is often fewer workers.
Already the company is cutting jobs from its warehouses as it ramps up automation. It plans to cut 2,000 e-commerce fulfillment jobs in the US and continues to close underperforming stores, leading to additional employee layoffs.
It’s difficult to escape the reality that with more automation will come a further streamlined workforce — a process that will be on rinse and repeat with ever increasing technological sophistication. Technology can improve work productivity and relieve people of some backbreaking tasks like hauling heavy boxes around a fulfillment center. It also creates opportunities for workers to improve their skills and become technicians rather than manual laborers. With each innovation though, new tasks will be added to the robot roster.
This has serious implications for those people without a college education who have traditionally depended on retail or warehouse work to break into the workforce. Automation leaves less need for less educated workers, who may not have the advanced technical skills to operate robots. That could further increase the gap between rich and poor as workers without a college education find fewer job prospects.
Of course, Walmart isn’t alone in its sprint toward automation. Amazon.com Inc. has long used robots in its warehouses, which it credits for its supply chain success. However, more traditional brick-and-mortar stores are embracing automation. Nordstrom Inc. uses automation across its supply chain, which helped it increase its distribution center productivity and speed by 20%. Panera Bread Co. and Popeyes Louisiana Kitchen Inc. are both testing automated ordering in some drive-throughs where robots replace the employees who used to take customer orders.