LANCASTER, Texas -- Walmart says it's figured out its future supply chain and planted all the pieces in Dallas-Fort Worth.
The largest U.S. retailer has reinvented how it stocks stores and ships online orders and D-FW is the first market where all the capabilities of its newly transforming supply chain are in one geographic location.
D-FW made sense "for us to bring all of the future in one place at one time," said Dave Guggina, executive vice president of supply chain for Walmart U.S. "Dallas is a pretty special place for us. It's really a unique place in the country."
Walmart's strategy team broke the U.S. into pixels, he said, that allowed them to look at demand in new and different ways across the country -- where Walmart says it has a store within 10 miles of 90% of the population.
"What we found with Dallas is just unique in that you've got urban locations, you've got rural locations, you got a broad socio-economic base," he said. "So this is the location where we have deployed every piece of new hardware and software."
D-FW is also Walmart's largest market with 156 Walmart and Sam's Club stores and it is where it competes with national and regional competitors that also count D-FW as key to their businesses.
The last big piece of the new supply chain is a 740,000-square-foot distribution center in Lancaster that will supply stores with perishable groceries kept in refrigerated units cooled as low as minus-15 degrees. It's been under construction since late 2021.
Other next-gen logistics include:
--Retrofitting Walmart's 1.2-million-square-foot distribution center, built in Sanger in 2001, with new automated hardware and software. It supplies stores with general merchandise and food that doesn't have to be kept at extreme temperatures.
--A third large facility that opened last year on E. Belt Line Road in Lancaster. The automated three-story structure is 1.5 million square feet and can process twice as many orders as Walmart's other fulfillment centers. It ships hundreds of thousands of orders a day. It also ships multiple orders to stores that can act as local sorting centers.
Walmart technology staff partnered with Witron, a German logistics systems company, to create its new systems that use both robotic and artificial intelligence technology.
The grocery distribution center, located on the southwest corner of East Pleasant Run and Cornell Roads, is now sending frozen foods from pizza to ice cream to stores.
It will be supplying all 156 local stores with perishable foods including meat, dairy and produce by summer. The facility is also supplying 14 stores located in Arkansas, Louisiana and Oklahoma.
The mainstays of a grocery warehouse -- wooden pallets and forklifts -- are still there, but the pallets are loaded by robots in the order that food boxes are unloaded in each store aisle. The autonomous forklifts are supervised and maintained by people hired and trained into new warehouse job descriptions such as automated equipment operators and automation data specialists.
Robotics and AI
About 99% of the inventory that flows through the warehouse is handled by automated systems that about 500 workers oversee, Guggina said.
The grocery distribution center can hold 2.5 million cases of goods or double what a legacy warehouse can hold. It also processes two times what a traditional facility can handle in 24 hours.
It has a frozen chamber set at minus 15 degrees and fresh areas at 34 degrees. The facility has redundant electric generation. In the future, the land Walmart purchased in Lancaster could hold a large solar energy field.
Customers will see food delivered to stores with greater accuracy, Guggina said. Items arrive undamaged, fresher and on time, resulting in fewer empty shelves.
"We're able to operate at a lower cost and reinvest back into customer experience, back into price and back into our associated experiences," Guggina said. "We're reshaping work for our associates."
The system removes the complexity from store backrooms.
Inbound loads from suppliers arrive on pallets, are inspected for quality and recorded in an automated inventory system.
Workers input attributes such as weight and dimensions. That allows the robotic system to know how to handle products through a series of high-speed lifts and conveyor belts into a dense automated storage structure that's 80 feet tall. Pallets are unloaded and boxes are put on individual trays with unique tracking information. Each case is stored like data on a hard drive.
As customers shop in stores and online, algorithms determine the sequence and placement of each case on the store-destined pallet. When a pallet is built, it is wrapped for transport and sent to the outbound dock for loading.
Historical leader
Way before there was Amazon, Walmart was always held up as the supply chain leader in retailing when founder Sam Walton realized he could lower prices by bringing in-house distribution to stores. He started building regional distribution centers for goods that didn't require temperature control.
Walmart moved on to perishable distribution centers once it entered the grocery business. It has the largest perishable distribution network in the country. It was also among the first retailers to build its own trucking network.
For Walmart, D-FW has long been a place to try new things -- from learning the grocery business in the late 1980s to opening big suburban supercenters in the 1990s and 2000s to offering curbside online grocery shopping here first in 2015.
Role of workers
The two new Lancaster facilities still need workers but fewer than large traditional warehouses. The new grocery facility has 500 workers and the online fulfillment center expects to have 1,000 employees by this holiday season.
A year ago, Walmart cut 1,047 jobs from a fulfillment center in Fort Worth that it opened in 2013. It was one of Walmart's first facilities dedicated to filling online orders.
In their new warehouse jobs, people are using more of their creativity than physical strength, said Guggina, who calls traditional warehouse workers "industrial athletes."
"When I see these machine-built pallets, I think about how people built those before," he said. "But the pallets now are built in a sequence that's specific to an aisle in a store and that would have been hard for a person to build manually."
Xavier Gonzalez, 37, is an automation data specialist with a college degree in information systems. About 50% of his workday is spent on the floor observing machines. He collects information about how cases of food items flow through the automated system and identifies patterns that need to be corrected.
"It may be that some product is being moved too fast and ends up crushed," Gonzalez said. "It is fun."
Samantha Garcia, 23, has an associate degree in business and is now helping to write training manuals while working in the grocery facility's control center. She had worked with a competitor in a traditional warehouse operation for four years.
"I heard 99% of the product was moved by robotic systems," Garcia said. "I thought, 'What's that all about?' and I applied."
Guggina joined Walmart in 2018 from Amazon and was a leader in the company's first all-apparel fulfillment center. Previously, he worked at Anheuser-Bush on warehouse optimization and canning operations. The Purdue University graduate's first job was as an intern in Ohio's Lordstown automotive assembly plant when it was owned by General Motors.
He's heard repeatedly from workers who say they don't go home as tired as they used to.
The average warehouse worker walks from 8 to 10 miles a day and lifts hundreds of items an hour, he said. "Those are highly repetitive tasks that quite frankly can get monotonous."