Chewy plans 3 automated distribution centers to ease supply chain challenges


Dive brief:

  • Chewy will open three automated distribution centers over the next 14 months to increase productivity while mitigating the effects of recent labor shortages, CEO Sumit Singh said. on the call for the company’s second quarter results Last week.
  • Singh said the company’s efforts to improve its FC network “have become increasingly relevant as labor markets remain difficult, transportation networks become constrained in capacity, and inflationary pressure on the costs of transportation. freight start to increase ”.
  • After the automated facilities open in Nashville, Tennessee, Reno, Nevada and Kansas City, Missouri, Chewy will have a total of four out of 14 automated facilities. FC. Its first automated facility opened in Archbale, Pennsylvania in October 2020.

Chewy plans to have 4 automated distribution centers by the end of 2022

Pet Retailer Existing and Planned Distribution Center Locations

Dive overview:

More automated installations will reduce Chewy’s exposure to employee shortages, which can slow turnaround times. CFO Mario Marte said on the call that if the current labor shortages continue, “they could cause delays in orders leaving our CFs, similar to what we saw in the second quarter of last year as demand increased and shipments lagged.

Chewy executives did not specify the extent of their labor shortage, but it has become a recurring problem in supply chains this year as companies grapple with increased demand for workers. consumers. To attract and retain employees ahead of peak season, 47% of supply chain executives say they plan to pay higher wages or salaries, according to an August survey by GlobalTranz and Edelman.

Chewy’s VP of Operations Mike Gilbert said last year that he expected improved operational efficiency, order picking accuracy and lower fulfillment costs from the plan. business automation, driven by a people-to-people system using conveyor belts and pneumatic rollers. The change also reduces warehouse traffic and heavy loads for workers, Gilbert said.

Many retailers are making similar investments in automation. In its partnership with Symbiotic to automate 25 distribution centers, Walmart aims to improve the stocking density, pallet density and ordering accuracy of its replenishment system. Automation at United Natural Foods’ distribution centers is expected to double picking speed and improve order accuracy, President Chris Testa said in March.

According to Singh, Chewy’s planned Nashville site joins Kansas City and Reno in the company’s CF pipeline that will open over the next 12 to 14 months. The Nashville plant will open in fall 2022 and employ 1,200 people, according to a press release from the Tennessee Department of Community and Economic Development.

“This new location will also expand our distribution network in the Southeast region, enabling us to provide even faster delivery to over 19 million active customers across the country,” said Pete Krillies, vice president of real estate, facilities and purchases at Chewy, in a report.

Chewy is also investing in existing CFs, as some will see automation renovations from 2022, Singh said during the company’s first quarter earnings call.

Within Chewy’s CF, the company implements efficiency improvement measures such as technology that produces custom boxes based on the size of the packaged items. The refinement of the picking, packing and shipping processes helps speed up the speed with which packages leave the facility, Singh said.

“This process is not only faster than manual packaging and shipping, but it also reduces the amount of corrugated cardboard and packaging materials used per order, which reduces costs and is better for the environment.” , Singh said.

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