Automation Meltdown: Myer's Costly Misstep in Robotic Implementation
The Cautionary Tale of Myer's Automation Misstep: A Call for Diligence in Vendor and Software Selection
In the high-stakes arena of logistics operations, the cautionary tale of Myer’s recent automation rollout serves as a stark reminder of the potential pitfalls inherent in implementing cutting-edge technology. The Australian department store faced significant setbacks with its highly anticipated, robot-operated distribution center in Ravenhall, Victoria, which was marred by a series of implementation issues leading to an $8 million hit on its half-year profits.
Initially delayed by two years, the national distribution center was poised to streamline Myer’s supply chain and bolster its efficiency. However, the reality unfolded differently when the facility went live in August last year. Almost immediately, it encountered severe automation and integration difficulties that prevented its inventory from reaching stores and halted online order dispatches just before the critical Christmas trading period. This disruption left key Myer-exclusive clothing brands trapped within the automated system, requiring manual intervention to resolve the ensuing stock-flow crisis.
Myer’s chief executive, Olivia Wirth, candidly acknowledged the impact of these issues, stating that a "disproportionate number of our Myer exclusive brands were trapped in the warehouse and couldn't be sold." This not only resulted in direct financial losses but also strained operational capacities across Victoria and Tasmania, forcing the company to fulfill online orders from physical store inventories, further compounding their challenges.
The situation was exacerbated by the new facility’s inability to reach its operational targets (KPIs); it was reported that cross-dock operations—a process designed to reduce storage time by transferring items directly between outbound delivery trucks—only achieved 60% capacity due to ongoing system and robotic communication failures.
Recognizing the complexity of integrating advanced robotics with seamless software functionality, Myer’s ordeal highlights the necessity of selecting the right software solutions and partnering with a software team that possesses deep knowledge of warehouse automation. The effective communication between software and hardware within one integral ecosystem is paramount to avoid operational disruptions. Choosing a vendor who understands the intricate balance of this ecosystem and can ensure that both elements work in harmony is critical to the success of automation projects.
Myer’s response involved significant remedial efforts, including the recruitment of a new chief supply chain officer, Darren Wedding, tasked with resolving these critical issues in collaboration with vendors. The company has since made progress, but not without incurring an additional $5 million in costs, with more expected in the latter half of the financial year.
This scenario underscores the critical importance of careful planning, rigorous testing, and most crucially choosing the right technology partners. The consequences of insufficient due diligence and inadequate vendor vetting can lead to severe operational disruptions and financial losses, as demonstrated by Myer’s experience.
For businesses contemplating similar automation enhancements, Myer’s ordeal serves as a compelling argument for adopting a meticulous approach to vendor selection. It is vital to engage with partners who not only provide advanced technological solutions but also demonstrate robust support structures to handle the complexities of implementation and post-launch troubleshooting.
As the logistics landscape continues to evolve with technological advancements, the lesson from Myer's experience is clear: meticulous planning, comprehensive testing, and a strategic partnership approach are not merely advisable—they are essential for success. Ensuring that all systems are compatible and that vendors can offer immediate and effective support in times of crisis will safeguard against the risks of automation and help realize the potential benefits of such investments.
Myer's new center to feature 200 Autonomous Mobile Robots (AMRs) and three different AMR technologies from Geek+ RS8 Shuttle, P800s, and Körber’s sortation solution.
Myer has recently taken possession of its new National Distribution Centre (NDC) – a 40,000 square-meter facility in Victoria.
The new warehouse, located in Ravenhall, Victoria, will hold over 100,000 SKUs and will consolidate both in-store and e-commerce fulfillment into one national distribution center.
Myer is currently in the process of fitting out the facility and expects it to be fully operational by March 2023.
Myer entered a ten-year lease for the facility in the Melbourne suburb of Ravenhall last year in a bid to drive “significant efficiencies in our online fulfillment operations”, CEO John King said at the time.
The move represents the next phase of the retailer’s ‘factory to customer’ supply chain initiative and follows improvement to its online operations last year in response to the pandemic.
Myer executive GM of supply chain Tony Carr said the NDC will improve inventory management and delivery management for online orders while maximizing sell-through and reducing future markdowns.
“Having an NDC is incredibly important as it will ensure we can accommodate the growth in our online business, as well as providing the service levels our customers expect and deserve from Myer.
“It will allow us to be more data-led in stocking our stores – to allow stores to draw from the NDC as they meet demand (not the push model of old) ensuring we continue to fulfill the stores more efficiently to meet customer demand.
“It will ensure, through automation, that online purchases are serviced in an even faster and streamlined way.”
In addition to online orders, the facility will also provide centralized fulfillment for stores for “improved inventory management, reduced markdowns, and maximum sell-through”.
Myer’s LinkedIn Post announcing the new National Distribution Center in 2023.
King said the distribution center will “fundamentally change our supply chain operations – delivering a faster, more efficient and profitable way to meet the demands of our online business and ensure we maximize the inventory flow to our stores”.
“This is an important deliverable of our Customer First Plan and importantly, will deliver a better outcome for both our customers and shareholders,” he said.
Technology at the site will include pedestal sorters to sort products by store and/or carrier for cross dock, store replenishment, and online orders.
The NDC will also feature more than 200 Autonomous Mobile Robots (AMRs) and three different AMR technologies (Geek+ RS8 Shuttle, P800s, and Körber’s sortation solution).
The rollout will include the largest implementation to date of Geek+ RS8 Shuttle System in the Southern Hemisphere.
The design of the NDC is to a 5-star Greenstar rating and includes water harvesting and recycling, LED lighting throughout the warehouse and offices, energy efficient fittings, water-saving taps and fixtures in kitchen amenities, and the use of sustainable materials where applicable.
Solar will power the NDC’s energy consumption by an estimated 20%, with any excess power returned to the grid.
“Our NDC will fundamentally change our supply chain operations – delivering a faster, more efficient, and profitable way to meet the demands of our online business and ensure we maximize the inventory flow to our stores,” Myer CEO John King said.
“This is an important deliverable of our Customer First Plan and, importantly, will deliver a better outcome for both our customers and shareholders.”
Original Story at https://www.warehouseautomation.ca/top-news/2022/7/15/myer-to-use-200-robots-to-dispatch-online-orders-9fgr9-csejk > (14 July 2022)
Myer selects Körber for its new state-of-the-art National Distribution Centre
Myer, Australia’s iconic department store, is transforming its supply chain operation by developing a new National Distribution Centre in Victoria. The leading retailer has selected Körber Supply Chain’s automation technology to underpin its operations.
Established more than 100 years ago in Bendigo, Myer department stores have been a part of Australians’ everyday lives for decades. With the aim of scaling its online business to over $1 billion in sales, Myer is set to embark on a supply chain transformation with the launch of a new state-of-the-art 40,000 sqm National Distribution Centre (NDC) in Victoria.
Over the past two years, Myer has seen significant growth in its online offering. In March this year, Myer reported that at its Half Year Results, Myer’s sales were up 8.5 per cent, with online sales growth of 47.5 per cent. Online sales represent $424.1 million, and 27.9 per cent of total sales, highlighting the strength of Myer’s online business, with growth that is outpacing most of its peers, including online pure plays.
In order to cater for this growth, Myer has recently taken possession of its new NDC in Dexus’ Horizon 3023 industrial estate in Ravenhall, Victoria.
A state-of-the-art facility, this new site will hold more than 100,000 Stock Keeping Units (SKUs) and offer Myer’s growing customer base benefits and efficiencies both instore and online.
INVESTING IN THE FUTURE
Prior to committing to this facility, Myer was fulfilling the majority of its online orders through its expansive store network. But with online continuing to grow, and with growth aspirations for this important part of the business, a centralised fulfilment model was needed.
By consolidating both instore and e-commerce fulfilment into one distribution centre, Myer’s customers will benefit from faster order processing, delivery timeframes and more accurate stock availability. With a commitment to offering the very best e-commerce service, the leading retailer has invested in this mega facility and deployed the latest automation technology from Körber Supply Chain.
This facility will service up to 70 per cent of wholesale fulfilment, and the state-of-the-art automation will deliver improved levels of service for Myer’s customers, operational efficiencies and reduced cost per order.
STATE-OF-THE-ART AUTOMATION
The new distribution centre will feature more than 200 Autonomous Mobile Robots (AMRs) and will become the first site worldwide to boast three different AMR technologies – Geek+ RS8 Shuttle, P800s and Körber’s sortation solution. It will also be the largest Geek+ RS8 shuttle implementation in the Southern Hemisphere.
This includes pedestal sorters to sort product by store and/or carrier for cross dock, store replenishment and online orders. The Geek+ AMRs will process hanging online product and store replenishment. Myer will also have 8-metre-high AMRs with the capability of put away and retrieval of boxed product.
“The integrated DC design will eliminate the need for multiple systems and multiple sites. By consolidating instore and e-comm fulfilment into one central DC, Myer will be able to achieve substantially high fulfilment productivity gains,” Rizan Mawzoon, Head of Transformation at Körber APAC says.
SAFETY AND SUSTAINABILITY AT THE FOREFRONT
Myer’s new NDC will utilize solar power, with solar powering an estimated 20 percent of the energy consumption of the site. Furthermore, any excess power will be returned to the grid.
The design of the NDC is a 5-star Green Star rating. It includes water harvesting and recycling, LED lighting throughout the warehouse and offices, energy-efficient fittings, water-saving taps and fixtures in kitchens amenities and the use of sustainable materials where applicable.
Operator safety has also been central to the deployment, and absolutely paramount at Myer. Körber’s design put a special focus on operator safety, including typical functions such as unloading, loading, and storing containers using safe work zones.
“We’ll be focusing heavily on the health and safety of all team members in this facility, including all the replenishment stations. All the different areas within the warehouse are designed with occupation and health and safety at the forefront,” Rizan Mawzoon, Head of Transformation at Körber APAC says.
Körber also ensured other safety benefits were met by ensuring minimum human contact in the movement of products into the DC, by building smart recognition and smart workflows into the DC design.
THE BEGINNING OF A NEW PARTNERSHIP
As a complete DC design and technology-integrator partner, Körber will partner with industry specialists to create and deliver the overall DC functionality and solutions including conveyors, racking and the AMR solutions for Myer.
The complete project will take 12 months, with staged launches of various operational divisions across the twelve-month period and a fully operating National DC is targeted for early 2023.
For Myer, Körber was the best solution to help boost the leading retailer’s e-commerce capabilities. “We went through an extensive tender process with numerous suppliers and the solution, technology and overall plans that Körber presented made them stand out from everyone else we considered,” Tony Carr, Executive General Manager of Supply Chain at Myer says.
Tony also says the team are so excited to get the keys to this state-of-the-art facility. “We know that with the leading technology in place at the NDC that we will deliver an even better experience in store and online for our customers, as well as significant efficiencies for the business. By having a centralized fulfillment model and deploying the latest automation technology with Körber Supply Chain, this will result in improved inventory management, reduced markdowns and maximized sell-through – whilst also producing significant efficiencies in our online fulfillment operations,” he says.
“The team are so excited to get the keys to this state-of-the-art facility,” Tony continues. “Having an NDC is incredibly important as it will ensure we can accommodate the growth in our online business, as well as providing the service levels our customers expect and deserve from Myer.
“Myer’s online business is one of the biggest retail online stores in the country, but we want it to be bigger and to be able to keep up with customer demand. We have an aspiration for our online businesses to be over $1 billion in sales, and with the capacity and technological advancements the NDC brings, it will help us deliver on this important aim, while ensuring the best experience for our customers.
“There are widespread customer benefits and efficiencies anticipated for both the stores and online businesses. It will allow us to be more data-led in stocking our stores – to allow stores to draw from the NDC as they meet demand, not the push model of old, ensuring we continue to fulfill the stores more efficiently to meet our customers’ demands. This will provide huge benefits to our business. It will ensure, through automation, that online purchases are services in an even faster and streamlined way.”
“This new national DC will feature a technology stack by Körber that will help eliminate bottlenecks and improve efficiency and productivity, ultimately enabling Myer to deliver better customer service nationwide,” Nishan Wijemanne, Former Managing Director at Körber APAC says.
“We’re delighted to partner with such an important Australian retailer in delivering its state-of-the-art national DC. As we return to work and our social calendars resume, one of Australia’s most iconic retailers is set to be busier than ever. By investing in the best supply chain technology in the market, Myer is well-placed to capitalize on this demand and serve its customers in a timely, accurate and efficient way,” Anthony Beavis, Managing Director ANZ concludes.
Full Story by Edward Cranswick - July 15, 2022 - at https://mhdsupplychain.com.au/2022/07/15/myer-selects-korber-for-its-new-state-of-the-art-national-distribution-centre/
