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Walmart is set to open a new tech hub in Austin, Texas focused on developing technologies to improve back-end processes, including finance, governance, human relations, employee training and manufacturing.

Driving back of store efficiencies

512 Tech reports that the facility, whose design is reflective of the start-up community, will open later this month. With a focus on developing technology-based solutions to drive back of store efficiencies, the team will optimise emerging technologies including machine learning, artificial intelligence, blockchain and IoT.

Access to a new pool of talent

Jason Norris, Director of Engineering for Walmart Tech ATX, stated the decision to locate in Austin was in part to access the pool of talent in the city. “At Walmart we are really changing the way we work in a lot of ways. Austin is a really unique city in that you have a very deep pool of that talent, but you don’t incur some of those higher costs of living that you do on the West Coast and East Coast.” He expects to the team to grow from 13 to 60 people over the next six months.

Looking to emulate success of Walmart Labs

This approach reflects how Walmart established Walmart Labs in 2011. This unit, which was initially developed following an acquisition, went on to acquire more than 15 other companies with the goal of advancing Walmart.com with a focus on social, mobile and local. This has evolved over the last seven years and currently includes Walmart Ecommerce and store technology teams. The focus is on creating the world’s leading retail platform to enable the most seamless customer experience, increasing operating efficiencies while decreasing enterprise expenses and ensuring that store and corporate associates have access to secure digital solutions.

Complements Store No.8’s store focus

While the new unit in Austin will focus on back-end efficiencies, last year Walmart established Store No.8 to assess the opportunities for innovative technologies such as virtual reality, artificial intelligence and driverless vehicles within the retail environment. Earlier this month, it acquired VR platform and content studio, Spatialand, which will create the foundation of the incubator’s third portfolio company behind Code Eight and Project Franklin.

Bridging the gap with the future Walmart

Setting up these tech-led units demonstrates how Walmart is looking at the opportunities for the business over the longer term. While it is currently building its ecommerce business and reinventing its store formats to ensure their future relevance, these three divisions will help it to bridge the gap between its legacy store business and the next three to five years while driving further efficiencies within the organisation.

Walmart has announced new plans to introduce stricter supplier delivery regulations to boost availability in stores.

Delivery on time or face a fine

Under Walmart’s new scheme, suppliers will be required to deliver more products on time to its facilities or be faced with a fine. Steve Bratspies, Walmart Chief Merchandising Officer, has revealed that large suppliers will have to deliver full orders within a specified one or two day window 85% of the time (previously 75%), or be fined 3% of the delayed goods. Smaller suppliers will need to meet the criteria 50% of the time, up from 33%. In 2017, the retailer revealed that its goal was for orders to be delivered on time 95% of the time.

Working with suppliers to improve availability

In order to further improve availability and lower inventory, Walmart will also share its On Shelf Customer Availability (OSCA) data with suppliers at its Supplier Growth Forum this week, something which was previously only available internally.

Making significant progress

“We have reduced inventory in stores in order to have the right amount of stock and have made significant progress in the past few years,” commented Steve Bratspies, chief merchandising officer at Walmart U.S., told Reuters. “We want to focus on improving that even more.”

This week, Chinese ecommerce business JD.com, which Walmart has a 12.1% stake in, announced it is building a traceability system with over 30 brand owners on its blockchain platform.

When complete, the system will enable customers to trace and review information about a product’s journey, including when and where it has been processed, stored, sold and delivered. The initiative will focus on brands and products that are susceptible to counterfeiting as well as fresh produce, where chain of custody and product origin are of obvious interest to consumers.

Full chain traceability, enabled by blockchain and IoT technologies, represents a significant leap forward for brands looking to engage more deeply with consumers. This, combined with direct supply chain benefits means blockchain has the potential to add value on two fronts – making it a particularly appealing prospect.

We’ve been tracking the development of blockchain-enabled solutions this year, and considerable progress has been made by a few businesses. But we are in the exploratory phase and blockchain is still an esoteric concept for many. With that in mind, I thought I’d look at why, in my opinion, blockchain has so much potential, and how it might be used in the food and grocery supply chain.

What is a blockchain?

A decentralised, distributed digital ledger – the key words here are “decentralised” and “distributed”, meaning individuals in the blockchain see the same information.

Why is it useful?

Firstly, it can be accessed by anyone with permissions at the touch of a button and secondly, once distributed, it’s extremely difficult to forge or corrupt. Information is not held by any single entity and therefore there is no single point of failure. Data is automatically reconciled at intervals ensuring consistency and continuity across the blockchain.

Where’s the supply chain value?

Imagine IoT technologies automatically capturing and transmitting information relating to a product’s journey, including timestamps, temperature, carriers etc. to a blockchain, making previously disparate or invisible details visible to all key stakeholders – including consumers.

This is the type of solution being explored by JD.com and Walmart among others.

Blockchain is still some way from full commercialisation, but with clear potential to add value to both businesses and consumers, it won’t be too long before we begin to see it deployed more widely.

Interested in learning more about blockchain? Check out this report on Walmart’s initiative.

Chris Irish
Supply Chain Insight Manager

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