Will Ocado's robotics change the supermarket trade?

Experiments with automation have already lowered costs and increased speed at Ocado's warehouses

Online grocery vendor Ocado has been a disruptive force since 2002. The headquarters in Hatfield are full of examples, which have been developed over 15 years - most of it by Ocado itself. We visited for a tour in mid-August, to see how automation is changing the supermarket trade and learn why Ocado is growing in double digits.

In total, Ocado has more than 12,000 employees, with technology development offices in Poland, Spain and Bulgaria: these countries have a strong track record in software engineering, said head of technology communications Alexandru Voica, as well as the software and engineering staff that the company needs - whereas the UK has a shortage. Despite that, half of the firm's 1,000 technical staff are based at the Hatfield office.

Ocado uses multiple stock systems at its warehouses in Hatfield; the oldest utilising self-driving cranes with a human caretaker, while the most modern is fully automated, with a flatter storage arrangement. Even that is undergoing constant revisions; since it was installed, Ocado has sped up product retrieval time by 50 per cent; each packer can process around 900 items every hour.

The first warehouse system still needs human supervision

From integrator to developer

Because the company is not a traditional online retailer, it has had to learn how to develop its own systems; it's impossible to buy them off the shelf. There is even a machine that opens carrier bags and puts them into crates, ready for packers. Ocado feels that it has moved from being a system integrator, to a system designer, to an inventor in its own right.

That knack for development is apparent in the software running the warehouses, where the company uses machine learning to determine how to arrange items around packers; it will look at the popularity of the goods, the time of year, the performance of the employee - even their height: a short worker will have popular items lower down on the sliding rails that surround each pick station. This completely optimised layout, Voica said, means that Ocado's waste is between 0.7 and three times lower than traditional supermarkets.

AR determines the most efficient way to place food crates at pick stations

In the future, Ocado will start to license its software and technology to other retailers around the world, who want to move to a more automated way of working (including in areas that Ocado doesn't currently operate in, like store pick); it calls this the Ocado Smart Platform (OSP). The separation between the retail and solutions business is similar to that of Amazon and AWS.

Operating in the cloud is intended to ease OSP installation and scalability. The first licensee, signing a deal in mid-2016, was Morrisons, and there is a new European customer, using Ocado's software, to be shared shortly (the deal was announced in June, but the partner wasn't named).

Warehouse innovation

Ocado's development of its warehousing systems hasn't stopped - in fact, general manager Matt Soane told us, the firm began using a new automated system in Andover, Hampshire last December.

The cranes and roof-high shelves of the first warehouse are long gone, partly due to the high number of bottlenecks; if something went wrong or an item was incorrectly placed, a large part of the system had to be closed down to fix it. It worked for Ocado, but was difficult to scale up or down for OSP customers of different sizes.

The Andover CFC stores items across a wide but low grid about the size of a football pitch. 1,000 battery-powered robots, connected to a 4G network, are used to retrieve crates. The robots roam across the top of the grid and reach down to collect crates; they move at around 4m per second and can collect 50-60 items in 10-15 minutes. A major advantage of this system is that it parallel rather than linear; errors will theoretically only affect one robot (literal gridlock won't be a problem), and the grid is less sensitive to product placement.

The newest CFCs use the 'robot hive' system

Ocado is building a new CFC, around three times the size of the Andover site, in Erith in south-east London, using the same system. The firm says that it will be the largest automated warehouse in the world.

Companies like Aldi and Lidl have disrupted the grocery trade while retaining a traditional business model; Ocado has taken a completely different approach that has so far proved successful, and shows no signs of slowing. In fact, the company was trialling a self-driving delivery truck around Erith earlier this year, as part of the OSP, which it aims to have ready to launch by 2019.