Bringing home the groceries: interview with Kevin Condon
Supermarket chain Kroger continues to innovate as it responds to the challenges of the evolving retail grocery market. Kevin Condon is at the center of that transformation.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Since its founding in 1883 in Cincinnati, The Kroger Co. has a long history of being at the forefront of retail grocery operations. Today, Kroger is a $115 billion company operating in 35 states. Kroger has been an innovator throughout its storied history. In 1901, it was the nation's first grocer to open its own bakeries. It was also the first to sell both meats and groceries within the same store.
That spirit of innovation continues today. The company owns 38 manufacturing facilities that produce about 40 percent of the private-label brands sold in Kroger stores. Recently, it established automated microfulfillment centers to expedite the processing of e-commerce orders and is testing the use of autonomous vehicles for home delivery.
At the center of the innovation is Kevin Condon, Kroger's senior director of engineering and supply chain network strategy. He recently talked with DC Velocity Editorial Director David Maloney about some of the programs under way at the grocery chain, including "Restock Kroger," the company's initiative to "redefine the food and grocery customer experience in America."
Q: Kroger has done more than practically any other grocery chain in envisioning the retail grocery store of the future. Why has the company taken this leading role in technology investment and deployment?
A: While we tend to focus on things like robot-powered fulfillment centers and autonomous delivery vehicles when we think about the future, the truth is that Kroger has been a leader in strategic decision-making and progressive technology investments for our entire 135-year history. You can look as far back as combining the butcher and the baker in the same storefront, the introduction of bar codes and optical scanners, or the more recent customer personalization made possible by data science.
No matter how far back you explore Kroger's history, you can find examples of the company thinking differently about the future of grocery retail. It should come as no surprise that when we launched the Restock Kroger initiative, redefining the grocery customer experience was the first driver we highlighted.
Q: What will your supply chain look like in 10 years? Will there still be stores as we know them today?
A: Stores today certainly don't look the same as they did 10 years ago, and I would anticipate they'll look even more different 10 years from now. Even the past one to two years have seen major changes, with automation, technology, and new processes that formerly would have been seen only in supply chain or manufacturing showing up at retail stores. These types of changes are indicative of an evolving definition of the supply chain to include not just getting products to the stores, but also everything it takes to fulfill a customer's order of anything, anytime, anywhere.
Q: How does your role tie into the innovations that Kroger is undertaking?
A: We're on the front lines of executing the strategies that support the vision of Restock Kroger. "Partnering for customer value" is a major driver of our company's plan to redefine the grocery customer experience, and through partnerships with companies like Ocado and Walgreens, we're deploying supply chain solutions that support that future vision.
Traditionally, network strategy has focused on optimizing capacity utilization and minimizing costs associated with inventory, processes, and transportation. With the evolving expectations of our customer, our network strategy also evolves to include building capacity to support our "anything, anytime, anywhere" customer expectations.
Q: Kroger plans to build 20 highly automated facilities in partnership with British online retailer and technology company Ocado over the next three years. What capabilities will these facilities give Kroger?
A: Kroger's traditional supply chain has been optimized over decades with an uncomplicated goal: deliver products to the store in the right quantities, at the right time, and at the lowest possible cost. A rapid retrofit of our traditional network with direct-to-consumer capability would be inconceivable and cost-prohibitive. Ocado has established itself as one of the world's largest dedicated online grocery retailers and has created game-changing technology to support that business.
Ocado's solution combines robotics and mechanical equipment with warehouse operating and control systems, as well as optimization and route planning for delivery. With the Ocado partnership, we will leverage these capabilities and accelerate the reimagination of the Kroger supply chain.
While our traditional network remains a critical part of our supply chain ecosystem, the customer fulfillment network enabled by Ocado's technology allows us to be extremely efficient and accurate in fulfilling customers' orders and delivering them to their homes or wherever they choose.
Q: Could you talk a little bit about your online grocery home delivery service, Kroger Ship?
A: With Kroger Ship, we've made a bold commitment to providing a seamless customer experience that offers anything they want, anytime they want it, anywhere they want it. The method for getting that order to the customer will be determined by many factors and will leverage all of our supply chain assets: our distribution centers, Kroger Ship fulfillment centers, Ocado automated "sheds," and of course, our stores.
Q: How do you balance maintaining a traditional supply chain while also undertaking innovation?
A: One of the keys to consider with a bimodal supply chain is that "traditional" and "innovative" shouldn't be looked at independently. The reality is that we continue to invest and update our traditional supply chain through innovation. We have advanced automation systems in our traditional supply chain that have been creating value for nearly 20 years.
Sometimes, maintaining the traditional just means replacing forklifts or conveyor motors. But maintaining the traditional can also leverage innovation and emerging technologies. This is most effectively accomplished through controllable pilots and through research and development initiatives, allowing our team to test and learn quickly and then roll out programs that are scalable, robust, and sustainable.
Q: You have a pilot program in Arizona using robotics company Nuro's autonomous vehicles for home delivery. How is that going and what have you learned from it?
A: A partnership with an innovative company like Nuro is extremely exciting for someone in the supply chain strategy space. The fact that we've now expanded the pilot into a second market in Houston is encouraging for the future of the program. I'm looking forward to evaluating applications throughout various supply chain deployments as we learn more about the capabilities and advantages of autonomous delivery.
Q: You also have a pilot program with Walgreens to send customer orders to Walgreens stores for pickup. How is it working?
A: The exploratory pilot with Walgreens creates an exciting opportunity to learn more about how customers want to engage with Kroger and our brands. With Kroger Express [a program through which a select range of Kroger products is offered at Walgreens stores] at 13 test stores in northern Kentucky, we're learning more about supply chain opportunities to support a data-driven grocery assortment in a format different from a traditional Kroger store.
We're also offering our "Kroger Pickup" click-and-collect service at Walgreens locations, which expands options for customers to pick up their orders at even more convenient locations. As this pilot progresses, we're looking forward to creating transformative solutions within the supply chain to support this partnership.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.