CSA Exclusive: Walgreens opens inventory visibility

Dan Berthiaume
Senior Editor, Technology
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Walgreens is deploying new inventory management technology.

Walgreens is supporting store-based fulfillment with advanced inventory management solutions.

At the recent Blue Yonder ICON conference in Orlando, Chain Store Age spoke with Brian Amend, senior director, supply chain systems, Walgreens, about the drugstore retailer’s decision to enhance its inventory management capability.

Pre-pandemic, Walgreens had been working on plans to optimize and implement new digital capabilities. As COVID-19 spread across the country, Walgreens worked quickly to deploy advanced omnichannel inventory tracking technology to meet the needs of customers.

“Pre-COVID-19, we were planning a full replacement of our order management system (OMS),” explained Amend. “We were traveling down that path with requests for proposal (RFPs), but then the pandemic hit.”

With the arrival of COVID-19, Walgreens shifted its OMS full replacement plan to a strategy that would more quickly produce benefits for the business.

“Things switched, we had to implement technology with a quicker time to value architecture. We only did the piece we thought would add the most capability to add value to the business.”

Walgreens stores remained opened during the lockdown phase of the COVID-19 pandemic as essential businesses. However, given the sudden sharp increase in customer usage of omnichannel shopping features, such as buy-online-pickup-in-store (BOPIS), curbside pickup, and same-day delivery, the retailer realized it needed to accelerate having more advanced algorithms and capabilities to support these offerings.

[Read more: Walgreens now delivers 24,000 items in under two hours]

Walgreens decided to deploy Blue Yonder inventory management technology, which is part of the supply chain management solutions company’s OMS suite.

“At Walgreens, we view OMS as a supply chain solution,” said Amend. “There is tremendous value in knowing where inventory is and how to best fulfill it. A ‘rip and replace’ of the whole OMS platform is a full-year project and higher risk.”

Instead, Walgreens performed a five-month pilot of Blue Yonder inventory management technology across the chain. According to Amend, this strategy provided a less risky, faster implementation that would still improve how it fulfills orders.

“What the customer sees or the employee is picking hasn’t changed,” said Amend. “The algorithms behind it and the decisions on where to get inventory are better, but the process has not changed.”

Amend said that having more accurate inventory available to promise also enables Walgreens to be store-agnostic in its basket search. If a store doesn’t have a specific item a customer placing an omnichannel order wants, another nearby store may be able to fulfill it.

In conclusion, Amend discussed some of Walgreens’ future plans for OMS and inventory management.

“The technology provides capability to fulfill more three-to-five-day orders from the stores,” said Amend. “And artificial intelligence (AI) and machine learning (ML) will improve the accuracy of inventory, shrink, and shipping. It’s very important for us to use ML to see what the probable fulfillment rate is Also, BOPIS and same-day shipping are significantly up. They’re here to stay.”

Based in Deerfield, Ill., Walgreens operates nearly 9,000 retail locations across America, Puerto Rico, and the U.S. Virgin Islands.