Dive Brief:

• As part of its four-part transformation to improve supply chain capabilities, United Natural Foods, Inc. (UNFI) announced new efforts, which include implementing robotics powered by artificial intelligence and software automation as well as new scanning technology in its distribution center in Centralia, Washington, according to a Wednesday press release.
• Other efforts to streamline supply chain efficiency include improving operating procedures, increasing training programs for associates and launching other technological improvements. 
• The announcement comes a week after UNFI’s second-quarter earnings call, during which the grocery retailer reported net income and earnings per diluted share both nosedived more than 70%. 

Dive Insight:

UNFI’s announcement of the additions to its transformation program signals that the wholesaler and distributor is looking to adjust course after the company’s CEO told investors that it was not anticipating such a sting to its profitability in Q2.

UNFI said Wednesday it has tapped Symbotic for its AI technology, which will be installed in the Centralia facility, and expanded its use of scanning systems from Systems Application Enterprises (SAE) at the location. These new features will be applied to the 1.15 million-square-foot distribution center to improve supply chain capabilities, customer experience and overall effectiveness of operations, the announcement said.

UNFI has included SAE’s technology solutions at a total of 18 distribution centers and plans to install the systems in more centers throughout 2023 and 2024, the press release said. SAE’s capabilities at the centers include Selector Pro, Loader Pro and Driver Pro, which use scan-based technology to improve order accuracy, enhance the efficiency of outbound deliveries and provide better order delivery accuracy, respectively. 

Symbotic’s partnership with UNFI, which was announced in September 2022, includes plans to install the company’s AI-powered robotics automation system in five UNFI distribution centers over a four-year period. The Centralia center will be the first to receive the automation system, with installation starting at the end of March and a full rollout planned for an unspecified time in 2024. Symbotic’s system is set to be utilized in the facility’s dry grocery area, per the press release. 

UNFI saw significant benefits for buying inventory ahead of supplier increases last year as the company notes this was “not repeatable in the current environment,” CEO Sandy Douglas said during the March 8 earnings call. 

In light of its most recent earnings, UNFI has set in motion plans to strengthen its performance moving forward, starting with reducing its profitability outlook, Douglas said. 

The company has developed a multifaceted transformation plan as it seeks “more scalable and streamlined capabilities” to improve its cost structures, Douglas told investors last week, noting that the company’s board is reviewing the plan this quarter. 

“This plan is focused on improving our customer and supplier experience and addressing legacy integration and capability gaps in our digital and physical infrastructure, all intended to increase effectiveness and efficiency of our customer and supplier value propositions,” Douglas said. 

UNFI’s growing partnerships with SAE and Symbotic follow suit with the efforts Douglas pointed towards. Erin Horvath, UNFI’s chief supply chain transformation officer, noted in the announcement that they are “key pillars of [UNFI’s] overall transformation agenda,” which includes improving operations at all 56 distribution centers over time.