Rami Levy's Automatic Warehouse: Is this a partnership model that will change the retail sector?
From the beginning, Rami Levy’s business strategy has been based on the principle of providing low prices to consumers by reducing intermediation gaps. Now, he not only promises low prices but also fast service (guaranteed within two hours) to the consumer’s doorstep. This is where Fabric (formerly CommonSense Robotics) comes into the picture, aiming to establish and operate logistics centers in urban centers with pricing based on the quantity of items and orders.
Why is this news? Because Fabric offers a collaboration model designed to address the Achilles’ heel and concern of many retail chains regarding the cost of renting and establishing automated warehouses, making them unprofitable. For example, while Shufersal is currently establishing automated logistics centers in Kedma and Modi’in with an investment of 600 million shekels, Rami Levy noted that he is receiving the automated center without any financial investment in its establishment. How is this possible?
This is where the partnership model comes into play. In other words, Fabric is responsible for the logistical and technological establishment of the center and will receive a certain percentage of the sales. According to estimates, the automated center will handle between 300-400 orders per day, and with nationwide deployment, the online sales share of the network will increase from 7% to around 30%. Therefore, in relation to the expected sales volume, this sounds like a profitable step for both sides.
Through the partnership, Fabric will receive a higher share of sales, and over time, Rami Levy will save on labor costs as the center will be operated by collaborative robots (cobots) – robots designed to work safely in a human environment. And what about saving on rental costs? Fabric’s robots are elevated, thus collecting goods vertically, allowing for a smaller and more efficiently utilized space. This solution enables renting smaller spaces in urban centers, streamlining operations and delivering goods to the customer’s doorstep within an hour or two, while a remote location would significantly increase delivery time and cost.
Currently, Fabric does not provide delivery services but stated that it may be interested in doing so in the future, depending on the company’s vision. In other words, instead of establishing its own delivery service, it would work in collaboration with another shipping company. So, will partnership models change the world of the supply chain?
To anyone interested, the announcement of Rami Levy establishing an automated logistics center in the heart of Tel Aviv (Shalom Tower) in collaboration with the startup company Fabric did not come as a surprise. Chen Goldner, VP of Operations and Supply Chain at Frits, states that, “Until now, we have seen automation mainly in food or large pharmaceutical companies (Strauss, Tnuva, Teva, etc.).
The decision of retail companies to implement automation processes within their organizations indicates an understanding of the need for efficiency through the use of these advanced technologies to achieve a reasonable return on investment. Rami Levy’s step is another breakthrough in the 3PL aspect of automation in the field.”
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