Google Solving Together – Ocado Technology readies clients for more changes to online retail’s ‘new normal’

Profile picture for user mbanks By Martin Banks June 15, 2020
Summary:
Automation is already a core part of online retailing operations, but there are still more opportunities for it to be exploited. Ocado Technology’s CEO has a to do list.

Ocado
(Ocado )

James Matthews is CEO of Ocado Technology, but, as he told Google’s Solving Together virtual summit, tends to see himself as the CTO in practice. He heads a team of some 2,000 people in a spread of technologies and disciplines which develops the platforms that underpin all three businesses across the Ocado empire:

We have people who are designing steel girders to support physical warehouses in seismically activity locations, and mechanical engineers, robotics engineers, as well as software technologists. So it's a broad end-to-end platform.

Ocado Technology is the arm that develops the Ocado Smart Platform (OSP), the proprietary end-to-end e-commerce, fulfilment, and logistics platform which is sold to third party retailers around the world to deliver and scale up online grocery operations. Areas of focus for the division include automation, robotics, Artificial Intelligence, machine learning, simulation and Big Data. Or as the mission statement puts it: 

We’re putting the world’s retailers online using the cloud, robotics, AI, and IoT.

While the online grocery delivery sector has soared in recent months, the COVID-19 pandemic has not significantly changed the nature of the core business of Ocado Technology,  although Matthews does see the need for some shift in order to better fit changing circumstances. If anything, the company is now seeing more opportunities opening up than its can reasonably deal with, despite being in an investment phase anyway. As a result,  the acceleration is forcing the firm to think about how quickly  it can bring new products to its customers.

The company has the advantage in a changing omni-channel retail market, of having started life as a fully digitalised, online operation, and Matthews sees this as having competitive relevance to its clients that are seeking digital transformation.  Those clients include some of the world’s largest retailers, such as Kroger, with digital transformation projects carrying a collective budget in excess of  tens of billions of  dollars.

One of the challenges at present that the company has to help its clients resolve is whether the new normal is temporary or permanent. For example, will retail online services slide back to pre-COVID levels of activity or will they become even more dominant? According to Matthews the pressure is now on to grow the online delivery element:

The demand for the services that our platform enables, getting food into people's kitchens online, is accelerating. Each of these clients is more interested in going faster, looking at what they're going to invest in those transformation projects. I think it's going to have a very real effect that will play out over the coming months and years.

Whatever is going to happen is clearly playing out over a longer timeframe than perhaps we thought at the beginning of the crisis. And even if there is a vaccine or some big, silver bullet solution to this, it's still going to have a behavioural impact on the way that people approach their life. It's highly likely that some of the consumer behaviours that are happening now become embedded everywhere.

One area where Matthews indicated Ocado continues to put significant development effort is in robotics,. The company already has robot systems that pick food items off the storage shelves, but their end destination is currently still a human who collects together and packs all the items a customer has ordered. The next goal, therefore, is to automate the whole process with robotic cells that complete the customer order ready for delivery.

This then is a mix of software and hardware, with several teams working on it within the company. The key element here is the design and function of the tool at the end of the robot arm and the teams are now, between them, bringing on three iterations of design at the same time. The key software aspects are the vision systems and the Artificial Intelligence, says Matthews:

We were already working on it, but we intend to accelerate that significantly, because it goes without saying, that in an environment where you might be worried about social distancing some of these automation products and techniques will help.

What is 'normal'?

One factor he is well aware of is that, at a time when it is still unclear what shape future degrees of normality may take, aiming for high levels of business agility is a “good plan”.  Over the last few months, he said, the company has undergone a huge change in how it operates, particularly in terms of remote working.

Ocado Technology is another business that has a tradition of work being done by close-knit teams that have been office-based, with a corporate culture that has built up around that. Both the team structures and the culture have had to undergo a radical readjustment to remote working. Matthews expresses himself well-pleased at the rate everyone has adapted.

But it is not just the people aspect that has required adaptation, but also the technology required, not only in terms of the teams working remotely, but also in terms of operating the company’s core platforms. But he is also happy that the investments will continue to bear fruit into the future rather than just a be a short-term response to the pandemic.

All of this stuff will be good for the long term actually, regardless of if we will return to the office. We were going to have to do something anyway because we have 40 to 50 operations around the world in different time zones. So we always knew that we had to get to the point where we have a central mission control, and automate more and more, but this has accelerated.