Ahold Delhaize

Oliver Baggaley

The grocery industry is undergoing a significant transformation, with the rise of e-commerce, changing consumer preferences, and increasing competition driving the need for greater efficiency and automation. Ahold Delhaize, a food retailer operating in markets across Europe, the US, and Indonesia, has been at the forefront of this transformation. The company serves around 60m customers every week through both stores and online sales (>€11bn in 2022), successfully navigating the complexities of food supply chain (e.g. managing perishable items, operating across multiple temperature zones). The company has implemented a variety of mechanization solutions across its supply chain and e-commerce businesses - from full-pallet mechanization across dry, chill, and frozen, to piece-pick goods-to-person systems for e-commerce. However, as the company has learned, implementing mechanization solutions is not without its challenges. In this article, we will explore Ahold Delhaize's journey towards building a group-wide mechanization capability, including the lessons learned and the steps the company is taking to ensure success.

Ahold Delhaize is relatively unique in operating in markets with different maturities and conditions. For example, their Benelux brands focus on next-day online grocery, whereas their US brands need to appeal to customers who demand online deliveries within a few hours. While larger-scale mechanization can be used in the Benelux’s more centralized fulfilment model, the company needs to assess smaller-scale, lower CAPEX solutions (e.g. micro-fulfilment-centers) to serve the demands of short-lead-time orders. Furthermore, in addition to their grocery brands, one of Ahold Delhaize’s local brands is bol, the digital non-food marketplace leader in the Benelux. Bol in turn requires a very different mechanization solution to the company’s grocery brands, due to factors such assortment range (bol sells millions of unique products), items per order (bol customers may order only single items), and packaging requirements (needs to be adjusted depending on order size). Meanwhile, the existence of “just-in-time” store logistics in some markets and “just-in-case” in others has significant implications the capacity, productivity, and reliability for any mechanized solution. Examples such as these highlight Ahold Delhaize’s diversity of use cases, leading the company to implement a variety of mechanized solutions and suppliers to find what works best for their specific situations.

“By building a group-wide capability, Ahold Delhaize is better positioned to implement mechanisation solutions that improve efficiency and reduce costs across its supply chain and e-commerce businesses”

Ahold Delhaize has implemented a variety of mechanization solutions across its supply chain and e-commerce businesses. In the Benelux alone, the business has mechanized installations from a range of suppliers: Vanderlande (Albert Heijn supply chain); Witron and Dematic (both Delhaize Le Lion supply chain); TGW, and SSI Schaeffer (all bol e-commerce); and Swisslog / AutoStore (Albert Heijn e-commerce). Yet the final installation, which soft launched in Q4 2023, illustrates a shift in Ahold Delhaize’s strategy. The Swisslog / AutoStore installation in the Netherlands follows a similar installation by the same supplier in Philadelphia, for The Giant Company (one of Ahold Delhaize’s U.S. brands). Although Ahold Delhaize are not shifting to a one-size-fits-all approach to mechanization, the Swisslog / AutoStore installations are an example of our search for scalable solutions that can work across different markets.

Ahold Delhaize has learned that implementing mechanization solutions is not without its challenges, yet has turned these challenges into an opportunity to build on past experience - the theory "learning by doing" strongly applies to this part of the business. For instance, the company has previously underestimated both the complexity of integrating mechanized solutions into existing processes and the importance of software in ensuring operational capacity can meet systems capacity.  While mechanization projects will continue to present challenges – they are complex, multi-year projects involving multiple teams – Ahold Delhaize has strived to avoid repeating the same issues. 

Ahold Delhaize's ambition is to build a group-wide capability, where a global mechanization team of cross-brand experts strengthens expertise inside the brands working on individual projects and sites. The company's initial priority is to ensure that new mechanization projects are set up for success by following a tested process, learning from past experiences, and leveraging expertise from across the group.  Aside from embedding the global mechanization experts into project teams, the company is building guidelines or templates required for deliverables across the projects that can be re-used by multiple brands. At the same time, Ahold Delhaize is looking to build a broader capability that stays up-to-date with the latest market trends (e.g. robotic picking), accelerates talent development and supports existing sites . The company is aiming to create a community of individuals interested in mechanization in order to increase expertise and utilize common approaches. By building a group-wide capability, Ahold Delhaize is better positioned to implement mechanization solutions that improve efficiency and reduce costs across its supply chain and e-commerce businesses.