SAP employees are working on an intelligent IoT-controlled digital warehouse for delivering groceries.

Retailers and online stores experiment with delivery services for groceries. Industry Cloud & Custom Development takes it up a notch and works on an Internet of Things (IoT) -controlled digital warehouse that might even eliminate waiting for the delivery guy.

Thankfully, those days of grocery stores closing before you got off work and sweeping supermarket employees shoved you out the door at noon on Saturdays are over. So, all is well in the shopping world? Well, not quite. Because now there is a regular supermarket blitz, with seemingly the entire workforce flooding the aisles every night, grabbing the last soy milk or can of cat food, forcing shoppers to spend precious spare time in long checkout lines. And in many countries, shops are still closed on Sundays.

Retailers understand the global need for more flexibility. Big supermarket chains and even Amazon now sell groceries online. But it’s a complicated matter. Shoes don’t wilt, salad does. You need a separate warehouse and extra staff to manage it and to pack boxes. And you need your own delivery service (UPS won’t bring your cookies). Additionally, this doesn’t really help the working population, their main target group. After all, you need to be at home to receive a delivery, and most employees aren’t.

Soy Milk via App

Sascha Magold

This dilemma is not new to Sascha Magold, design thinking coach and project expert in the retail area of Industry Cloud & Custom Development. Sascha is known for working on clever prototypes that give customers an idea what kind of IoT solutions can be realized with existing SAP technology.

His motivation was not the checkout line. “We invited friends over for a barbecue, and I wanted to buy everything the night before,” Sascha explains. He even found a store that was open Saturday night, but the shelves with the barbecue supplies were already empty. Which made Sascha and his colleagues hit on an idea. With a digitalized warehouse, retailers could continue to sell their stock after hours.

Sascha started working on a wooden prototype of a digital warehouse, adding sensors and actors — the counterparts to sensors — that can identify the purchased items, locate them on the shelves, place them on a conveyor belt, and move them to a shutter.

An attached Raspberry Pi transfers all transaction data to SAP Cloud Platform, which immediately posts them to the ERP backend. No data has to be carried over manually, and no separate stock keeping is necessary.

The extra shoppers without additional staff is just one advantage a digital warehouse could hold for retailers.

“You can also sell the goods in the order of their expiration date, whereas in supermarkets, customers always grab the items with the highest best-before date. And shoplifting would be impossible,” Sascha thinks.

Customers can only access the warehouse with an integrated SAP Hybris web shop app that they also use to pick out goods and to pay. The app shows what’s in stock, so you don’t have to get in your car in vain. You just add soy milk and cat food to your digital shopping cart from your couch and pay. This reserves the items for you. At the warehouse, you type in your pick-up code, a shutter opens, and — boom! — you are the proud owner of soy milk and a happy cat. No closing time, no checkout line.

Machine learning could even allow for individualized product recommendations matching the customer’s app profile. After all, those who buy cat food might also need litter. Retailers could also analyze which goods sell best at which time and adjust their assortments.

Fun Ride into the Cloud

It started out as a spontaneous idea that was implemented with the help of the D-shop in St. Ingbert, where all major parts are printed out in 3D. Over time, more colleagues joined in. Meanwhile, Felix Guldner, Michael Biwer, and Udo Lanzer have taken on SAP Cloud Platform and ERP backend integration.

“If you tell seasoned colleagues who only know ABAP to look into cloud technology, they might stonewall. But if you say ‘I’ve built this model, how could we implement this?’, they become curious and often want to participate,” as Sascha describes his approach.

The prototype

Besides the demo effect for big retailers, Sascha sees the model as a perfect door opener for new technologies within SAP. Colleagues see that it’s fun to try out something new.

Once his prototype is ready, Sascha will take it to major retail events and customer meetings. And who knows — even though the use case is just a suggestion, some retailers might seriously consider digitalizing their warehouses. Because even without additional sales, automatized warehouse management is a future-oriented idea.

It would prevent cat owners from having to face a sulking animal because kitty didn’t get her favorite food, or indignant spouses because you don’t have the soy milk. It would also reflect a modern consumer world and advance SAP on its way into the cloud. In other words: a win-win-win situation!