By YonBee Yang | March 9, 2021
‘Come with me if you want to live,’ and automate your warehouse. You might recognize that opening line from the 1984 movie The Terminator, a movie that introduced most of my generation to robots. Reality has proved very different but no less problematic in 2021.
Any organisation dealing with logistics needs an extension to their strategy to include a section to outline specifically its approach to logistics automation. It is not entirely the most riveting subject for an article but bear with me.
The warehouse automation market is predicted to grow at a rate of approximately 11% for the next 5 years, increasing between 27-30 billion dollars annually. Venture capital investment in robotics automation solutions is at an all-time high. New use cases are being explored daily which could provide industry disrupting benefits. These opportunities bear consideration. After all, IT strategy is now common-place whereas previously it was just ‘programmes’. So how do we avoid a helpful tote carrying co-bot from suddenly turning into a relentless business killer from the future?
Let us try and avoid having to travel backwards and forwards in time to repair our timeline.
As the market for automation has grown, mechanical automation has become a much larger part of warehouse logistics. This has highlighted the requirement to provide a specific plan for the adoption and implementation of these solutions.
Companies have had success in selecting a single partner or systems integrator to provide all their needs. The one complaint being a tendency to fall into an over reliance on that one partner rather than build internal capabilities.
As the complexity of automated solutions has grown, this approach has been found wanting. The ability to mix logistics systems modules (and partners) and get the best out of the solutions they provide is what differentiates and, in many cases, has built huge competitive advantage for the successful practitioners. Amazon, Ocado, L’Oreal and John Lewis Partnerships have managed to interweave building internal automation capability and understanding, whilst generating huge sales channel growth.
Those that have proven they can provide their own insights and can link related technologies to their own business have reaped the benefits. The alternative can force organisations to learn the hard way. A lack of internal awareness of the compatibility of technology from other industries and the breadth of solutions available already on the market can lead to unsuccessful projects.
So, when does a company need an automation strategy? What are the drivers to indicate that this change is required, and does a one-size fits-all approach exist?
The logistics strategy is the starting point, but rapid progress in industrial robotics, drones and automated guided vehicles means the subject of automation now requires greater scrutiny. It may not prevent completely the chances of a robot assassin spouting pithy one liners, but it may avoid costly mistakes in operational compatibility and implementation.
In the not-so-distant past, automation meant conveyors. Miles and miles of conveyors. This also required substantial capital outlay. The plans were described in years and only large organisations could entertain their implementation.
The route for smaller companies was systemisation and automation of point solutions such as data capture and printing. Islands of mechanical solutions in a sea of labour.
Times have changed. ‘End to end’ solutions have created a new warehouse environment with a WES/WCS at its heart. Large storage modules connect inbound and outbound processes with few ‘touches’ of the product.
More recently, the progress of AGV’s and industrial robotics have enabled the complete automation of transport and picking, realising the ability to create true ‘end to end, zero human touch’ solutions.
In parallel, the advent of flexible robotics and co-robot clusters have coincided with the advent of the micro fulfilment centres and the replacement of outdated warehouse facilities. This promises to dispense long implementation timelines and large capital investments. ‘Flexible’ automation provides an option for ‘automation as a service’ replicating the same scalability and low entry point advantages of cloud computing in the IT world.
Where does an automation strategy fit in?
Automation strategy will begin to form at the intersections of some of the factors that go into creating a logistics strategy. It will crystalise around the areas of inventory policy, transportation, distribution requirements, IT and integration capabilities and probably, most importantly, cost planning. It will be underpinned by the consistent measurement of logistics functional KPI’s aligned to enable the betterment of corporate KPI’s.
Overall, it will bypass the element of supply chain flows and network analysis although the concept of micro fulfilment may have now made that an exception rather than the rule.
How does this need for automation strategy manifest?
The needs can manifest differently depending on the industry, but the main challenges driving the need for mechanical automation are:
- Trends to lower order volumes and higher the SKU mix, driven by direct to customer models of fulfilment
- Shortening delivery and order cycles and a demand for increased visibility of order status and delivery progress
- Higher human resource costs in areas where the logistics industry centralises
These challenges have been exacerbated by an unprecedented speed of change in the technological environment.
This inevitably leads to calls for more ambition and high-minded concepts which describe a technological nirvana ‘smart warehousing’, ‘anticipatory logistics’, ‘retail 2.0’ and the ever present ‘agile organisation.’ These concepts may successfully drive stakeholder ‘buy in’ but does not drive the process of decision making.
What are the next steps?
The simplest approach would be to look at a high-level overview of internal logistics processes and rank them for labour intensity and cost. Selected point solutions would then be matched to the areas of most value.
Other approaches would concentrate on a specific functional process within the warehouse which had been highlighted in pain point & opportunity studies and on broadening out around that focus. For example, to ‘eliminate or reduce travel time for the picker.’
The more advanced approaches would consider a broader horizontal view of processes aimed at reducing overall operational complexity.
It could also come down to a crisis driven firm wide or facility wide cost reduction approach, driven by growth, regulatory or cultural changes. Brexit and Covid-19 being two good examples of external drivers of this nature.
What cannot be ignored is the success of organisations that have reached a capability level for automation that differentiates from their competition. These trailblazers have transformed their operations through technology and are managing the changes to their organisation. This is enabling them to realise the benefits consistently and in the long term.
Progress is achieved by addressing the common challenges facing all organisations beginning the journey with automation technology such as:
- Providing a comprehensive overview of current proven technologies
- Identifying areas of focus
- Selecting the right stakeholders and involvement of staff
- Managing knowledge transfer and adoption
- Identifying the correct roles for responsibility
- Focusing on change management
Organisations can ensure the understanding of how automation is set to change their operations from a performance expectations and cultural point of view.
In conclusion, there is value to be gained in taking a holistic view of automation when establishing your overall strategy. This will improve the chances to deliver the positive outcomes successful logistics delivery programmes always aspire to such as:
- Increased supply chain capability
- Reduced costs
- Improved operational efficiency
- Increased supply chain flexibility
- Improved staff engagement
Automation in any form is simply making business processes more efficient, which has been the goal of logistics operations for a very long time. So, if someone in your organisation approaches you with a plan to bring automation to your organisation, please do not say ‘Hasta la vista baby.’
Reach out today at email@example.com to learn more about our Warehouse Robotics service offering and how we can help you realize your automation supply chain potential.
Contributor: Michael McCloy, Director of Operations at Bricz Supply Chain UK