Over the last several years there has been massive interest in automating supply chain fulfillment activities. With rising labor shortages, capacity constraints, and ever-increasing order volumes, more and more retail and 3PL leaders are encouraging their teams to evaluate the emerging robotics and automation technologies.
Whether the interest is sparked by seeing these machines firsthand at a trade show like Promat or Modex, or from feeling operational pressure on the floor at the distribution center, supply chain fulfillment teams are trying to understand a solution fit for their operation.
This increased interest in the robotics space has drawn in serious external investors. In July 2019, more than $10.1 Billion was invested in robotics worldwide, up from $1.1 billion in June 2019. Granted, the bulk of this influx of investment capital went towards technology for self-driving cars and intelligent healthcare systems. Nonetheless, supply chain robotics investment was not too far behind {The Robot Report}. We’re also seeing a human capital shift occurring in the robotics space. For example, if we look at leading supply chain distribution robotics vendor, Grey Orange, we’ve seen them grow to over 600 employees in just 8 years- roughly 25% year over year growth. Growth paired with funding is supporting many robotics organizations as they continue to innovate and scale their products.
In a time when labor shortage is becoming a serious problem, cutting edge technology is proving to find its place within the distribution center, when does it make sense for your organization to invest in these technologies?
Here at Bricz, we have heard our customers list several deterrents from adopting these solutions; large capital expenditure, internal resourcing bandwidth, solution longevity and compatibility. Fear not, we have outlined a framework for how your organization can approach such solution viability and fit.
- Define the opportunities:
- Which functions of your operation cause the greatest bottlenecks?
- Which transactions consume the most manual labor?
- What are repetitive tasks that can be automated?
- Vendor and solution qualification:
- Understand the core competencies of the solutions and compatibility with your product type and operation.
- Are significant infrastructure changes required?
- Are your current or projected volumes compatible with the solution entry point thresholds? For example, minimum threshold for Solution A is 5000 pick lines per hour, but your operation is doing 2,000/hour.
- What does the implementation timeline look like?
- Understand the return on investment:
- What are your fully burdened labor costs? Think about wages, overtime, payroll taxes, employee benefits, and other labor costs.
- What are your current and projected volumes? Evaluate metrics such as piece picking units or lines, pallets built, number of shuttle movements, required manual workers for a specific task or shift.
- What is the total cost of ownership of the solution? Take into consideration capital expenditure for hardware, services for implementation and integration, annual software, support and maintenance costs, etc.
- Understand the labor replacement value of the solution. For example, with a new solution I can now execute X number of picks, which reduces X number of pickers, and in turn, saves X in manual labor spend.
With these solutions rapidly introducing new product offerings and improvements, it’s crucial to be up to date with all market options. Contact the Bricz team today to engage in a robotics/automation conversation.
Contributor: David Steinfeld, Manager at Bricz