Contribute by: Paul Trudgian
(Paul Trudgian Ltd are leading consultants in operational and strategic supply chain planning and they are at the forefront of delivering cost and service performance improvements in logistics operations. Here they discuss the impacts of the rapid development in warehousing operations through automation, artificial intelligence and robotics.)
The warehouse really is at the cutting edge of development and implementation of automation, artificial intelligence and robotics. The speed of change that we’ve seen in our warehouses has been lightning fast, and changes are still afoot. No other function within the supply chain has seen the changes that automation has brought quite as profoundly as warehousing in terms of both operation and management. The way is being led by big names such as Ocado and Amazon, who’ve demonstrated it’s worth investing in automation, and what they have therefore achieved.
Is Automation Only an Option for Big Names?
It’s easy to write off implementing automation in your warehouse operations and management by saying to yourself that you’re ‘not Amazon’, you’re not one of the big players, and you’re not heading down the sci-fi route of getting robots in on the action when your staff are doing pretty well, thank you. Then there’s the cost which will send the idea firmly to the back of your mind.
However, this is a little short-sighted. Like it or not, you probably are competing with the likes of Amazon, or other big players who’ve embraced automation and have got it doing the job more efficiently, and more cost-effectively. You cannot compete unless you at least take yourself to the level playing field and have a go.
Nonetheless, we understand that it takes a shift in the thought process. You will also need operations and warehouse managers who have developed the requisite artificial intelligence and automation skills in order to fully take advantage of these new tools of the trade. What comes out of automation in a big way is data – and lots of it. You need the relevant personnel to make sense of this data and use it to create visibility and efficiency, not simply a quagmire of information. Those are unique competencies in the modern warehousing industry.
Is Automation Here to Stay?
You can’t ignore the automation bandwagon thinking that it’s a fad or a passing phase. Automation has been proven, along with artificial intelligence, to make a real difference on a number of levels from warehouse costs, to reduced wastage, to heightened efficiency. Therefore, it looks as if automation is definitely here to stay and likely to continue apace.
In fact, according to a study by Modern Materials Handling, 52% of businesses are looking to either upgrade their existing automated packaging systems, or to implement new ones altogether. 45% of businesses are going to focus on robotics in the warehouse (such as picking solutions). In fact, logistics and warehousing is thought to be one of the primary sectors which will see a boom in the amount of automation and artificial intelligence deployed over the next few years. This makes sense because a vast number of warehouse tasks and functions can be simplified, made safer, and more efficient (and with less wastage) by using automation.
Does Automation Remove the Need for Warehouse Operations and Management Personnel?
Whilst inevitably some job functions will change or be removed by automation, it also brings about a need for new and different skills. Not every facet and function can or will be replaced by automation. Rather, automation and artificial intelligence should be the tools to get the job done more efficiently. This requires a different type of skillset for warehouse managers heading in to the future.
Now, warehouse operations and management needs to be a more strategic role whereby they can support the multichannel approach that many retailers are now adopting. In theory, by using automation, it should be less about fire-fighting problems, and more about looking strategically at their part of the chain in order to identify ways in which they can make further improvements.
Smart technology in the warehouse can give insight, and this combined with automation in the warehouse, should enable managers to actually become a step removed from operations and instead look at the bigger picture to fuel organisational success. They will need the skills of data analytics in order to excel. This will be combined with the role of meeting compliance and mitigating risk. The role therefore changes quite substantially through automation.
How Much Does Automation Cost for Warehouse Operations?
Of course, this question is akin to how long is a piece of string? However, what you should be looking at is return on investment that is worthwhile. The automation process should ultimately be about contributing to the bottom line. The ability to implement automation processes will depend on your funding, and obviously this does make it easier to implement for the big giants. However, it doesn’t need to be an either-or case. You can implement automation in one area to scale as time goes by.
You can do this by mixing small changes with additional training for key personnel on new skillsets. For example, you may be able to warehouse a greater number of Stock Keeping Units (SKUs) by introducing dynamic slotting which in turn will improve the efficiency of your picking. It can be a case of adapting more gradually according to needs, and scaling as things progress and you see the benefits of automation.
What Matters When Introducing Automation to the Warehouse?
Finally, we need to look at the key principles that really matter when it comes to introducing automation in the warehouse, and assessing its cost. Primary in your thoughts should be how durable and reliable the automatic system or approach is. Uptime is absolutely crucial. You of course should look at the total cost of ownership (TCO) in conjunction with the anticipated return on investment (ROI). You should also pay heed to elements such as maintenance costs, support provision and access, and the risk of your chosen automation becoming obsolete (a very real concern giving the pace of change).
However, automation in warehouse operations and management is here to stay, and you cannot turn a blind eye to it if you wish to remain competitive in to the future.