It's hard to put a figure on what proportion of warehouses serving or owned by retailers rely on automation today. But I can tell you something for sure: it is going to increase. The future of retail is multichannel, and the future of multichannel relies on technology that maximizes the benefits of both big data and automation.
The vast majority of retailers are embracing automation with alacrity.
I have no doubt you’ve been hearing about the increasing trend for automation for years, but there are several important factors that are pushing retailers to shift from anticipation to widespread adoption.
The chief reason is that the promise of e-commerce, visible on the horizon for two decades, is now very much being realized, and has transformed retail. It will continue to do so; especially in terms of fulfilment and therefore warehousing. Shipments from warehouses now vary wildly in size and complexity. Long gone are the days when the typical retailer’s DC contained a series of monolithic stacks of product on pallets, ready for the forklift. E-commerce means orders often get picked and shipped direct to the consumer’s home, or a customer’s order needs to get to a local store, or any one of a number of scenarios we simply didn’t need to consider 20 years ago.
In addition, retailers also face a vast increase in the number of SKUs. Consumer trends have moved dramatically in the direction of expanded product ranges, and it feels like the average granola bar comes in a dozen different flavors these days. It used to be that retailers chose to stock only certain varieties in certain stores, keeping a lid on some aspects of complexity of distribution. But consumers are armed with search engines. They want their sriracha mango Greek-style Chobani yogurt, and they want it now. Add this into the multichannel mix, and the humble warehouse now has to be set up to cope with a dizzying range of pick, pack and ship configurations.
Another aspect you may not have considered is the labor element. It’s not just that it’s a serious challenge, given the complexities outlined above, to keep warehousing operations on a human scale. The need for more small-scale picking and packing means more labor. Receiving a full case and transferring it onto a truck requires a lot less time and effort than opening the box, separating out individual pieces, and putting them into another box. Piece picking involves more labor than full-case picking, plain and simple. Meanwhile, just as the need for labor rises, demographic shifts mean those extra man-hours are hard to find. We’ve come across online-retail giants like Amazon hiring more and more warehouse personnel, creating scarcity which pushes hourly rates upward, which in turn increases costs. At first, it looked really smart for e-tailers with little or no bricks-and-mortar presence to build or rent warehousing space in cheap, remote areas. But the downside is that it’s precisely those regions that suffer from scarcity of the right kind of labor because of aging workforce and population decline.
All in all, it therefore seems best to make the most of what mechanical automation offers us.
It’s also time to capitalize on what computers allow us to achieve. First off, Big Data capabilities to crunch unimaginable amounts of information, and to use algorithmic approaches for predicting and responding to stock demand and other crucial supply chain elements that impact warehousing, making everyone’s life easier. Further, computer-based automation contributes greatly to the increasingly important factor of accuracy. Accuracy leads to lower returns and reduced costs overall. Using automation helps because, when you scan boxes and barcodes and shipping labels, you know exactly what is going out of your warehouse, when, and where it’s headed. Witron’s automation systems come with scanners and scales, and if the customer wishes, even tiny cameras that take pictures of the content of a package before it’s closed up, which helps with tracking losses and resolving disputes. Many retailers run franchise stores, and there’s often a conflict between the outlet and the warehouse. Taking photos of the case before it’s shipped solves a great many of these disputes before they’ve begun. One customer needed a dedicated phone line to answer all the calls of complaint around this one issue. Now, with camera-driven automation, that phone rings once a week.
Another simple fact of life is that automated picking is faster than manual picking. As picks become increasingly multi-SKU and time-sensitive, computers are going to win out. They also lead to greater flexibility when responding to changes in fulfilment times. If people are on the floor picking one order, it’s hard to call them back to get them picking another. By contrast, with automation, you can prioritize the orders for picking, giving permission to a particular order to skip the line and go to the picker directly. You can also run less urgent picks, when customers are willing to wait a few days for an item, for instance, at night, when things are quieter and you don’t have to consider overtime, since machines don’t get paid extra for working anti-social hours.
In general, there have been fundamental changes in serving the retail business in the last two decades, and there is every reason to think more and more radical changes are coming. After we watched smaller stores giving way to big-box retail chains, we saw another major shift toward home delivery. Right now, retailers are struggling with balancing their bricks-and-mortar business with e-commerce, and that includes in the warehouse. Who knows what will come next? There are plenty of threats to the retail industry, but when it comes to warehouse automation and Big Data, there’s plenty of opportunity, too.
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