Control towers are taking on an increasingly vital role in modern-day warehouses, powered by advances in artificial intelligence, says Kevin Reader, director of business development and marketing with Knapp.
SCB: What’s your definition of a “control tower”?
Reader: Control towers were developed with the idea that they were going to control supply-chain operations on an overarching level. Today, there are micro-level implementations of that, particular with respect to quality control in warehousing and distribution fulfillment.
SCB: So they’ve evolved from their original conception?
Reader: Some implementations are getting a bit more specialized. And there are experts in particular areas that make them more functional, more capable and higher-performing.
SCB: What’s the status of their use and success in distribution and fulfillment facilities today? Are they well-established?
Reader: Mature in some senses, but it's an emerging technology. It's not widely implemented at this point, but there are instances of spectacular success.
SCB: What has made it possible for this to become a mature technology?
Reader: Part of it is attitudinal. A control tower that's running a fulfillment center or distribution center is connected to a myriad of different solutions — warehouse management systems, warehouse control systems, automation and things like that. We as an industry had to mature to the point where we were willing to look at these particular implementations and plug into various pieces of equipment or software solutions that aren’t necessarily made by us.
SCB: Are there any issues in integrating hardware and software from multiple vendors into this centralized system?
Reader: Yes, there are. In some cases, you have friendly relationships where you agree to a closer integration. In others, you have less-than-friendly relationships with suppliers, and that requires a more manual integration. That might be a way that you bridge the gap.
SCB: Talk about the use of control towers for control and scheduling of labor. What role are they playing, and how successful are they?
Reader: Think about the scope of control in a fulfillment center as being from one end of the facility to the other. Not excluding security, not excluding things like H.R. and those type of aspects, but really end to end. Labor is by definition one of the areas of low-hanging fruit. It’s getting harder and harder to get labor. We're down to hardcore unemployables in many markets, especially as these mega distribution centers go up. We need the ability to move decision-making about labor from every couple of hours or every day to real-time levels, with notifications going out to decision makers on a minute-by-minute basis.
Now, when I plan and schedule labor, I'm planning at a much more finite level. I'm not using labor standards, I'm using labor actuals. My ability to resolve what productivity rates are actually going to be is significantly improved.
SCB: In the world of e-commerce, you have to react to what’s going on at the moment. You don't know what to expect.
Reader: It's analogous to the problems we had with simulation. You couldn't make decisions about how to design a warehouse with calculators and spreadsheets. When you really get down to it, you're using simulation because you're modeling multiple operating independent variables, and it's those mathematical tools that help you to do that. The availability of those tools has driven the use of control towers, and their acceptability and performance, to a whole new level.
SCB: Should we distinguish the use of control towers for labor management from labor management system [LMS] software? Are they two completely different things?
Reader: The control tower takes over the LMS functionality. It's inseparable from the rest of the resources. Looking at it from the practitioner perspective, it's a group of resources that must be employed to move product through the door, effectively and efficiently.
SCB: It is something like taking a warehouse management system and putting it on steroids?
Reader: I look at control-tower technology as a leapfrog technology. You're moving the whole enterprise up to a real-time level, and you're plugging all these pieces into it, from ERP [enterprise resource planning] to WMS, WCS, labor management, and things like that. You can employ mechanization to gain a heck of a benefit.
SCB: What role is artificial intelligence playing in control towers today?
Reader: Massive. There's a huge place for both predictive modeling and AI in how you manage a fulfillment center.
SCB: It wouldn’t be too extreme to say we wouldn’t have control towers in their current form if it weren’t for AI.
Reader: Totally agree. Most people in the mechanization business have to start asking themselves a fundamental question: "Is my business around mechanization, or am I a software business?" It's getting to the level of a strategic perspective.
SCB: What's it going to take for control towers to catch on with a greater number of warehouse operations? Is it simply a growing awareness of the advantages? Or does something more have to happen for it to spread itself more widely?
Reader: I think it's awareness. We're seeing savings on the order of 5% to 30% by rolling out this technology. With typical savings at a P&L level of 8% to 10% of costs. When you can implement that in less than a year, it doesn't take long before you say, "This seems like a very good investment."
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