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Home » Automation Plays Key Role in Future-Proofing Supply Chains

Automation Plays Key Role in Future-Proofing Supply Chains

August 4, 2021
Sponsored by Seegrid

When COVID-19 upended the global economy, the most successful businesses transformed their supply chains to adapt. Many of these transformations are here to stay, especially certain long-overdue technological innovations.

Some of these changes had already been gaining traction before the pandemic. Since 2014, with the rise in e-commerce, an increasing number of companies have been looking to logistics and supply chain technologies to provide end-to-end shipment visibility, actionable analytics, automated processes, and frictionless documentation and payments. Warehouse and distribution center networks have been seeing large-scale transformation in lean-inventory management and e-commerce operations. Automation is now a given for regional distribution centers more than 200,000 square feet segmented to store inventory, and to cross-dock palletized and deconsolidated SKUs for last-mile delivery, where productivity gains are measured in minutes or seconds. Lockdowns and false-start reopenings last year brought new urgency to the game as businesses labored to keep essential goods flowing to front-line workers, businesses and consumers.

A major post-pandemic concern is building resiliency and flexibility into supply chains, as pandemics, extreme weather events, infrastructure vulnerabilities, shifts in consumer behaviors, heightened demands and labor shortages prove to be the new norm. At minimum, skilled-labor shortages and heightened service expectations will continue to put upward cost pressure on wages, materials and operations in the post-pandemic environment. In this context, factory and warehouse operators are seeking new automated solutions to gain and hold a competitive edge.

“The most significant factor during COVID-19 was the transition of retail channels and the rapid growth of e-commerce,” says Clint Reiser, director of supply chain research for business consultancy ARC Advisory Group. Reiser doesn’t believe the landscape will simply revert to previous norms over time. “I think some of that e-commerce purchasing and use of additional channels is going to be sticky, particularly for those who were forced into doing things a different way and continue to see benefits.”

The Hybrid Workforce

Chronic labor shortages in warehousing that have accompanied e-commerce growth, Reiser believes, are a key driver for automation. The scarcity is driving companies to look for ways to accelerate pathways to automation to reduce reliance on human labor. “There are fewer moving parts,” he adds, “fewer people to schedule, less staff to handle, less replacement required, and the labor you have can be assigned to more value-added tasks.” 

Reiser’s survey research conducted in early 2020 for ARC Advisory Group, in partnership with DC Velocity, showed that 96% of respondents, just prior to lockdown, expected the warehouse automation value proposition to increase within three years, with 60% “very likely” to invest in warehouse automation during that time. More specifically, when asked about likely investment in specific technologies, nearly two-thirds of respondents were looking at conveyors and sorting systems over the following 3 years, while roughly half were considering shuttle or automated storage and retrieval systems (ASRS), as well as automated guided vehicles (AGVs). 

Another accelerator has been the range of technology advances seen in recent years, which deliver meaningful visibility and efficiencies in the warehouse more simply and cost-effectively. A case in point is the use of autonomous mobile robots (AMRs), which bring maximum flexibility and productivity to warehouse operations, as opposed to manually driven forklifts, traditional AGVs, or “bolted down” solutions such as conveyors and automated storage and retrieval systems.

Unlike stationary conveyors, or traditional AGVs that operate on fixed paths, AMRs utilize a system of sensors, scanners and onboard technology to liberate lifts, pallet trucks and towing vehicles from fixed routes. Many of today’s AMRs use light detection and ranging (LiDAR) laser scanning to build a 3D digital environment with, among other benefits, the ability to avoid unintended contact with obstacles. That in turn makes it easier to optimize programmed trips during a shift, reconfigure shelf systems and operations, and scale up or down to meet changing demand. LiDAR technology also allows AMRs to operate safely within a facility alongside human-driven equipment.

A Flexible Solution

“Traditional warehousing before e-commerce was fairly predictable in terms of service demands and cost,” explains Jeff Christensen, vice president of product for Seegrid, a leader in AMRs for material handling. “In the old tech days, companies always had to make a tradeoff choice,” he says. “If you didn’t have a high degree of predictability, you had really high costs. Traditional AGVs navigated by relying on built-in landmarks and infrastructure, in which vehicles followed a wire in the floor, and if you wanted to change the production flow, you had to first get out a jackhammer.” That in turn lowered productivity as customer profiles and demand patterns changed over time. 

Predictability went out the window at the height of the COVID-19 crisis. “In the first two months it was an environment filled with uncertainty,” Christensen recalls. “Things were on hold or slowed as businesses tried to figure out what they needed to do. Businesses deemed essential had to remain operational. That meant reconfiguring spaces, working with less labor, implementing new social distancing guidelines, and making sure the labor had the right protective equipment. Then, once it became clear this was going to go on for a while, there was a need to plan ahead.” Even then, many large manufacturers and distributors proceeded carefully, waiting to see how the pandemic’s impact on supply and demand would play out, and what would ultimately be required in order to build more adaptable and resilient supply chains for the future. 

As price differentials with stationary systems come down, flexibility plays a greater role in business calculations. “If you install conveyors instead of mobile robotics, and you finance that over a five-year lease,” Christensen argues, “what are you going to do if your product flow changes?” The question is particularly apt as warehouses try to gauge the proportions of space that will be needed post-pandemic for B2B storage versus B2C cross-docking operations. 

Once their operating software is integrated into a warehouse management system (WMS) or a factory’s master production schedule (MPS), mobile robots can be easily reprogrammed as shelf systems are reconfigured, to optimize routing and trip time. “You don’t need to have your warehouse laid out in a rigid format, bolted to the ground,” Reiser says. “You can move [transport capability] to a different part of the warehouse or redeploy the AMR to a different task. You have that agility and flexibility.” 

AMRs are typically provided on a sale, lease or subscription basis, enabling facilities to select the purchasing model that best supports their business needs. 

Drive Continuous Improvement

Although the growing deployment of AMRs is mainly in response to a shortage of skilled workers, Christensen emphasizes that in most cases the adoption of AMRs is meant to augment an existing workforce, not replace it. Automation allows workers in repetitive or dangerous jobs to move up in an otherwise highly stratified workplace, he adds, citing the example of a tow driver reassigned to manage workflow for a cluster of 50 robots in a facility. 

He insists there will always be a need for human experience and insight in problem-solving, and contends that automation of the final 10% to 20% of factory or warehouse operations can be cost-prohibitive and represent a point of diminishing returns. “We can debate whether a 100% automated ‘lights-out warehouse’ is economically feasible,” he adds. “It might be in 10 years, but in the meantime facilities can automate maybe 80% to 90% of things.” 

Reiser believes that the overarching reasons for investment are reliability and cost savings over time. “Do all companies want end-to-end automation? Not necessarily,” he says. “Some companies will be happier with an incremental approach; they want to be able to scale as they prove the value and as their operations require.” That can be achieved through an automation vendor with a suite of connected intelligent solutions or a WMS provider offering an integrated warehouse control system on its platform.

A final benefit of all types of automated systems — from high-density storage facilities, to shuttle systems and robotic item picking, to collaborative or zone-based AMRs — is data collection. AMRs, for example, capture fleet performance data, collecting information on their order and delivery volume and the distances and travel time per trip. With a holistic, data-driven view of facilities using fleet analytics software, this data enables a facility to optimize workflows, measure performance, increase efficiencies, and test different planning scenarios as analytics capabilities allow.

COVID-19 may have been the catalyst that has gotten supply chain executives off the fence over technology investment, despite earlier cost and disruption concerns. If so, it will not only have helped future-proof an industry slow to change, but will also supercharge efficiency and performance, benefiting both the individual customer experience and broader economic growth.

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