CPG and other companies use automation and artificial intelligence to adapt their distribution networks in uncertain environments, says Roger Counihan, chief commercial officer of KPI Solutions.

Providers are taking a significant look at geographic realignment of their networks. That includes major shifts in where they're sourcing, holding inventory and in how they distribute. Rigid supply lines are being done away with, and not just in retail, Counihan says. “Across all types of major supply networks, we're trying to take out that last mile, that last inflexible cost, and get a much higher return on our inventory investment. We want to create more flexibility across multiple business units in different geographies.”

Automation plays a major role in these scenarios, which is ironic because a decade or more ago automation created inflexibility, he says. “It was long lines of conveyors, very fixed forms of picking. And we created these fulfillment centers that could really only do one type of operation. There was a fixed process and that's what they were really optimized for.” Distribution centers had difficulty in adapting to changes in assumptions, requirements or different products or business units. Clearly, automation has changed.

Now, one can pick anything from anywhere; different products can be fulfilled out of any part of a building, and different types of orders can be fulfilled from a hub node, even one downstream, Counihan says. That type of flexibility creates a level of resilience operators need now. “Automation today enables that flexibility and that resiliency versus the perception from the past where it really created a more lock-down, strict design process.” 

Of course, the right software powers the different types of automation one uses. And AI brings predictive capability. “We can see how fulfillment is going, where we expect some downtime, or what challenge is our fulfillment going to potentially run into in the future.”