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Ever since e-commerce began accounting for a healthy share of retail sales, D.C.s and warehouses have struggled with the problem of how to handle two distinctly different types of shipments.
Early efforts involved the creation of separate facilities - one for handling traditional pallets and large quantities of product destined for retail shelves, the other for small shipments and "eaches" ordered by individual consumers online.
For most retailers, however, that model wasn’t sustainable. The cost of maintaining multiple distribution operations was simply too high. So they were forced to combine them into common facilities.
The decision created its own set of problems, not least of which was how to run two sharply different order-fulfillment systems under one roof. Initially, the answer lay in executing the e-commerce portion manually. But that, too, entailed unacceptably high costs, especially at a time when speed and efficiency were deemed essential to competing in the world of online sales.
The modern-day retail D.C. is an omnichannel operation. But how can warehouses make it work?
Robotics furnishes at least part of the answer, says Michael Hazelden, senior vice president of product strategy with OrderDynamics. The technology can play a crucial role in handling both large quantities of product and individual items.
Robots are especially well suited to the job of retrieval. Storage schemes within the modern-day warehouse are built around complex algorithms that might make sense for the operation, but often result in product being scattered throughout the facility in hard-to-reach locations.
Robots “bring product to the picker rather than the picker to the product,” says Hazelden. They’re already playing key roles in D.C.s dedicated to pharmaceutical and grocery operations, particularly in the U.K., where pickers stand still and process orders that are flowing past them.
Today’s technology-driven omnichannel D.C. involves a higher level of activity that the traditional warehouse, but it’s likely to employ fewer people. There’s no question that robots are replacing humans in key points along the fulfillment stream, says Hazelden. At the very least, they’re making it possible for distributors to ramp up activity without a commensurate increase in bodies.
But robots can only do so much. True, some D.C.s today are automated to the point where no humans are involved in the fulfillment operation at all. These tend to be facilities that handle a limited number of products within a well-defined vertical, such as pharma. But most operations continue to employ humans, working right alongside the new breed of robot.
“There comes a point when the variety of product can outstrip the capability of robotics,” says Hazelden. Certain fragile items, such as light bulbs, require human handling. And the highly diverse grocery environment is, for the most part, too complex for machines to take over entirely.
“Technology is moving forward,” says Hazelden, “with [robotic] arms that can automatically adapt to the softness of the product it’s picking. But we’ve got a little ways to go before that’s a reality.”
Moreover, warehouses continue to require large human workforces during peak periods of demand, such as the run-up to the Christmas shopping season. Even Amazon, which blazed the automation trail in 2012 with its acquisition of Kiva Systems, hires tens of thousands of additional people to staff its fulfillment centers during the holidays.
The truth is that we’re far from seeing the full potential of technology play out in the omnichannel warehouse anytime soon. These are early days in terms of the ability of robots to handle every task with maximum efficiency and accuracy.
Artificial intelligence remains an area that’s yet to be fully tapped by D.C.s. “It’s still very much in the development stage,” says Hazelden. “The actual warehouse environment isn’t quite ready for it.”
In its current form, A.I. can’t adapt to a highly scalable D.C. environment. It must be able to combine consistency of operations with the unpredictability that’s characteristic of e-commerce.
The “lights-out” warehouse, involving no humans on the floor at all, is “the end game for everybody,” says Hazelden. Realistically, he adds, it’s not likely to play a major role in most distribution operations for a decade or more.
In the meantime, D.C.s are having a good deal of success in integrating robots into existing environments, where they work side by side with people. That’s also the case within stores, where robots are just beginning to perform roles such as stock checks and customer assistance. “We’re seeing big steps forward with this,” says Hazelden.
As with any application of new technology, the cost of systems is an issue. Hazelden says companies are making big investments at the front ends of e-commerce fulfillment operations, where failure to execute can have a devastating impact on customer retention. Money is also being spent in stores, where the resulting systems are visible to the shopper.
But the question of where technology dollars really need to be spent remains unsettled. Some retailers are focusing on shipping online orders from the store, while others are pulling stock back to the D.C.s, where items can be handled with greater speed and efficiency. The latter scenario is where future investments in robotics are likely to be directed, Hazelden believes.
It’s all about creating the most efficient fulfillment operation, and tying it to reliable demand planning. Yet change in the retail landscape is constant, and suppliers must pivot accordingly.
“Predicting the next click-and-collect or home order can provide difficult,” says Hazelden. “You have to make the best of inventory wherever you’ve got it.”
