The expectations of the omnichannel shopper today are higher than ever - it is unprecedented. In the last decade, the demands have grown at an exponential rate; warehouses being the backbone of the supply chain have always tried to cope with these changes. While some relied on manual processes, some invested in technology that automated only particular functions/processes in silos.
Let’s look at the warehouse journey and where we are at present:
Post-World War 2: With rising consumer confidence and the emergence of big malls and supermarkets in the 1950s, consumerism started taking off. Warehouses catering to consumer demand were still largely manual. catering to consumer demand were still largely manual.
The 1960s: With growing prosperity and disposable income, the demand for fast-moving consumer goods, consumer electronics, merchandise, and apparel increased. As demand increased, warehouses evolved in its storage function providing more than just storage capacity. That is when storage and retrieval automation gained prominence as vertical height could be utilized.
In the 80s: In the era of the Baby Boomers, the US saw a major rise in consumer disposable income and change in consumer preferences. Customers got much greater access to goods with newer shopping formats and the rising influence of advertising. During this period, the large volume of goods needed to be moved rapidly th
￼Figure: Factors changing the warehouse operations
rough the processes in a warehouse. This resulted in the rise in conveyor-based automation technologies for receiving and shipping a high volume of goods quickly, thus reducing the need for more storage spaces.
The early 2000s: Boom of eCommerce led to further growth due to the ease of ordering at the click of a mouse, and a range of choices became accessible easily. It led to the emergence of direct to consumer fulfillment centers which are large facilities assembling individual orders. Over time order sizes started becoming smaller and more frequent shipments were needed.
Between 2005 to 2010: In less than a decade of dotcom gained popularity, and traditional brick and mortar retailers tried to react to the customer expectations of a multi-channel experience. This led to increased complexity in warehouses as both large and small orders needed to be fulfilled. This period saw exponential adoption of WMS systems to increase inventory traceability and visibility.
2010 onwards: Now we see more and more product categories going online and a turf war among existing categories on price, service, quality, and delivery. Retailers are employing every trick to woo consumers to maintain or even increase market share. As this competition intensifies, we will see retailers innovate more and more to influence consumer buying habits and boost demand. Warehouses will definitely need to support such growth strategies. The question is - will the same warehouse be able to handle more complexity and at the same time fulfill shopper demands across multiple channels.
Changing business-scape affecting Investment in automation
Automation in a warehouse has become imperative. However, if the business requirements keep on changing, it is a tough choice as major investments are typically big, take a long time to execute and the projected ROI is normally in years rather than months. With the supply chain variables changing fast and surprises hitting warehouse operations, often the expected automation efficiencies are not achieved.
Rigid vs Flexible Automation:
All of these changes affect the efficiency of automation when the systems are rigid i.e. they fail to adapt when the operating variables depart from the design variables, leading to sub-optimal performance.
Subsequently, the savings that were expected to materialize from automation diminish over a period of time.
On top of that, to maintain business continuity in the face of changes, warehouses may need incremental investments on temporary workarounds. This is a vicious cycle and can have a detrimental effect on the customer’s bottom line as well as the final consumer experience. All in all, the return on automation investments may be severely jeopardized if the systems are rigid and fail to adapt to changes.
The shortcomings of legacy rigid automation have given a boost to the development of more advanced flexible automation systems which can adapt to changing operating variables.
In the business environment today, change is happening faster than ever, and it is hard to predict what will change next but easy to see that it will certainly change even faster. Hence warehouses will have to be highly flexible using autonomous technologies to adapt to such dynamic changes.
Flexible Automation will be the game changer
Warehouses of the future need to be flexible:
- Enabling highest resource utilization at all times: in terms of labor, space or equipment. This will give warehouses the highest return on their investment.
- Quickly reacting to change: minimizing any adverse effect on business performance
- Supporting continuous improvement: learning from data and continually devise operational strategies to improve performance. This will give businesses an edge over the competition in terms of costs and customer service
- End-to-end optimization: increasing supply chain predictability and enabling businesses to commit to more aggressive SLAs.
There are five building blocks of warehouse automation that define whether automation is flexible or inflexible.
If systems fully embody these five characteristics: mobility, modularity, collaboration, and connectivity, and driven by intelligent software, it has the ability to adapt in the future and deliver the flexibility and agility that a business needs.
Stay tuned to know more about how these 5 pillars of flexible automation can build a future-ready warehouse to give your business an edge.
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