ARC Advisory Group conducts an in-depth analysis of the global warehouse automation and control (WAC) market. The research process includes the analysis of large amounts of information and interviews with executives from numerous warehouse automation companies. The process concludes with the publication of ARC’s global Warehouse Automation & Control Market Research Study, which analyzes the market shares across numerous segments of the market, defined by criteria such as geographic region, end-user industry, load-size, and more. Of course, the report also includes a five-year forecast for the market and a number of different segments. The forecasting process involves the analysis of past trends, current factors contributing to market growth, and a forecast of how sales are likely to evolve. Much of this process is centered on analyzing market growth factors. I will focus this blog post on the factors that are currently contributing to the market’s growth.
E-Commerce Fulfillment Offers Secular Growth
The explosive growth in e-commerce and the ways in which it is affecting fulfillment continue to be the leading factors contributing to the growth of the WAC market. The shift in retail from brick and mortar to e-commerce is creating demand for warehouse automation, regardless of the larger macroeconomic growth rates. In effect, the retail paradigm shift is creating demand for automation to support modern shopping and fulfillment practices. Companies are investing in warehouse automation to survive, not just to grow. They’re investing in systems that can efficiently handle a high volume of small, multi-line-item orders. These systems include goods-to-person systems such as shuttles, pick-to-light, and put-to-light. The demands of e-commerce are also driving WAC investment up the supply chain to wholesalers and manufacturers. But one of the most prominent findings of this year’s study is the degree to which e-commerce fulfillment is stimulating warehouse automation investment by parcel carriers and other logistics service providers. Publicly stated examples of these investments include Vanderlande and Fives Group statements that the parcel and postal market is driving sales of their solutions.
Ongoing Pursuit of Efficiency and Accuracy Improvements
Practitioners outside of e-commerce fulfillment also continue to seek and obtain operational efficiencies from warehouse automation. High labor cost regions such as Western Europe, the US, and Japan can easily cost-justify warehouse automation to replace labor and obtain economies of scale. Warehouse automation system advancements are also improving the return on investment for WAC projects. Many times these improvements are driven by the additional software intelligence included in the warehouse control systems. From an end-user industry perspective, a notable amount of recent warehouse automation investment activity has occurred in the grocery retail industry as these firms look to gain efficiencies. A publicly available example is KNAPP’s 2015/16 annual report statement about its food retail wins (REWE group and SPAR distribution center).
Desire for Greater System Adaptability and Flexibility
As I previously noted in last month’s post on How the Warehouse Automation Market is Evolving to Meet Practitioners’ Needs, adaptability has become more important to fulfillment operations due to increased order variability. Shorter lead times and the heterogeneous nature of today’s items, orders, and loads are placing a different set of pressures on warehouse operations. These customer requirements are increasing demand for flexible warehouse automation. In particular, warehouse automation suppliers informed ARC that demand for shuttle systems has increased. Customers are looking for shuttle systems that are adaptable to various items, loads, and able to easily scale to changing volumes.
Expanding Capabilities of WCS
Warehouse control systems have expanded in breadth and depth of capabilities. WCS now integrate and coordinate different systems across an entire facility. Many of today’s WCS can interpret data and facilitate processes with a greater level of sophistication. Agility is becoming increasingly important to fulfillment operations. WCS have visibility to the operations across a facility, providing it with the presence for adapting operations to changing circumstances, constraints, and priorities. These capabilities allow practitioners to derive additional value from their warehouse automation investments and improve upon the potential benefits from these investments.
For an overview of ARC’s recently published 2016 Warehouse Automation & Control market research, please view this brochure. Those interested in learning more about the study’s content and its availability for purchase can contact ARC here.