Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Most Popular Logistics Articles of 2019

Logistics Trends | By •

logistics articlesIt’s the last few weeks of the year which means it is time to look back at the year in logistics. As always, it was a busy year covering the latest supply chain and logistics trends, emerging technologies, mergers and acquisitions, major news announcements, and more. We want to take this opportunity to reflect on the Top 15 most popular logistics articles written this year and see what our readers found to be the most interesting. It was a nice combination of topics and authors, including a few from our sponsors. So, without further ado, here are the most popular logistics articles from 2019.

  1. Supply Chain Trends to Watch in 2019 Clint Reiser
    Many of the key supply chain trends in 2019 will be continuations from years prior. However, the details, progress, and intensity will differ greatly. ARC Advisory Group believes the following trends will be the most impactful to the supply chain and logistics domain through 2019.
  2. Digital Transformation of Supply Chain Chris O’Brien (C.H. Robinson)
    Much of the conversation these days about supply chain centers around the “digital disruption” of the business. The very definition of “disruption” implies a major disturbance; that it’s all changing too rapidly and upending the accepted way of doing things. But in reality, we have been living within the digital transformation of supply chain for quite some time. Consider this, right now at C.H. Robinson, almost 70 percent of our interactions are completely digital. We are processing hundreds of millions of digital transactions every year.
  3. What Truck Driver Shortage? Steve Banker
    Since 2005 the American Trucking Associations (ATA) has been releasing reports on the driver shortage. The ATA is the largest national trade association for US truck carriers. Most recently the ATA estimated that the trucking industry ended 2018 with a shortage of more than 60,000 truck drivers.
  4. 20 Things to Know About Artificial Intelligence for Supply Chain Management Steve Banker
    I saw a good article by Gordon Benzie with a similar title, but with a cross industry perspective. Mr. Benzie is a director at AVEVA. I think his article provides a good premise for a more focused article on the topic of artificial intelligence for supply chain management.
  5. What 5G Means for the Transportation and Logistics Industry Greg Carter (GlobalTranz)
    Last week, the Department of Justice gave the green light to the long-sought merger of telecom giants T-Mobile and Sprint. While the merger of the #3 and #4 American phone carriers, respectively, still has legal hurdles to overcome, it is expected to accelerate the deployment of 5G networks in the U.S. For consumers, 5G networks will deliver faster upload and download speeds, and decreased latency (the time it takes for devices to communicate with each other over the wireless network) with wide applications to everything from entertainment to health care.
  6. The Warehouse Labor Gap is Unsustainable Clint Reiser
    I am in the process of updating ARC Advisory Group’s research studies on the global warehouse management systems (WMS) market and the global warehouse automation & control market. I hear two interrelated and repeated themes as I speak with suppliers in these industries. 1. Warehouse automation companies are having difficulties finding qualified personnel to fill open positions, and this is hindering growth, and 2. WMS and warehouse automation customers are having difficulty recruiting and retaining staff in their warehouses. The extent of these concerns led me to take a step back and review some of the relevant macroeconomic data surrounding the market.
  7. Best Logistics and Supply Chain Shows to Attend in 2019 Clint Reiser
    Welcome to 2019! With a new year comes a new list of forthcoming supply chain and logistics events. I find that each conference has its own strengths. I’m sure you do as well. Maybe you are looking to assess the conferences available to you this year. Maybe you are looking to attend two conferences, back-to-back in the same city. Or maybe you want to see who is planning a conference at the same time as your organization. To assist you with your conference planning, we have assembled the following list of conferences that my ARC supply chain colleagues and I consider to be the premier industry conferences scheduled for 2019 – many of which Steve Banker, Chris Cunnane, and I plan to attend ourselves. Feel free to save this webpage to your favorites list for reference through the year.
  8. 20 Things to Know about Supply Chain Digital Transformations Steve Banker
    Companies mean different things by the term “digital supply chain transformation.” For some companies, it means replacing manual, paper and pencil processes with digital data and process support. For some companies it means using autonomous mobile robots and other forms of robotics in their supply chain. For some, it means applying machine learning and artificial intelligence (AI) to supply chain Big Data. And for some, it means getting better digital data to support an end to end supply chain involving multiple tiers of a company’s supply chain.
  9. Transportation Trends: First Autonomous Spotters, Then Autonomous Trucks Matt Yearling (PINC)
    Across all transportation-reliant industries, we see more experimentation with self-driving vehicles and related technologies. Focused on lessening their reliance on human drivers in the midst of a significant truck driver shortage and leveraging the capabilities of modern technology, these companies are leading a charge that one day could give autonomous vehicles a real presence on the world’s highways and byways.
  10. The High Cost of The One Percent Inventory Accuracy in Your Supply Chain Matt Yearling (PINC)
    If your company is experiencing inventory accuracy problems, the problem extends across your entire logistics network—and right to your end customer. Here’s how digital inventory technologies are helping companies solve those challenges.
  11. Four Transportation Management Trends to Watch Chris Cunnane
    The Transportation Management System market continues to grow at an impressive rate. I’ll get to the main factors that are driving this growth in another article, but the main reason is the robust ROI attributed to a TMS. Companies buy a TMS to achieve freight savings which can be attributed to simulation and network design, load consolidation and lower cost mode selections, and multi-stop route optimization. There are a number of key trends that are driving customers to explore TMS and suppliers to enhance their offerings.
  12. What is a Supply Chain Control Tower? Steve Banker
    The term supply chain control tower is being used more frequently. Some think it is being overused.  What is a supply chain control tower? From my perspective it must be a holistic supply chain solution. What does that mean? For me, it means the following ten things.
  13. Sustainability in the Supply Chain Madhav Durbha (Llamasoft)
    Over the past several years, companies have been incorporating sustainability in the supply chain, thanks in part to younger consumers who place a higher premium on environmentally-friendly practices. In fact, according to a Nielsen study, 81 percent of global consumers feel strongly that it’s a company’s duty to help improve the environment, making “going green” a must for many organizations.
  14. 2019 Supply Chain Trends Chris Cunnane
    As I wrote about a few weeks ago, I spent the first week of February in Orlando attending ARC Advisory Group’s Industry Forum. The event had a heavy focus on how digitizing factories, cities, and infrastructure will benefit technology end users and suppliers alike. While I was there, I had the opportunity to sit down and interview a few ARC analysts including Craig Resnick, Greg Gorbach, Larry O’Brien, Mike Guilfoyle, Harry Forbes, Will Hastings, and Jim Frazier. I also had the opportunity to sit down with Steve Banker and discuss some of the major industry trends the two of us are following and researching.
  15. The Micro-Fulfillment Center Automation Race Clint Reiser
    ARC Advisory Group’s survey-based research shows that fulfillment responsiveness (time from order receipt to delivery) is rapidly increasing in importance. Companies are making a wide-range of changes to their warehouse operations to compress fulfillment times in an effort to meet consumers expectations for instant gratification. These changes include the use of waveless fulfillment processes, facility layout changes, the relocation of fulfillment centers to urban centers, warehouse automation investments, and any combination of the above. My current research into the automated storage and retrieval systems (AS/RS) market has elevated my interest in the systems being designed, tested, and utilized for the automation of micro-fulfillment centers. Although this is still a relatively small market segment, my research indicates that it is poised to grow rapidly.

There you have it – the most popular logistics articles from 2019. We will be taking some time off to re-focus, re-energize, and re-fresh our minds. We will back after the new year to bring you the best supply chain and logistics stories in 2020.

Digital Innovation in the Modern Warehouse

Warehouse Automation | By •

 

Supply Chain SummitDigital innovation in the warehouseI had the pleasure of moderating a conference panel on “digital innovation in the modern warehouse” at eyefortransport’s 3PL & Supply Chain Summit on June 12th. The session panelists included Joe Couto of HighJump, Ottavio Saluzzi of SSI SCHAEFER, and Tom Corbett of Pepperl+Fuchs. I started off the session by providing my perspective on the terms “digitization” and “digital innovation.” I explained that I see this phenomenon as an exponential growth in digital data being generated and computation being applied to harness this data in ways that provide a transformative change in the level of system functioning and decision making.

I like to use the example of consumer mapping applications such as Waze to illustrate the point. GPS has been available for decades, as have routing applications. It is the combination of these two technologies, along with the wealth of real-time data points that have allowed Waze and similar applications to provide real-time traffic data, estimated commute times, and more efficient alternative routes. The increase in real-time data within the warehouse, along with the long-established data sources and application capabilities, is being similarly recognized for its potential.  Since the wealth of data is a catalyst for digital innovation, I thought it would be fitting to start the discussion with Tom, the photoelectric sensors product manager at Pepperl+Fuchs.

Clint (LV):          Tom, can you tell us about the applications for sensors in the warehouse and the types of sensor technology used in these applications?

Tom Corbett (P+F):         There is a variety of sensors in use in automated warehouses such as simple photoelectric sensors that tell you if an object is present or not, and barcode scanners to track and read what product is being presented on conveyor, an AS/RS, or on a crane, etc. There is also a variety of positioning sensors used in AS/RS systems and those that provide information in wireless data transmission. The sensors on conveyors may simply provide an on/off signal indicating that something is present or not, while barcode scanners and ID systems tell you more about the product itself such as the identity of the product, or maybe how many products have passed. There is a whole host of data provided by positioning systems, such as location of a crane on an x and y axis or the location of a product. Sensor devices also provide the ability to look along a path to make sure nothing is sticking out, for instance, to assure safe movements.  Finally, there are specialized devices that may provide information such as how far away a crane is or how high pallets are stacked, etc.

Clint (LV):            Ottavio, how does the warehouse control system use sensor data in the warehouse that indicate information such as presence or location of inventory or items, knowledge of machinery or sub-system capacity, and available capacity to help a warehouse run more efficiently?

Ottavio (SSI):     Sensors, readers, and other IoT devices are the gateway between the physical and the digital world. They play a crucial role in maintaining high throughput while giving the system the possibility to react in real-time to sudden capacity constraints. Also, the integration of real-time location systems (RTLS) may greatly increase asset visibility, especially in very large facilities.

Clint (LV):           I have been told that the cold chain has a strong use case for digitization. Can you tell us how your customers are using sensors and HighJump solutions to support cold chain integrity?

Joe (HJ):              We are seeing sensors placed on pallets of goods at the source.  The data from these tags will direct actions at the warehouse level. The sensor readings include temperature and humidity. If the temperature exceeds a threshold, the system will trigger according to predetermined rules and warehouse workers will put product on hold, move the pallet to another area, and notify owner of the goods. HighJump also has actionable alerts that feed what the temperature should be, or if it should be put on hold until the final disposition is notified. There is some activity that happens in the background and some that trigger alerts, depending on certain options in the system.

Clint (LV):           Ottavio, I was informed that Pepperl+Fuchs used its own sensors and SSI SCHAEFER’s Lighthouse solution in its automated warehouse in Texas. Can you tell us how SSI SCHAEFER uses raw sensor data to support functions such as preventative maintenance of equipment in the warehouse?

Ottavio (SSI):     Lighthouse (control center for automated warehouses) gathers information from a large number of sources. It integrates sensor data from AS/RS, vibration information and other data, and then interprets that raw data and synthesizes it into a meaningful preventative maintenance use case. The SCADA module visualization system provides information about every possible device within the warehouse ecosystem, all in real-time. And it gathers relevant key performance indicators within the material flow system and order processing for material flow performance, picking performance, and other KPIs.

Clint (LV):           Joe, there has been a real-time element to WMS for a number of years. Scanning with RF guns informs the system almost instantaneously of inventory availability, movement from storage slots, etc.  How do you see the WMS as facilitating the process of managing this data and other sources in addition to RF scans?

Joe (HJ):              With RF guns, you know workers or items are at point A or point B when scanning a bin, etc., but you don’t know where they are in between these discrete steps. RTLS is really knowing where an individual is at any given time in a facility, and then based on that knowledge, making decisions such as how to change the allocation to optimize in terms of slotting, allocating product, tasks to an operator, etc. It is real-time location information that is suited to leveraging artificial intelligence (AI) capabilities in terms of pushing work to the worker and how best to slot and optimize space. It is about optimizing labor and space.

Clint (LV):           Warehouse labor shortages are really becoming serious problem, especially in the US and Western Europe. Ottavio and Joe, what are your views and your companies’ initiatives on labor management systems as a resource to manage warehouse labor in this environment.

Ottavio (SSI):     SSI offers as part of its WAMAS software, Labor and Resource Management. We see the need for labor management as increasingly important, even in highly automated warehouses, to gather data from workers to determine staffing requirements for peak and off-peak periods.

Joe (HJ):              Labor management is central to understanding a fulfillment business. Labor is deployed, then the system helps determine points of inefficiency. And labor management isn’t just about the four walls. For example, there may be certain products being shipping to me for which unloading will take longer or certain plants that ship to me that take longer to unload. Labor management drives a lot of behavioral change in the warehouse. HighJump is currently expanding its mobile solution capabilities to allow workers to get up and running without training. the mobile applications will essentially on-board new workers without the need for training. This is where HighJump is currently focused.

Clint (LV):            Thank you gentlemen and thank you eyefortransport for inviting us to this summit and providing us with the opportunity to provide our perspective on digital innovation in the warehouse.

Is Your Supply Chain Ready for Reverse Logistics? Three Critical Questions to Ask to Reach Your Goals in 2018

Guest Commentary | By •

reverse logistics sean elliottTwo steps forward – one step back. This old catchphrase is fitting for the current state of ecommerce and reverse logistics. The constant growth and rapid evolution of ecommerce is heightening the volume of returns. In 2016 alone, the ecommerce return rate was 30 percent, compared to under 10 percent of brick and mortar sales (Invesp). Retailers recognize that this number is quickly, and inevitably, rising.  Yet, most treat reverse logistics as an afterthought, focusing time and resources on go-to-market efforts instead.

Why is this?

Historically, returns have been managed as a problem. However, with the right planning, reverse logistics becomes an opportunity for retailers and logistics professionals to differentiate themselves and increase revenue. Here are three questions to ask to move forward with reverse logistics and make this a reality.

What is the definition of “reverse logistics”?
We typically associate mistakes, broken, or faulty items with reverse logistics. However, it encompasses much more. For example, reverse logistics also handles the products from consumer electronic buy-back and trade-in programs and subscription-based clothing or other “box” order services with a “keep what you like, send back the rest” approach. Buyer’s remorse also comes into play here. Consumers want the option to send back or exchange items, even if unflawed. Robust return policies have become standard, with industry giants like Amazon now requiring its merchants to provide its same, flexible return options. Overall, the definition of reverse logistics has evolved, covering an array of scenarios that put products back into the supply chain.

How do we handle inventory management?
Reverse logistics isn’t simply doing go-to-market logistics backwards. Managing returns is a unique and intricate process. Given its complexity, reverse logistics is typically viewed as a cost center. If executed properly, it becomes a value center.

Retailers , or often the item’s manufacturer, must find a means to proficiently resell or liquidate returned items. Assessing an item’s profitably is necessary for this. The merchandise must go through quality inspection and testing to determine what, if anything, is wrong with it. The resale rate of a returned item is normally around half of its original value.  Anything else is sold for less. Pending the item’s condition and if it has depreciated too much, it is recycled. Otherwise, it goes through the necessary refurbishing and pre-retailing for resale.

Inventory route planning is also pivotal. This includes accounting for product disposition, setting rules that ultimately determine how a returned product is handled. An example of this is putting specific criteria in place to assure products go to the right location for inspection and restoration. Then it must be determined where to ship the items next. This could be a store, another customer, or a warehouse. Additionally, it must be simple for consumers to make returns. Customers expect seamless, cheap (if not free) shipping that fits with their daily routines. This could be dropping the item off at a local store, carrier pick up, lockers, or drop boxes.

Exploring all of these considerations for inventory management is key to maintaining profit margins and assuring customer satisfaction.

Can our existing distribution center handle reverse logistics?
Reverse and forward logistics have different requirements that need to be managed and considered separately. Doing so provides an opportunity to achieve both facility and workload optimization that are pivotal to success. Effectively handling the growing volume of returns requires dedicated staff and resources. Most companies, however, lack the capacity to give reverse logistics this high a level of priority. An option is to outsource to a third-party logistics provider (3PL). This alleviates the strain on the company until it can expand on or build its own reverse logistics strategy. As companies scale, assessing the capabilities of their distribution centers is key to handling returns at a higher volume, and in turn, allowing them to grow their ecommerce offerings.

The questions above put retailers on a path for more capable supply chain execution. The next step forward is determining the right technology partner to help capitalize on reverse logistics.

Look for supply chain solutions that scale with your business. The combination of robust forward functionality, adaptable reverse logistics capabilities, and complementary features is key. This includes end-to-end inventory visibility and inspection. Consider quality management, image archival for documentation and damaged goods, and integrated supply chain analytics. These provide important insights into the lifetime flow of items moving out of and potentially back through the supply chain.  Overall, this creates a supply chain execution platform suitable for today’s operations and optimized for tomorrow’s emerging needs.

—

Sean Elliott serves as Chief Technology Officer for HighJump. A 15-year technology veteran, Mr. Elliott has been the principal architect of the HighJump One platform and the technological convergence strategy at HighJump. Sean joined HighJump in 2014 with the merger of HighJump and Accellos, a global supply chain execution software provider. Earlier in his career, Mr. Elliott served within the architecture group at Infor, where he focused on distribution-centric supply chain. Sean has a passion for bringing leading edge mobility technologies to the supply chain, and enhancing end-user experience within the HighJump customer community.

 

 

Why Your Supply Chain Should Be Riding the Dynamic Waves Trend

Inventory Management | By •

Online retail has rocked order processing to its core.

Large, pre-determined replenishment orders are the past. The amount of unique, one-off orders from consumers from anywhere at any time is constantly increasing. As a result, order sizes are consistently shrinking down to single unit fulfillment. Order cycle times are also waning. Twenty-four hour shipping is no longer the expectation. Customers expect same-day delivery.

What does this mean for the distribution center (DC)? All aspects of its operations – the facilities, personnel, automation, and supply chain systems – are challenged. Peak seasons, such as the holidays, intensify this. Distribution centers can quickly morph from needing to ship large, wholesale orders to handling a flood of direct-to-consumer orders. This can turn a distribution center upside down.

Supply chain professionals have the ability to not only keep DCs upright, but also capitalize on the variable nature of unified commerce.

This is possible with dynamic waves.

Dynamic Waves: A History

Traditional waving, also called wave processing or loading planning, came into play to increase productivity in distribution operations. Supervisors systematically grouped orders into waves. Orders traditionally came in a day or more in advance for the operations team to wave and plan resources accordingly. After this, replenishment was completed to ensure smooth processing of the wave, and picks were then executed. In automated DCs, the warehouse management system (WMS) or fulfillment system took care of waving and pick processing, and then handed the sort job off to the warehouse control system (WCS). This resulted in better visibility, enhanced replenishment planning, and increased labor planning. Ultimately, it ended in a more efficient operation where pick densities were increased and travel time reduced.

With the onset of ecommerce, the traditional waving model started to break down. With new orders coming in 24/7 and the market demanding same-day processing, operations could no longer depend on a firm cutoff the day before to plan orders.

Enter dynamic waves…

With dynamic waves, also called waveless processing or waveless order fulfillment, the system constantly releases and reprioritizes the order pool based on cutoff times, inventory levels, and resource availability. Waveless systems allow conditional business rules to dictate which orders should be available to the floor and when, along with their priority during certain time windows. Orders continue to flow into the system throughout the day, but the operation is no longer required to put them in a pre-defined wave.

 The Benefits of Going Waveless

The advantages of dynamic waves span far and wide. Here is a quick snapshot:

  • Improved throughput: Waveless order management avoids the “lulls” that typically occur as waves are finishing or starting. This maximizes throughput at all times.
  • Better resource utilization and labor management: Because the system is constantly releasing work on pre-defined rules, employees are never underutilized during the valleys between waves.
  • Upped productivity: An operator’s tasks are assigned in real time as he or she proceeds through the pick path. Additional picks are completed without the need for a separate trip.
  • Exceeded customer expectations: As tasks are released and reprioritized in real time, the need to draw a line in the sand on which set of orders gets out that day is eliminated. Same-day delivery is achievable.
  • Beating the competition: The business can use the decreased order cycle times and increased customer satisfaction as a differentiator in the market.

Making Dynamic Waves in Your Supply Chain

To reap the benefits dynamic waves offer, supply chain professionals must tap into a WMS or fulfillment system with waveless order fulfillment embedded in it. Consider the following features:

  • A rules engine that controls the flow and priority of orders to the floor: This includes managing the number of orders in the active queue and their priority at any time based on configurable thresholds such as carrier and time window.
  • Continuous “re-evaluation” of picking queues: This includes real-time notifications to operators to adjust the number of units needed while en route as new orders arise. Additionally, this should pinpoint “hot items” located in multiple pick locations. This allows dynamic inventory replenishment or rerouting the pick to a new slot as needed to fit demand.
  • Real-time, actionable analytics: Due to the fluid nature of waveless fulfillment, real-time visibility of the workload throughout the operation is increasingly important. This includes a dashboard that illustrates where current labor allocation won’t meet needed service levels or cutoff times.  It should be actionable, with the user being able to redirect operators to correct the situation as needed.

The present and future of unified commerce must consider the aftershocks that ecommerce has and will continue to make. Dynamic waves will provide the flexibility necessary for distribution centers to not only survive, but also thrive in today’s dynamic supply chain landscape.

Craig Moore is Vice President of Sales, NA at HighJump.  He joined HighJump in 2011 and is responsible for the continued growth of HighJump’s Supply Chain Execution solutions within its customer base and by working with new prospects.  Moore’s previous roles in sales and sales management have allowed him to work with retailers, manufacturers, distributors and many other points of influence and impact within global supply chains.

Measuring the Changing Technology Requirements in Today’s Warehouse

Labor | By •

rpEarlier this month I wrote an article about the changing warehouse order profile. That article presented data and discussed findings from ARC Advisory Group’s warehouse practitioner survey conducted in partnership with DC Velocity earlier this year. The overarching theme of the findings is that the ongoing transformation in the fulfillment environment is quickly shifting order profiles and warehouse operations. Adaptability and responsiveness are becoming more important and direct-to-consumer fulfillment is expected to increase extensively, as is the practice of drop-shipments. At the same time, picking processes are expected to shift toward a greater volume of smaller units. But how are these shifting order profiles and the premium placed on adaptability and responsiveness creating operational challenges at warehouses? And how are these challenges affecting the role of technology and investment priorities?

We know that e-commerce fulfillment requirements are driving investment in warehouses and in supporting technologies. But we wanted to obtain more detailed information on the specific pain points and requirements that are stimulating these investments. More importantly, we wanted to obtain some idea of practitioners’ investment priorities since many “nice to haves” never reach implementation. So we asked survey respondents about various warehouse material flow and planning processes and the likelihood that they would purchase or implement technology to improve upon these processes.

Key Material Flow Processes
Shipping, goods retrieval/order picking, and put-away are the material flow processes that respondents most noted as likely area to be supported by technology investments (over the next three years). Given the labor requirements of picking processes, its unsurprising that “goods retrieval/order picking” was near the top of the material flow process list. An aftermarket parts retailer specifically noted the assembly of multi-line orders as a primary pain point. This company is considering the use of a put-wall to assemble orders after order items have been picked. Other ARC research supports the view that put-walls are increasingly being used to support e-commerce fulfillment. WMS providers are developing functionality to better support this fulfillment step, and warehouse automation vendors also note that customers are making incremental investments to support the process.  Similarly, a respondent from a retail company stated a need for flexible picking solutions for direct-to-consumer fulfillment that can scale-up and still offer high levels of picking accuracy. Clearly that is a goal for all fulfillment operations, but achieving and maintaining the performance at a reasonable fulfillment cost is the challenge.

tech-deployment-likelihood

Key Warehouse Planning Processes
When asked the same question about technology investment for warehouse planning process improvements, parcel shipping, general inventory management, and slotting optimization were the most frequently noted processes as likely recipients of investment support. We expected parcel shipping to be a focus area due to results from other ARC and third-party research showing a substantial increase in parcel shipping resulting from the boom in ecommerce. However, the high percentage of practitioners that plan to invest in technology to support re-slotting and facility layout changes was unexpected, but confirms the view that order profiles are evolving quickly and warehouse managers are diligently searching for sources of efficiency improvements.

Specific Warehouse Technology Investments
We know how order profiles are changing and the specific warehouse processes that practitioners want to enable and improve upon with technology investments. So what are the specific warehouse technologies that practitioners anticipate purchasing or implementing over the next three years?

WMS was the technology most frequently noted as “likely” or “very likely” to be purchased or deployed over the next three years. This is unsurprising since it is a ubiquitous technology and serves as the backbone for warehouse operations. Labor management systems are also a high investment priority for the next three years. This is likely driven by the increased labor costs associated with ecommerce fulfillment. Also, voice recognition can provide some marginal efficiencies on top of the use of RF guns, but is a relatively mature warehouse technology. It is also worth noting that the analysis represents the percentage of respondents, not the percentage of warehouse technology investment. For example, voice recognition requires a minimal investment and a moderate pay back. In contrast, warehouse automation is often a larger investment that is more limited to higher throughput warehouses or more specific profiles.  Finally, the low levels of anticipated investment in autonomous mobile robotics indicates that the technology is still at its early stages – in the developmental to early adoption stages.

tech-invest-priority

Finally, businesses live in a world of competing priorities where oftentimes one investment must be chosen at the exclusion of another option. Given that reality, we asked respondents to select their top warehouse technology investment priorities over the next three years, and as a result forcing them to exclude the remaining options. Interestingly, but not surprisingly, warehouse labor management was the most prevalent choice. E-commerce fulfillment is labor intensive and costly, especially when looking at fulfillment costs as a percentage of profit margin on the product sale. WMS was the second most frequently selected investment choice, unsurprisingly given its role as the backbone of warehouse operations. For automation, conveyors/sortation was the most popular investment choice, followed by pick to light/put to light. The responses for conveyors likely reflect the high level of conveyor/sortation use in North America, as compared to Europe, and pick-to-light is often considered a low risk entry into automation that is especially valuable in a direct-to-consumer environment.

Sneak Peak: How Warehouses are Adapting to Rapidly Changing Demands

Warehouse Automation | By •

rpPrior research by ARC Advisory Group and DC Velocity on omni-channel fulfillment determined that companies expect an average of 40 percent growth in e-commerce sales over the next five years. That research project placed strong emphasis on the use of stores in today’s omni-channel environment. But it also showed that major changes are occurring at DCs as well. To learn more, ARC Advisory Group in partnership with DC Velocity developed and launched a subsequent survey of logistics practitioners to evaluate the future direction of today’s distribution facilities, technologies, and practices. We obtained feedback from practitioners and analyzed the results. DC Velocity will be running an article on the findings in May, and ARC will distribute a strategic report to clients soon as well. But for now, I would like to provide you with a sneak peak at a small subset of our findings.

  • We listed four fulfillment capabilities of a warehouse – Accuracy, Responsiveness, Throughput, and Adaptability – and asked respondents to rank them by relative importance to their organization. Not surprisingly, Fulfillment Accuracy was by far the most frequently chosen as “most important”. However, when asked how they anticipate the relative importance of these capabilities to change over the next five years, the survey results painted an entirely different picture. Adaptability (defined as the ability to handle a wide range of order profiles) and Responsiveness (time from order receipt to delivery) moved to the top of the list.
  • We listed four common fulfillment paths between nodes in today’s supply chains and asked respondents to indicate the degree to which they engage in these processes. Replenishment of downstream DCs and stores were the most prevalent responses. However, when asked about anticipated change, the responses once again painted a different picture – as direct-to-consumer and drop-ship were the paths expected by most practitioners to “increase extensively”.
  • Digging deeper into warehouse operations, we asked respondents about how they anticipate the prevalence of picking unit types to change over the next three years. We chose “picking” because it is typically the most labor intensive process within a warehouse. Piece (eaches) is the unit type that most said would increase. In contrast, less than half of survey respondents anticipated an increase in pallet retrieval. This data supports the view that picking units will continue to move toward eaches as warehouses increasingly shift toward direct to consumer fulfillment
  • Finally, we we asked respondents to select their top warehouse technology investment priorities over the next three years. Interestingly, but not surprisingly given the labor cost of direct to consumer fulfillment, warehouse labor management was the most prevalent choice. WMS was the second most frequently selected investment choice, also unsurprisingly, given its role as the backbone of warehouse operations.

That’s all for today’s sneak peak. ARC Advisory clients, look for the full strategic report in June. DC Velocity readers, an article will be published on dcvelocity.com in May. Others may contact mailto:chanf@arcweb.com for more information.

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