There are approximately 160,000 warehouses in the world today, and surprisingly, only about 20% of them deploy even modest levels of automation. The majority of warehouses store products in designated areas on the floor, or stack them in static shelving units, using manually driven forklift trucks to move heavy pallets around. A warehouse management system (WMS), sometimes developed in house, is required to track the inventory and to manage inbound orders. People, often lots of people, are hired to walk the aisles and pick products to fill orders, usually directed by pre-printed pick sheets.
The reason for the lack of automation? The cost has been too high for many companies to consider a more sophisticated solution.
E-commerce is growing at an unprecedented rate, now approaching 20% of all retail sales in the United States. The percentage has doubled over the course of the past five years. With more power than ever before in the hands of consumers, and less in the hands of manufacturers and retailers, warehouse efficiency has become a major area of differentiation for many companies.
If consumers can’t get what they want, when they want it, they are likely to keep searching until they find a retailer that can deliver on their terms—and the yardsticks continue to move. What was acceptable five years ago is no longer acceptable today, and what is good enough today is unlikely to be good enough five years from now. It won’t be sufficient for products to be delivered the following day, but rather within hours, or within specific time windows at locations of our choice, even deposited with a special code in the trunks of our cars.
To compete effectively, many retailers can no longer afford to defer their automation investments. Instead, they must choose a path to improve their efficiency, even if it means doing so one small step at a time.
For smaller warehouses that must automate on a budget, the name of the game is flexibility. In the past, a popular approach has been to automate only select processes, based on priority. They may have implemented a pick-to-light system to increase the efficiency of human pickers, and subsequently augmented it with a voice-to-light system, enabling them to hire flex workers during peak periods. As their businesses grew, some chose to make additional investments in automated conveyors to transport containers from one picking zone to the next, and added light-driven put walls to speed up the order consolidation process.
Subsequently, they might have invested in an automated cartonization system to speed up the packing process, in automated print, label and apply machines, and in high-speed, linear sorters to transport the finished packages to their designated shipping lanes. What started as a $200K automation investment, might have grown to a $5M investment over the course of several years—one process at a time.
Robotic Solutions
While this phased approach using legacy technologies remains reasonable today, there are new robotic options that must also be considered. All are designed to improve warehouse efficiencies and to reduce the dependency on manual labor, which is becoming increasingly difficult to attract and retain. While lights- or voice-based picking continue to be popular in lower automation, person-to-goods environments, there are a variety of new automated transport options.
Swarms of centrally controlled autonomous mobile robots (AMRs) can be programmed to appear at the right place at the right time, working side-by-side with human pickers. Current solutions can eliminate the need for bolted to the ground conveyors and sorters, moving totes or cartons to their downstream destinations. Working as a collective unit, with their movements orchestrated by a centralized software engine, they offer a number of advantages over older technologies. They are inherently scalable and additional robots can be leased to support peak period requirements. AMRs can be deployed quickly and they can be easily moved to new, perhaps larger, warehouses as a company grows.
Customers can evaluate the relative productivity and walk-time reductions that are offered by each robot, and weigh the costs against corresponding workers’ salaries. For example, paying $50K to buy a robot outright, and $2K per month to rent peak-period supplemental robots, may make sense if you compare the costs against the salaries of workers who spend a considerable amount of their time performing menial, automatable tasks. This is especially true these days, as these types of workers are becoming increasingly difficult to find.
While implementation costs need to be factored in, and the numbers must be assessed carefully for each environment, the business case may make sense for warehouse operators who have been delaying their buying decisions. For a modest investment, a 5- to 10-robot starter solution may provide sufficient value to validate an automation strategy, it may ease labor shortage challenges, and it may help establish a path toward long-term, sustainable growth.
For a number of years, we have been stuck at 20% automation across global warehouses. To grow significantly beyond this number, new scalable technologies are required to enable smaller operators to justify lower-risk investments at a rate that makes sense for them. With the massive amount of capital injection that has poured into new robotic technology companies recently, we are likely to see a “hockey-stick” increase take shape soon, perhaps doubling the number of warehouses deploying automation technologies before the end of the decade. Those that don’t find a way to make the leap are likely to face continued challenges, as it will be increasingly difficult to satisfy their customers’ heightening delivery expectations.
Pete Devenyi is an experienced technology executive with a primary focus on warehouse automation. He is the author of the technology career book, Decoding Your STEM Career, published by Business Expert Press. He ran enterprise software at RIM/BlackBerry for nine years and was senior vice president of global products and solutions at Dematic, a warehouse automation integrator.
