Manufacturing and Supply Chain Expert, Lisa Anderson, MBA, CSCP, CLTD, president of LMA Consulting Group Inc was quoted in the American Journal of Transportation on the need for warehouses to now service both retail stores and customers – so called ‘omni-channel retailing’. 

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There is a revolution taking place in warehouses all over the globe. It’s the automation of the warehouse. The automated warehouse will be plugged into every socket of the nooks and crannies of the distribution system. Robotics stand ready to change warehousing forever, but will price prove an obstacle to implementation? 

Next March, Integrated Distribution Services will inaugurate its new, state-of-the-art 456,000 square feet warehouse near the company’s Indianapolis headquarters and some existing warehousing facilities. IDS is in the midst of re-engineering operations and processes for the new building. After that is completed, said president and CEO Mark DeFabis, IDS has to tackle what technology to embrace, not a straightforward or easy task. “The process of identifying what is useful for you has become much more difficult,” he explained, as he reels off various new picking technologies, tagging technologies and robotics. “It used to be there were not so many choices and technologies were independent of each other. Now, we’re trying to interface all these multiple technologies and interfacing them with everything else we have to do.”

With facilities in both Indianapolis and Salt Lake City, IDS is a warehouse-based 3PL that specializes in e-commerce and direct selling fulfillment. Most of its customers are middle-market, fast-growing e-retailers. “We have to provide them with scale very quickly,” said DeFabis. “We’re leading them by the hand in terms of technology.”

Gone are the days when the primary function of a warehouse was to receive, store and move pallets full of case goods. Certainly, a distribution warehouse dedicated to, say, Kimberly-Clark will be stuffed with cases and cases of Huggies, Kleenex, Kotex and Cottonelle. But more and more warehouses are like the IDS facilities. They must gear their operations toward huge numbers of different goods that could be shipped to their customers or directly to consumers by the case, by the pallet or, increasingly, by the piece. Small orders of disparate goods that are located in far-flung nooks and crannies of vast warehouses make physical picking difficult, taxing, time-consuming and inefficient. 

Omni Channel 

Many warehouses must service both retail stores and consumers. This so-called omni-channel retailing complicates processes even more. “You have multiple channels going on in the same warehouse and they’re not handled in the same way,” said Lisa Anderson, a supply chain consultant.

All this comes as retailers and consumers alike demand faster and faster delivery time. Retailers want to cut inventory without sacrificing availability. Consumers want it now. Vendors want to keep costs down. And the warehouse operator is expected to successfully manage all these expectations.

“We have moved from a ‘you will receive what I have in stock’ mentality to ‘I will send you what you want, when you want it,’” said Stephen Halliday, the president of High Tech Aid, a Pittsburgh-based consultancy specializing in automatic identification and data capture technology.

Warehouses depend on increasingly sophisticated warehouse management systems (WMS), which are specialized types of enterprise software. These are necessary to monitor, analyze and link everything from online shopping carts, accounting and shipping schedules, to inventory control, expiration dates and order tracking. However, warehouses are finding it more and more difficult to merely layer WMS on top of legacy operational systems.

That’s especially true for older based on static terminals and paper orders. “Many of these are pretty antiquated,” said Fetch Robotics CEO Melonee Wise. Getting rid of paper-based systems, though, requires new equipment to read and process orders and that takes warehouse operators down the technology highway with lots of different routes to take. Warehouse operators are offered a variety of technologies that promise greater speed, accuracy and what is often referred to as “visibility.” This means a heightened ability to see where exactly goods are in the supply chain, from manufacturer to the end customer and everyplace in between, down to where on a conveyor belt a particular item may be.

Just because the technologies are available, however, doesn’t mean they’re being embraced en masse. The biggest issue is cost, which may be coming down, but is still formidable for small- and even medium-sized operators. “Price has and is still challenging for the adoption of robots,” said Alfredo Valadez, vice president of business development for the robotics division of Wynright, a subsidiary of the Japanese company Daifuku. Technological breakthroughs have helped reduce costs, he said. “However, the end user still has to have the right operational volumes to support the capital investment. The technology has definitely given smaller companies an opportunity to invest in the technology, but it’s still not an all solution for every company.” 

 

Published in American Journal of Transportation on June 24, 2015
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