Gone are the days when Amazon was a strangely named bookseller available through an AOL dial-up connection, and Walmart focused only on brick and mortar Supercenters. Now, the Amazon vs. Walmart race to reinvent shopping is a well-documented battle of the giants. These well funded, large, price competitive companies demonstrate their philosophy of innovation by adopting available automation technology and often speak of it as essential to their future growth. Less known, however, is that these flexible technologies are accessible to everyone today. What is needed is a better understanding of how they work and the confidence of what the future of warehousing looks like.

Decline of the Hidden Workforce

 

First, let’s take a moment to remember those times when e-commerce began. Between work, dropping off kids, hitting the gym, and appointments every car ride was an opportunity to stop at a store to pick up a few items. Every purchase cost a consumer 10-20 minutes at the store plus driving, and a glimpse at one’s home was a constant reminder of all the time spent shopping. Hours and hours of personal time allocated to driving, sifting through aisles, picking items, filling baskets, and checking out. Up to 40B hours per year in the US alone.

Today, the consumer benefits of e-commerce are better understood than the drastically changing economics of warehouse fulfillment. In the past, each item sold cost the consumer 10-20 minutes of his/her time. Now, the e-commerce fulfillment center covers that picking cost. There isn’t enough available labor in the available workforce to do the work that consumers do today. Consumers are a hidden workforce in decline.

Which explains an unavoidable statistic: e-commerce fulfillment requires more material handlers per square foot than traditional warehouses (1 material handler per 700 – 1,000 square feet vs.1 worker to 1,500 – 3,000 square feet according to NAIOP, the Commercial Real Estate Development Association). Today’s fulfillment centers are chronically managing labor shortage issues while striving for operational predictability.

The Future Warehouse Is Predictable

 

Automation technologies are great at supporting a baseline of operational requirements and having a resource of versatile employees is a great way to handle the variation of peak demands. For example, an operation can look at a baseline of material throughput and systematize the appropriate self-guided forklifts, mobile picking robots, or conveyors to take care of it. A workforce may be utilized as necessary for tasks such as: put-away when a large shipment arrives, packing boxes when a truck needs to depart, or additional shifts during peak season.

Consider what is predictable about the warehouse of the future when selecting new technologies. Future warehouse operators can expect:

  • An increase in labor shortage and employee turnover.
  • An increase in the number of fulfillment centers in a single region.
  • An increase in urban area locations that require a smaller footprint.
  • An increase in operational visibility to address cost savings.
  • An increase in mechanization and automation.

Amazon and Walmart are resolving this with the back-end automation that increases capacity within a smaller footprint (density) and increases picking speed (throughput). Warehouses of the past implemented automation created for other industries by adopting conveyors, automated sortation and retrieval systems (AS/RS), retrofitting manufacturing robots as pallet loaders, using forklifts, and moving large pallets with automated guided vehicles.

Now, investors have dedicated over $900M to solving the warehousing problem with specialized technologies.

One possibility is to assign mobile picking robots to a segment of an operation and work with the vendor’s engineering team to adjust and expand the system as necessary. Doing this in small chunks enables a more seamless installation of robots at a future date; which makes full warehouse automation possible over a shorter period. Today’s mobile picking robots are capable of being installed with minimal change to infrastructure and without the need to pause an operation.

Open Competition

 

Every logistics manager has the opportunity to dedicate people to the internal evaluation of new technologies. Amazon and Walmart hire teams to seek out and speak with startups and technology developers to create in-house trials. For those who do not work for Amazon or Walmart, the way to create access to new technologies, and get ahead of the competition, is to evaluate it as soon as it becomes available. And, with recent advancements in robotic technology, automation solutions are more accessible to a wider variety of companies – automation solutions are cheaper, more flexible and faster to implement. It is predictable that the warehouse managers who participate early with technology developers will be the ones who influence the technology to meet their specific needs.

It is also predictable that the earliest evaluators of new technologies will have useful deployments and cost savings before their competitors do.

The predictable future of warehousing includes a need to increase inventory density in small-footprint urban areas, more efficient management of throughput and backlog during peak demand periods, and operations that must be lean to become cost competitive. Automation can ease the tension between all of these trade-offs.

The time to begin deploying new technologies is now.