Market Forces and New Technologies Give Automated Distribution Centers the Edge

In the chaotic logistics environment that followed the outbreak of COVID-19, forward looking distribution centers (DCs) with automation solutions in place enjoyed significant advantages. They could scale faster and respond to sudden market changes with greater flexibility. They also made the best possible use of scarce human labor, shifting workers where they were most needed and maintaining higher productivity.

These operations continue to thrive, despite rapidly changing conditions — proving the value of the latest next-generation logistics automation solutions. A confluence of innovative technologies is not only enabling unprecedented capability and performance, but making such systems significantly more integrated and cost-efficient than in the past.

Manual DCs Can No Longer Compete

Around 80 percent of today’s DCs still lack automation for most jobs. Yet despite their mental and physical advantages, humans aren’t always the best choice for common DC tasks, which can be repetitive, tedious and even injury-prone. Productivity and safety also suffer when humans get bored or distracted.

What’s more, even though the number of available jobs is growing, the pool of qualified candidates isn’t keeping pace. Even before the pandemic dramatically increased the demand for workers, roughly 10,000 baby boomers were reaching retirement age every day — with fewer younger workers available to replace them. Unfortunately for DC operators, both trends are set to continue for more than a decade. And while virus-related unemployment in other sectors may temporarily increase the available labor pool in the short term, the problem is only going to get worse. DCs that want to remain competitive will need to act quickly as employment levels normalize.

Demand and other factors are driving up the cost of warehouse labor; turnover rates as high as 36 percent add even more costs. Replacement costs per worker can run from 25–150 percent of an employee’s salary, depending on which factors you calculate. Less tangible costs include a lack of continuity, covering for open positions and lost productivity. DCs also risk costly fines, charge-backs and lost contracts if they don’t have enough labor to meet service level agreements (SLAs).

And all these costs are adding up in a market that’s under more pressure to reduce costs than ever before.

Maximizing Productivity

The runaway success of e-commerce has trained consumers to seek the lowest online prices — literally down to the penny. At the same time, COVID-19 has supercharged e-commerce demands for everything from groceries to prescription drugs.

As a result, one-click comparison shopping has practically commoditized the entire retail industry. Customers now expect superior service at little or no cost, including fast (and free) shipping and returns.

Robots to the Rescue

In the past, high costs or complexity had made automation impractical in DCs. Today, however, two encouraging developments are changing the game.

First, costs are coming down. According to the International Robotics Federation, the average price of industrial robots fell by a compound annual growth rate of 6 percent between 2013–2018.

Second, DC automation is finally coming of age, thanks to significant advances in simulation, sensors, vision, mobility, computing power, machine learning, artificial intelligence (AI) and connectivity.

Sample Use Cases

Here are several real-world examples that demonstrate how autonomous mobile robots (AMRs) are already transforming leading DC operations:

Heavy Load or Pallet Transport

Whether you’re managing cross-docking operations or transporting the discharge from a palletizer or wrapper, heavy loads are typically moved with forklifts. Labor scarcity makes this an inefficient use of workers, whose unique human advantages can be better applied toward more advanced needs.

Pallet conveyance AMRs offer a better solution. When a pallet is ready to be moved, fleet management software assigns the appropriate AMR to pick up the pallet load and orchestrates the routing of the pallet to the appropriate destination. The selected robot picks up the pallet, transporting it by autonomously navigating through the facility, and avoiding obstacles along the way. When the robot arrives at the designated location, it drops off the pallet load at the destination location station. The drop-off is reported to the manufacturing execution system (MES), warehouse execution software (WES) or an operator, and the robot receives its next assignment or instructions to return to a “home” position.

Processing Returns

Returned or refurbished items must be sorted and transported to various locations throughout a typical facility. Traditional fixed automation solutions like conveyors don’t work well for these tasks, which involve extensive travel, complex routing and the inherent variability of reverse logistics. Refurbishment and recycling processes add further challenges because they require secondary and tertiary routing among multiple workstations.

With a robotic solution, returned or refurbished items can be received and manually sorted into bins on AMR carts. Loaded carts are placed in a pick-up location for a workstation, where the operator scans a placard to signal the AMR fleet. A mobile robot delivers the cart to the appropriate workstation, where the bins are manually removed for processing. Once the cart is empty, the operator positions it in an empty pick-up location and scans a return placard, informing the fleet management system that the cart is ready for re-use.

In more complex operations, a touch-screen interface enables the operator to select from a list of destinations for the cart as required by the returns process workflow.

Assisted Picking

Order pickers can spend half or more of their time manually transporting items between picking racks and pack-out stations. It’s not unusual for workers to walk more than five miles a day.

Productivity can be streamlined dramatically by deploying AMRs in the same aisles as picking operators. Based on the orders that need to be fulfilled, AMRs are directed to the locations of the item(s) to be picked. An AMR’s display indicates the item to pick and its location. Once the operator picks and scans the item, the AMR automatically drives to the next pick location while the operator moves on to the next robot.

Once a given AMR has all its picks, it is routed to a pack-out or a value-added service (VAS) cell for packing and shipping. There it is unloaded, and the pack-out operator indicates that the unit is ready to be redeployed. The fleet management software then generates a new picking order and sends the unit back to the picking aisles.

Robots Mean Business

Many e-commerce trends have been accelerated by events of 2020. These changes are here to stay and are highlighting the entire industry’s need to consider an expanded use of robotics. The key concern is not to replace human workers, but to remain competitive in response to unprecedented market changes.

Recent events have demonstrated that automation is already becoming critical to achieving this goal and operations willing to embrace it are more likely to thrive. The examples detailed here illustrate just a few of the ways today’s advanced automation solutions enable you to take advantage of the latest innovations in DC automation with minimal cost and technical risk.  

To download the full publication, click here