Warehouse 4.0 ─ Today's Tech for Today's Problems
Fuelled by an unprecedented shift to eCommerce, and the need for solutions-driven tech, the industrial revolution, a.k.a, Industry 4.0, has ushered in Warehouse 4.0.
Quickly making its way into distribution centres (DCs) and warehouses, Warehouse 4.0 is helping organisations everywhere to battle the Amazonian giant and appease demanding big-box retailers.
Supply chains faced many challenges throughout 2020. Industries that enjoyed a history of stable demand and accurate forecasting dealt with erratic, out-of-norm fear-based buying and empty store shelves. And along with a massive shift to eCommerce came significant changes in order characteristics such as smaller order sizes (customers ordering single unit items rather than full case quantities), customer expectations and service requirements.
“In order to build agility in the supply chain, companies must use technology that helps companies work smarter and more efficiently. The COVID crisis has resulted in massive swings in demand, testing the limits of supply chain resiliency worldwide. The organizations with the smartest supply chains will be the ones that survive and prosper. In many respects, COVID has not created new problems, so much as it has exposed existing problems and made them worse. When slow-moving inventory starts to pile up, for example, agile companies will recognize the problem quickly and proactively disposition the product in order to avoid losses.” Sanjiv Gupta, CEO of told Supply Chain Digital.
And the challenges aren't likely to stop coming. With increased supply chain disruptions come hefty fines and chargebacks. Organisations have had to learn to pivot on a dime and increase efficiencies while doing so, and new tech is helping them get there.
Leverage today's technologies to create solutions-focused digital strategies that help eradicate the symptomatic "Just-in-Case" (JIC) behaviours brought on by supply chain disruptions while circumventing labour issues and avoiding the high costs of human error.
On September 1st, 2020, Walmart issued a memo, effectively giving its massive supplier network two weeks notice on their newly adjusted service requirements and penalties. As of September 15th, 2020, Walmart now requires a 98% deliver on-time and in-full (OTIF) compliance rate from its suppliers and has implemented a fine of 3% of the cost of goods sold.
Warehouse 4.0 can help organisations achieve improvement goals and meet the high demands of customer like Walmart through:
- Reducing operating costs with improved resource planning, lowered customer chargebacks, fines, and carrier charges.
- Improving order quality and customer service levels such as OTIF through:
- Faster delivery/ change response times
- Decreased picking errors
- Increased inventory accuracy
- Improved packing, packaging and labelling
- Customer notifications of order status
- Better service centre response times
- Increasing productivity and driving Lean principles by eliminating all waste, including reductions in wait times, travel time, rework, and over-handling.
Today's deep tech is creating an ecosystem of 'smart' warehouses, providing the visibility and creating the agility, pliability and responsiveness supply chains need to remain viable.
The Internet of Things (IoT), autonomous vehicles, wearables, drones and cobots are just some of the new technological advancements that are converging into an A-Team of sorts. Bringing new capabilities, increased accuracy and unburdening the heavily burdened, deep tech and cool new gadgets make hard work easier, so you can get on with it.
Autonomous Guided Vehicles
Autonomous Guided Vehicles (AGVs) are revolutionising material handling and cargo transport. It has been reported that Amazon has now more than 200,000 mobile robots within its warehouse network. Working alongside human workers, this army of robots helps the company to fulfil its promises.
Often replacing forklifts, this technology reduces costs, and time while eliminating the inherent risks of human effort in the movement of goods.
“Everyone talks about self-driving passenger vehicles, but mobile automation is far more developed in intralogistics for fulfilment and industry,” said Rian Whitton, senior analyst at ABI Research.
He further expanded, “The automation of material handling will see huge segments of the global forklift, tow truck, and indoor vehicle market consumed by robotics vendors and Original Equipment Manufacturers (OEMs) that bring indoor autonomy.”
Drones and Cobots
Drones are being leveraged for safe and easy access to remote, hard to reach locations within a warehouse. Both faster and more accurate than manual practices, equipped with cameras, sensors, RFID technology, or barcode scanners, are being used to locate items, conduct stock takes and cycle counts, and other inventory tasks.
Rather than taking over the manufacturing floor as we've all long imagined, Cobots are robots that work collaboratively with humans, automating the "dirty work" such as unergonomic, heavy, or repetitive tasks like machine feeding, material handling, or assembly tasks.
Mobile Devices for Warehouse Mobility
Desktop computers are quickly becoming obsolete, opted out for mobile devices that make things, well, more mobile. Nothing (other than perhaps safety) is more important in a warehouse than keeping things moving. Data is no exception. Mobile devices and apps increase efficiency by allowing employees to work on the move, accessing data as they go.
Smartphones aren't just liberating employees from the confines of a desktop, but are bringing new capabilities and computational power that warehouse employees need to get things done faster, and easier. Video conferencing, picture and video imaging, cloud integration, voice and face recognition are all technologies that bring strong advantages.
Images can help personal locate lost items. Quality inspections and approvals, for instance, may be performed through a video conference call. Cloud integration can help employees track a shipment while on the warehouse floor. The uses are only as endless as our imaginations.
Wearables such as smart glasses are mini-computers that can be strapped to your wrist or head, worn as glasses, or otherwise attached to any part of the body. Wearables are used to automate manual processes and streamline workflows like receiving and handling, order picking, safety and workforce training.
Barcode scanners can scan barcodes without needed to pick up or move packages. The technology can also provide warehouse employees with real-time information and automatically provide reports to management while bypassing manual entry with scanning technology increases accuracy rates and optimises efficiencies.
Today's tech removes the physical constraints and human limitations faced when managing a high volume of shipments, a long list of SKUs, ever-changing demand, and the myriad of other challenges warehouses battle every day.
Together, these technologies can afford you real-time, actional data and seamless collaboration both internally and across your supply chain. Align your operational needs with the right technical solutions, and bring your A-team together for a robust warehouse automation plan that launches you into the 21st century with an effective, efficient, and scalable operating model.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”