Blogs

Enhancing operational efficiency through warehouse automation, the present and the future


  • Benefits of warehouse automation
  • Present scope of warehouse automation
  • The big names using robotics and automation in warehouses

 

A warehouse is an integral part of the supply chain that acts as an intermediary between the manufacturing and end consumers. The demand from end consumers is seasonal for most of the products with demand peaking during the festival season, which varies from country to country. The rate of manufacturing, on the other hand, is more or less stagnant and the products need to be stored in advance for the peak season. The cost of warehouse operations becomes an unavoidable overhead and it is subject to negotiations, whoever bears it, be it manufacturer, wholesaler or retailer. The common goal is to maximise the operational efficiency and minimise these costs irrespective of whoever bears the cost. Prior to the arrival of sophisticated IT systems that brought advanced logistics and supply chain ERP products such as SAP and Oracle, the process of keeping a record on incoming and outgoing products was highly manual with operation associates performing these through journal entries. The ERP systems have made the process of record updating and database creation relatively automatic. But still the warehouses continues to be highly labour intensive as the actual physical processes such as offloading products from trucks, sorting, taking them to the right sections in a warehouse, placing at right shelves, picking right products according to the demand and loading these on freight vehicles for transportation for end consumers continues to be manual. These manual processes have also been largely error prone with most of the errors occurring during the picking phase. This is where the role of robotics and automation comes into play to minimise errors for the achievement of operational efficiency, create an optimized operations cycle requiring minimum movements in a warehouse and to eliminate the requirement of humans in order to cut labour costs.

The level of automation in warehouses is still in the incipient stage. However, it is growing at a good pace and a decade from now it is feared that a lot of workers may lose their jobs. According to a report by the Hexa Research, the global warehouse robotics market was worth USD 2.83 billion in 2015 and is expected to reach USD 6 billion in 2025 at CAGR of 7%. This is an industry that is worth investing and apart from the older robotics companies, start-ups have also ventured into this arena.

The scope for warehouse automation is vast and we still have a long way to go before most of the warehouses around the world are fully automated. Automation will be implemented in bits and pieces through the identification of small projects for improvement. The projects can be identified where the work is repetitive, time-consuming or error-prone. Some of the areas which can benefit from automation in the near future are as follows.

1.       Picking automation: the process of picking products, though this is very simple but has been highly error-prone owing to similar SKUs.

2.       Barcode labelling of products and automation to scan barcodes: the process of keeping a comprehensive record of all inventory requires documentation after each minor step on the movement of products in a warehouse. The bar code labels attached to each product and efficient hardware and software to scan the products can save significant man hours and also reduce manual errors.

3.       Automated Guided Vehicles (AGV): AGV are automatic vehicles that can follow digital paths without requiring a human navigator. They can be used for picking and placing items on shelves and to carry the items within the warehouse.

4.       Vertical growth: with the help of AGVs and robotic arms for picking and placing products, it will be possible to make full use of the vertical space available in a warehouse.

5.       Smart product storage: with the help of warehouse management software and the use of advanced scanning techniques, the process of product storage can be made more enhanced to improve efficiency and optimization.

6.       Automated inventory management: the entire inventory management can be automated using business intelligence, wherein the replenishment of goods, order placing, storage is done and a detailed analysis of the inventory can be done at any point of time.

Furthermore, one of the innovative technologies that companies have started implementing is the goods to persons automation system in which the products are brought to the workers instead of workers going to shelves to pick these products. Robots used in this technology are called Autonomous Mobile Robots (AMR) that transport mobile shelves in a warehouse to a station where a worker picks up these goods. Moreover, another innovation is the use of pick-to-light systems in which there are lights above the racks for product storage. Hence, with the automated inventory management system, a light above a rack glows indicating a worker that the item from a rack needs to be picked. Alternately, mobile autonomous robots can be used which would move in the warehouse towards the shelf from which an item needs to be picked and a light above the robot would glow, signalling a worker in the area. In addition to the existing robotic companies, a number of start-ups too have forayed into the AMR technology. GreyOrange is an Indian start-up creating butler robots for goods to persons systems. It is one of the highest funded start-ups in India with funding of USD 140 million. Similarly, Locus Robotics and Fetch Robotics are two US-based start-ups that are working on similar lines.

A number of companies in the developed economies have now automated warehouses to a great extent though not fully. Coca-Cola has an almost completely automated warehouse for the EMEA region. Nike too has an automated warehouse in Europe which handles 43 million items per year through its 280-meter long loop sorter, which automatically handles inbound and outbound orders. Additionally, other notable names that have automated warehouses include e-commerce, retail and logistics giants-Amazon, Walmart, FedEx, UPS, Diapers and Zappos. In fact, Amazon acquired the robotic company Kiva for USD 775 million in 2012 and Amazon currently holds a patent for its Kiva robots. Kiva is a square shaped robot that can move at five miles per hour and handle packages up to 700 pounds. Amazon is looking forward to fully automate its picking and packaging process in the near future.

While complete automation in the warehouse industry is a process, we may have to wait for few years or even decades so that the same is achieved at a much larger scale rather than only by a handful of bellwethers as has been the case lately. We are expecting to see small and medium-sized companies in both developed and developing economies investing in small automation projects in the near future. We may also see new robotics companies coming up with some low-cost innovations to fulfil this demand going forward.

Your Rating

Tire manufacturing industry, analysing the cost and margin trends

The global market for tire manufacturing stands at $180 billion. Michelin anticipates the long-term demand to rise at the rate of 5 to 10% a year in developing markets and 1 to 2% a year in mature...

Failure of Amazon in China, an analysis

E-commerce market in China Online consumer product retailers in China Performance of Amazon in China   Amazon is a global e-commerce player selling a wide...

An analysis of Malaysian rubber glove industry

How big is the international rubber gloves market? Reasons behind the healthy and steady growth Malaysia’s role in the industry Why are companies struggling for stable...

Rapidly growing Indian online food delivery industry and its unrealised profits

Evolution of online food delivery industry in India Geographical penetration and scope for expansion Key players and their zeal to balance revenue and costs   Online...

Can lithium-ion anode demand for needle coke reduce availability for electrode players?

What is needle coke? Uses of needle coke Lithium-ion battery manufacturers demand needle coke   Needle coke? Needle coke is a specialised form of petroleum coke...

Is the radio broadcasting industry in the U.S. dying? An analysis

Radio, the most powerful medium of reach in the U.S. Why the industry is moving at a slow pace? Radio’s health is still sound, will it continue in the long-term?   ...

Sri Lankan economic and political crisis

Sri Lanka’s latest political crisis, who governs the nation? Poor economic indicators adding to the nation’s woes   Sri Lanka is currently embroiled in a political crisis,...

Carbon black industry, strong potential for supernormal profitability?

What is carbon black? Its uses Impact of the environmental curbs in China   What is carbon black? Carbon black is a fine carbon powder and it is a disorderly...

Blockchain, an emerging concept, a disruptive technology (Part 1)

What is blockchain? How is blockchain revolutionary? Cryptocurrency, the new money ICOs, the new way of raising money Summary Blockchain is a software architecture...

Housing finance market in India. Is affordable housing driving the growth?

Overview of the housing finance sector in India Key players dominating the segment and their dynamics Factors driving aggressive demand for housing   The housing...

Rice industry outlook 2018

Major rice producers and consumers Global rice trade Factors dominating the trade   Rice is the 3 rd largest produced agricultural commodity in the world, after...

Indian wood panel industry, growth drivers and present trends

Current market scenario in the Indian plywood industry Growth in the housing sector and rapid urbanisation to provide the boost GST rationalization to reduce price difference...

Rise of Ant Financial, will the success story continue?

What is Ant Financial? Journey to become king of unicorn Will regulatory curbs hinder its success journey?    Ant Financial, an affiliate and integral part...

Baidu’s Apollo, the underdog of autonomous driving platform

Overview of the autonomous vehicle sector in the global automobile industry Search giant Baidu’s entry into the autonomous driving space Baidu’s approach in becoming a front-runner...

Malaysian rubber glove industry, an update

Rising global demand for gloves Impact of USP 800’s implementation and the US-China trade war on Malaysia’s rubber gloves industry Key challenges for the Malaysian rubber...

Unnoticed growth of the media and entertainment industry in India

Overall industry brief Growth of the M&E industry and its segments Major supporting elements of this growth   Media and Entertainment (M&E) is a very wide industry...

Battle for the textile and apparel industry in Southeast Asia

The reasons for China’s decreasing presence in the industry Initiatives by the governments in Southeast Asia to boost the textile trade Vietnam and Bangladesh’s quest to conquer...

OYO Rooms, an Indian start-up to enter Japan

Growth story of OYO Rooms in India Business model of OYO Rooms Analysis of strategy to enter Japan   OYO Rooms, the Indian start-up has decided to venture in Japan...

What’s in store for India’s first commercial REIT as it hit the market with Blackstone teaming up with Embassy Group

Overview of the partnership and assets of Embassy Office Parks Comparison of the Indian commercial office market space with other developed markets Road ahead for India’s...

German economy, will the slide continue?

Weakening global industrial demand weighs on Germany’s manufacturing sector Inflation and business climate take a hit with broader signs continuing to be subdued Future...