Retailer’s paradise: warehouse automation?

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Retail markets are changing rapidly, but how are warehouse operations responding? Maria Highland investigates whether automation is the solution to retail’s challenges.

In recent years the retail landscape has changed dramatically as e-commerce trading has become a core customer offering of most retailers. As retailers compete to gain consumer loyalty, their express delivery offerings become the benchmark for the entire industry. “Customers expect their order to arrive on time, as ordered and at the correct destination,” says BEUMER Group systems director, logistics systems, Brian Hansen. “If these requirements are not met, customers can simply change suppliers and are likely to share their dissatisfaction on social media.” The change in consumer expectations and retailers’ offering has directly impacted how warehouses now operate. “The rapidly changing business models (new apps etc) that retailers have today are putting pressure on the warehouses to be able to change and be flexible at very short notice,” says Hansen. KNAPP UK managing director Craig Rollason also attributes the changes experienced by warehouses to the rise of e-commerce. He notes that “the last decade is a cautionary tale of retailers’ responses to e-commerce,” and explains that “Brands such as Toys R Us, BHS and Maplin have disappeared, while others – like House of Fraser, Homebase and Mothercare – continue to sail in troubled waters.” Therefore, “The ability of retail brands to respond to by implementing a sound multi-channel strategy with a flexible approach to distribution is critical for success,” continues Rollason. “The typical retail warehouse today has greater volumes than ever before and needs to achieve very high throughput speeds – without compromising accuracy levels.” With the rise of e-commerce, and the desire to minimise costs and reduce risks where possible, retailers often find themselves operating straight out of their warehouses. “Stock is being pushed back up the supply chain,” explains Indigo Software solutions architect Eric Carter. “For warehouses, the biggest change has been the need to adapt to handling much larger volumes of more frequent, smaller dispatch items which are more expensive and time consuming to handle.” With retail warehouses supporting a business operation that services an ever more demanding customer base, different obstacles arise. Carter believes that the “biggest obstacle for the warehouse to overcome is coping with throughput volume and getting items out to customers either at home or in the stores, quickly and cheaply.” And for Rollason, “the availability of labour is becoming a real issue, especially in the light of impending immigration controls for EU citizens.” And, “Of course,” he continues, “the rise of e-commerce is adding to this pressure, because e-com distribution within a manual warehouse environment requires more labour – for the picking and packing of individual customer orders – than bricks-and-mortar retailing.” However, the rise of e-commerce is not a bad thing. “The growth of e-commerce over the last few years has been phenomenal for a lot of retailers – into double digit growth for many,” says consulting partner at Bis Henderson Consulting Neil Adcock. It just means that the warehouse takes on a new role and requires new approach to the way it operates. Hansen describes the most successful warehouses to be “those that can keep a wide range of products at low cost while maintaining the highest degree of reliability in terms of fast and fault-free delivery.” And “High reliability requires efficient intralogistics, from warehousing to sortation and transport,” he adds. Likewise, “as material handling becomes more complex, warehouses are required to be more flexible to enable them to handle different tasks and adapt to changing local conditions,” says Hansen. “Highly efficient processes are therefore necessary to ensure quick handling and delivery of items.” E-commerce and company growth often “opens up the big question of ‘how large a fulfilment centre is needed?’ and requires a business to plan in flexibility so as to cope with possible changes in order or product profiles,” says Adcock. “The key is to think about phases of growth. Perhaps, considering islands of automation.” Likewise, retail warehouses facing the growth are also presented with the issue of people and labour. “Finding enough people is now a major issue,” notes Adcock. This is where automation comes in. Automation is a key technology that provides the solution to warehouse qualms regarding labour, efficiency and accuracy, not to mention space. “We are finding that more and more businesses are asking us about mechanisation and automation, the common objective being to reduce reliance on manual labour and to reduce costs,” says Adcock. And “Automation naturally helps to mitigate labour shortages and, crucially, also helps to deliver the speeds required in retail distribution today. Recent figures show that next-day deliveries now account for over half of e-com orders in the UK,” adds Craig Rollason. “Consumers are demanding speed as well as convenience, and retailers need to respond to remain competitive.” By investing in “technology that automates some aspects of certain jobs can make work safer and more satisfying, empowering our workers to then focus their attention on higher-skill tasks,” says UPS UK, Ireland and Nordics president Mark Vale. Although automation can help to address issues of efficiency and labour shortages, it should be a thought-out decision as it is not a “one size fits all”. Hansen explains that due to this, “warehouses often team up with a reliable partner who can help design the integrated solution which makes every process of a warehouse optimum.” Likewise, automation solutions can often be inflexible, which can be the opposite of what retailer warehouses require if they are responding to changes in consumer markets and seasonal growth. “Automation does improve operational efficiency to a degree because automating processes makes them faster to execute and less error prone,” but as Carter adds, “it also adds a degree of inflexibility which needs to be thought through carefully because retail warehouses also need to remain as agile as possible to adapt to sudden market changes.” This is where it maybe be useful to invest in a mixture of both automation and robotics solutions. Hansen notes that the “ideal process is made of a combination of automation and robotics.” He explains that “Today the speed at which robots operate and their levels of intelligence has increased significantly. Robots are now able to distinguish or decide for themselves how to grab an object and where to place it optimally.” When it comes to automation or robotics, Rollason also recommends the use of both. “The automation takes care of storage and transport around the warehouse, while robotics is set to be the future for order fulfilment.” Likewise, robots “can also be retrofitted and integrated with existing automated handling solutions,” adds Rollason. Likewise, solutions providers are now looking to offer customers combined robot and automation technologies. For example, “KNAPP has even combined its Pick-it-Easy Robot and Pocket Sorter technologies to enable robots to pick items and place them into pockets that are then sequenced by matrix sortation. This concept offers huge potential for rapid and accurate order fulfilment,” states Rollason. However, it is worth noting that the answer is not always in the realm of automation, or robotics. Hansen suggest that a potential alternative is a manual or semi-automated approach. Sometimes, automation is not the way forward he explains. “If the calculations do not tell us the decision is worth the investment, then we can recommend looking at optimising other processes in other parts of the business.” Rollason agrees that the alternative is to rely on manual operations. “Of course, these can usually be scaled fairly easily to meet peaks – although this is problematic when labour is scarce, as it is becoming today – but it comes at a premium in terms of space. Manual processes require more warehouse space, which is also an issue in UK distribution centres today, as well as more time to pick and dispatch orders, making it a challenge to meet ever-shorter delivery windows.” But, if automation is indeed the answer a retail warehouse has been in search of to boost operations, then there is a multitude of automation technologies that are operations to get excited about. “There is an awful lot of technology out there,” says Adcock, “for example: Fully automated systems, pouch sorters, OSRs, goods-to-person systems, auto bagging, carton erection etc.” When it comes to technologies that are driving retail warehouses, Indigo Software’s Carter notes that the commonly encountered technology “is goods to person picking, because it is cost effective to implement and can be used for a wide range of applications. It is fair to say that RFID been and gone in retail now,” he adds. Likewise, “For retailers, the ability to invest in a select few technologies is very attractive in terms of simplicity and maintenance,” says Rollason. “This is a factor driving interest in KNAPP’s shuttle storage solutions and pocket sorter technology.” Likewise, he adds that KNAPP’s “overhead pocket sortation solution is particularly interesting for retailers handling hanging and flat-packed items, as they can both be handled by the same system.” Having established a multitude of automation options, Adcock then asks: “How do you find your way through all of that?” He recommends the “key questions to ask are: how much capital does the business wish to deploy? If capital is at a premium then you may need to look at some smaller changes. Is there a short-term or long-term commitment to the facility? If you can move to a new building then you are not constrained by existing processes and layouts. How fast are you growing? You may want a short-term solution if you are growing at 20-30 per cent year-on-year. Then the types of customers, types of products and the future order profiles all need to be thought through. And of course, throughput and the wider business strategy must be carefully considered too.” Automation of operations feeds into an overall improvement in operations, contributing to a wider supply chain. UPS’s Vale says: “Hub automation, improved driver routing and technology-driven efficiency in our preloads improves accuracy, time in transit and in turn, reduces our carbon footprint. Fewer mis-sorts, mis-loads and missed deliveries mean more satisfied customers – it’s as simple as that. Improved time in transit also means more satisfied customers in today’s fast-paced economy where businesses value speed and expect accuracy.”

Automation and sustainability

The retail sphere is growing more and more concerned with environmental impact. And “When it comes to reducing carbon footprint,” says Craig Rollason, “automation is something of a no-brainer because it helps companies minimise their impact on the environment in a variety of ways.” Rollason explains that “Software control of logistics operations means that material flows are optimised, thereby minimising energy use. Sophisticated software can ensure that automated handling systems operate in line with capacity demands, and can also accumulate handling tasks for release in efficient batches. Software can also be used to optimise vehicle loading and delivery routes to reduce fuel use and thereby emissions. Plus the increased order accuracy achieved through automation of the order picking process means lower levels of returns owing to inaccuracy, which in turn has green benefits.” “Most organisations have established CSR to some level and automation plays its own role in supporting this responsibility,” says Hansen. “Our loop sorters, for example, can achieve up to 70 per cent reduction in energy consumption, compared to conventional sorter technologies. The reduced energy consumption will help reduce the product life cycle costs while also to helping warehouses to meet environmental goals for reducing carbon emissions.” Eric Carter also agrees, he notes that “automation certainly improves sustainability especially in terms of countering the disruption of the skills shortages among warehouse workers currently.” Automation helps to take labour issues out of the equation, enabling companies to “focus on improving their processes further and shortening their investment payback time.”

Dematic offers beauty brand automation solution
Global beauty products brand was looking to improve productivity and gain competitive advantage in the UK market as its online customer base was fast- expanding by streamlining and merging its fulfilment operations for both retail stores and e-commerce orders. The company had two separate distribution centres on the same campus, one handling retail demand and the other fulfilling e-commerce orders and the businesses wanted to consolidate them in a single building. Dematic was to provide an automated facility capable of processing both retail and e-commerce orders, all within an operating footprint of 4,500 sq m and critically, within tight budgetary constraints. The solution provided by Dematic catered to both retail and e-commerce orders by combining
a number of picking solutions, including the use of the Dematic Multishuttle, with Goods-to-Person technology, Dematic RapidPut stations for e-commerce orders, voice command technology for order consolidation and trolley picking operations – all under the intelligent co-ordination and control of Dematic iQ software. The solution was capable of meeting the heavy demands of retail promotions and replenishment, as well as the expanding requirement for fast, efficient and accurate despatch of online orders. Another challenge that presented itself was the need for a solution that matched the company’s peak demand, such as during Christmas time which saw a retail volumes doubling and a fivefold increase in e-commerce orders. Dematic responded by providing a system designed for non-peak operations, with an added manual trolley pick to support automation during peak periods. This solution fulfilled the objective of providing an efficient solution, all within the designated footprint and set budget. Likewise, getting trolley pick to merge with orders from the automation side was complex and required close attention by the iQ software team, which they provided. Overall, Dematic provide a flexible and scalable solution through the application of intelligent systems and automated.


This feature first appeared in the November issue of Logistics Manager.

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