Strategies for a shifting retail landscape

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Extensive choice is part of the new shopping experience. But how well is warehouse automation adapting to the growing presence of omni-channel? Alexandra Leonards explores…
Whether buying online, picking up or purchasing in store, shoppers now expect nothing less than a perfect experience. The pressure is on for warehouses in the retail space to deliver goods on time and in pristine condition. As a result, the complexity of warehouse operations is intensifying.

This article first appeared in Logistics Manager, September 2016

This article first appeared in Logistics Manager, September 2016

“Omni-channel is a bit of a buzzword but makes a lot of sense because it effectively means having a universal way of doing things,” says Eric Carter, solutions architect at Indigo Software. “So regardless of where and how a customer buys goods from a company, they can expect the same level of service and the ability to easily switch between channels when dealing with the company.”
Behind the scenes, a watertight warehouse operation is needed to achieve a seamless shopping experience. But is the industry adapting to the pressures driven by a new, multifaceted retail environment?
“The e-commerce market is definitely booming,” says Darcy de Thierry, sales manager, Dematic Northern Europe. “Like for like sales are experiencing double-digit growth and this has been going on for at least the last five years.
“People are coming to understand what e-commerce is all about and now they are really starting to apply more and more automation to it.”
Thierry thinks that over the past few years’ some retailers have been “holding back”.
“The market has matured and now they have gained the confidence to apply automation,” he says.
Bashir Shama, director of logistics automation at DAI, says that varied delivery options require software to manage all of the different warehouse processes, whether they are manual or automated. As for the technology itself, he thinks that it is universal and fairly simple.
“The stock is either picked at a multi-way ‘goods-to-person’ area into either batched order container or individual order container for packing, depending on the solution,” he says. “The former batched container is further sorted by put to light or voice into individual orders before being packed.
“Where there is a large SKU range (400k plus), these technologies may not suit and therefore, a storage system is used to replenish a manual pick-face giving access to all SKUs.”
Brian Whale, senior logistics consultant at Swisslog, points out that warehouse automation is designed to manage omni-channel processes.
“It is now just a matter of streamlining solutions to minimise the number of touches before a customer receives the order, and to reduce associated packing and shipping costs,” he says. “The best and most efficient solution is a new build facility, but often this is not possible.
“We have many examples of new automation being installed into existing facilities, introducing goods-to-person solutions to compliment what is already in place.”
Omni-channel is all about getting a single item collated and delivered to the right destination. “So sequencing is key when it comes to the solution, and that is achieved through the application of technology such as multi-shuttle and overhead pouch sortation systems,” says Thierry. “Pouch sorters are really coming into their own in sequencing.”
Pouch sorters have the advantage of handling both hanging and flat products at the same time. “In the past you would have had to have a hanging garment sorter and a flat sorter, and then you would still have to bring those products together to collate the order,” he says.
But omni-channel certainly isn’t a walk in the park for automated systems. There are a number of pressures and pitfalls prompted by the intricacy of a multi-channel process.
“The disparity between peak throughput and normal throughput can adversely affect how the solution is designed and how efficient the warehouse is,” says Shama. “Changes to how late a customer can order can have a significant effect on the ability to despatch before carrier cut-off.”
Another area that retailers struggle with is balancing brick and mortar stores with e-commerce orders.
“Retailers looking to use their existing infrastructure for both store replenishment and e-commerce may face issues with efficiency,” says Swisslog’s Brian Whale. “A warehouse, whether it is automated or manual, is designed to achieve a fixed set of criteria at the outset, which traditionally was store replenishment.
“Not every business is online, of course, but the pull of e-retail has led many labour intensive warehouses to dramatically change their processes.”
He says it is clear that where any retailer now invests in new distribution centres, the processes must have the ability to accommodate both streams for the future alongside a transition between the two.
Roland Martin, global market leader for e-commerce and retail at Swisslog, says that one of the areas that can present a challenge in catering for omni-channel is ensuring stock availability is consistent across every channel.
“Different zones will need to be kept replenished and for multiple item orders, the consolidation of items from different zones will have to be taken into account,” says Martin. “This is especially significant when it comes to grocery orders, with items coming from several different temperature zones.”
Eric Carter says that warehouse automation plays an essential role in enabling companies to implement omni-channel logistics processes. “It helps to remove errors, improve productivity levels and allow the company to operate more consistently and reliably around the clock,” he says. “But it comes with a price tag and herein lies another problem.
“Depending on the type of technology required, it can be expensive to implement and the cost can’t always easily be offset against delivery charges.
“This is because although consumers want fast, reliable delivery, they tend not to want to pay for it.”

In the past, automation has been seen as inflexible. But, says Roland Martin, global market leader for e-commerce and retail at Swisslog: “Warehouse automation has become much more flexible by, for example, handling different zones or catering to future growth,” he says “and that’s just the tip of the iceberg.”
Derek Rickard, distribution systems sales manager for Cimcorp, agrees: “Warehouse automation has become more flexible and scalable. With the use of shuttle technology, mini loads and level-based shuttles, manufacturers are able to get to products faster. They have the ability to grow and change as the market shifts.”
So, why are many companies still hesitant about going “fully” automated?
“I wouldn’t agree,” says Martin. “Automation needs to become more scalable to cater to SKU changes and sales fluctuations, that’s true.
“It is critical for warehouse automation to be quickly set-up and smoothly integrated with current processes in order for facilities to be future proof.”
Rickard says that automation is still perceived as inflexible by some in the industry. But with the right solution an automated system can adapt to changing needs, whereas a manual system is unable to.
“Within a manual system, the fulfilment centre is laid out with items positioned in specific locations on the floor based SKU volumes (the amount of times they are picked) during peak season, and that is where they stay,” he says. “If it is not peak season or your business changes, then you would have to completely reorganize/resort your warehouse to accommodate the changes.”
Shama says that flexibility is dependent on how you design the solution.
“Most businesses know what their normal day looks like – automation should primarily be considered and designed for their normal day, the ROI is there and it’s a ‘no brainer’,” he says. “The peak day is a problem anyway, you cannot and probably should not design automation for your peak day unless there are good business reasons for doing so – for example, business location does not attract the labour required.”
Automation can have a significant impact on the level at which a company can cost-effectively run an omni-channel business model.
“But the extent of financial investment required can limit the numbers of companies that can feasibly justify the necessary outlay,” says Indigo’s Eric Carter. “What’s really clear is that omni-channel has brought with it an increase to customers’ general levels of expectations and anything a company can do to provide a better, more efficient and more personal service will yield significant dividends in the future.”

There appears to be a consolidation culture springing up in the market. Companies are now offering up a range of services – effectively transforming into complete systems providers.
“We are starting to see more companies trying to get into markets that they have never been in before to become a company that can offer everything to their customers,” says Rickard. “This is partly due to the owners of warehouses and distribution centres wanting turnkey solutions and seeking it from one provider, instead of multiple providers.
“The strategy is to gain more revenue and market share and provide better service by becoming a full-service turnkey solution provider.”
Carter says that there have been some interesting developments with companies offering a single, one-stop-shop solution.
“Some could argue that they should ‘stick to the knitting’ but equally, because their MH systems need a WMS in order for users to get the best usage value, they were missing out on significant revenues having to partner with another company and clearly view this move as a safe diversification strategy,” he says. “We can expect other major players in materials handling equipment to follow suit and could potentially see a series of acquisitions whereby the MHE specialist acquires and integrates a software company into their offering rather than sets out to develop their own solution from scratch.”

Omni-channel has exploded and shows no signs of retreating. It is here to stay. So what does the future look like for warehouse automation in retail?
“The solutions designed will need to be more flexible with faster despatch times,” says DAI’s Shama. “The technology that can improve this are robots for fast piece picking.”
According to him, this kind of technology is still in its infancy – but will play a key role in improving efficiency, despatch times and being able to react to changing customer requirements.
“Technologies that store and bring stock to the person efficiently for picking and therefore, reduce warehouse footprint and bring stock to the person at the right time, in the right sequence, is already there and will become more prevalent,” he says.
Swisslog’s Brian Whale says that warehouses of the future are sure to involve picking activity undertaken by robots.
“Automated item picking for e-commerce is on the horizon, with interactive human-robot picking stations due to hit the market next year,” says Roland Martin. “Technologies such as automated case packing (ACP) and automated packing for e-commerce are already here, but will be used on a much larger scale in the coming years to aid with the lengthy packing process.
“There’s also a need for warehouse management software that uses historical data to predict future outcomes. An obvious advantage would be to predict future labour requirements and improve the coordination of picking to staging.”
Cimcorp’s Derek Rickard also sees robots as the future for automation. “They have the ability to adapt to real-life scenarios and will enable companies to be more efficient, safe and speedy, when working alongside and with employees,” he says. “Advancements in robotics will continue, and they will continue to get smarter to meet customer demands.”

Case study: L’Oréal converts DC from manual to automated
L’Oréal’s 680,000 sq ft Walton distribution centre, which opened in 2009, began as a completely manual site – using a hand-pick, three-shift operation staffed by a sub-contracted workforce.
In the end the cosmetic company decided to go with a solution by Cimcorp, the manufacturer of turnkey robotic gantry-based order fulfilment solutions.
Cimcorp introduced a fully automated, robotic system that has the ability to pick close to a limitless variety of products, and access a large volume of inventory with a single machine. It also enabled the company to create customer orders in any sequence. The layer pick system is best suited to areas that pick over 1,000 layers every day from 50 to 500 SKUs.
Subsequently, L’Oréal decided invest in a double gantry system to reach 100 per cent redundancy. The company also felt it was necessary to implement a forward reserve cascading replenishment system for the 6,000 pallets per month to reduce forklift travel.
Cimcorp integrated its warehouse management system with L’Oréal’s business interface module to facilitate communication with the SAP system.
According to Cimcorp, since the implementation of the company’s layer pick system, ‘the flow of orders and productivity have become more efficient and consistent compared to the manual order processing’. The automation enabled the site to ‘reduce and reallocate existing resources to other operations within the facility’, like warehousing and shipping.

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