Creating the warehouse of the future

From the October 2020 print edition

Perhaps the most significant by-product of the e-commerce revolution is that customers now expect that they can have exactly what they want, when they want it, and at the right price. This puts enormous pressure on supply chains.

“It’s this idea of the perfect order that’s driving how supply chains are changing right now,” says Carol Valentine Fleck, coordinator of the supply chain management program at Mohawk College in Hamilton, Ontario. “People expect things to be instant and at a really great price.”

As facilities devote more and more space to direct-to-customer orders – a trend that has accelerated during the COVID crisis – they are evolving from holding areas to customer service organizations where small orders are the norm, returns and complaints are frequent, and the standards for speed and accuracy, as set by leaders like Amazon, are forbidding.

“The disruption we’ve witnessed in recent months heightens the need for better collaboration across the supply chain,” says John King, director of customer solutions at GlobalTranz. “We will likely see more rapid adoption of new technologies, such as digital warehouse management systems, that are part of a single solution or platform that allows customers to see across their entire supply chain.”

The trend has increased pressure to streamline and automate processes on the warehouse floor. “How do you get to that point inside a warehouse?” asks Fleck. “You’re not going to get there by having people running up and down racks and picking things by hand.”

A variety of technologies are entering the picture. Better scanners and vision systems are helping companies improve accuracy and ensure that an item confirmed to be in stock isn’t damaged. Internet of Things (IoT) sensors are helping managers locate single items and gain an accurate picture of overall inventory. Pick-to-light systems are increasing the speed of stock picking and reducing the number of errors. Piece-picking robots are starting to eliminate human picking functions altogether.

Understanding the technology itself, even at the most sophisticated end of the spectrum, is not the major barrier that potential implementers face. “Robotic systems are pretty user friendly,” says Vince Martinelli, head of product and marketing for Boston-based RightHand Robotics “and I think the better ones are designed with the needs of operations people in mind. There’s a bit of a learning curve, but I think it’s entirely manageable. Vendors expect to help people with the process.”

Engaging the team
The hard part is matching workflows with the technology, and according to Martinelli, this is the key area where companies need to devote time and energy. “When you decide to make an investment in new automation like robotics, you need to think about how you’re going to operationalize that,” says Martinelli. “This means getting the team in the facility who are going to use the system engaged in the process. How will the process work? How will it affect the shifts? What if it fails on a particular day? All these need to be considered.”

Floor layouts often change as well. Martinelli notes that when Amazon first began to use robots from Kiva, a company it acquired, pilots took place in brand new buildings. The warehouse of the future, therefore, is not likely to be staffed with techno-wizards, but with people who can engage in the kind of dialogue that will be required to work with technology partners in a rapidly changing work environment. This is reflected in the program content for the eight-month supply chain management program at Mohawk. While the course introduces students to the technology, allowing them to get a feel for transactions and how they tie together using an ERP system, this is only scratching the surface.

“There’s no way we can teach them about all the technology,” says Fleck, “so we focus on the soft skills that they’re going to need.” Fleck adds that these include time management, communication and negotiations.

Supply chain managers introducing automation will find that they have many of the same challenges that IT departments face. Any new technology has to integrate cleanly into existing warehouse management systems and ERP systems, so finding system integrators that can pull everything together is critical.

According to John McKenna, president of 3PL McKenna Logistics who also teaches in the business program at Humber College, data awareness is one of the most important skills for supply chain professionals. “Now that you have this data, how do you turn it into information that you can make decisions on?” he says.

“I would think even if you’re not a programmer type or networking person, you ought to have some familiarity with data, and understand the thought processes around metrics such as overall equipment effectiveness (OEE),” says Martinelli.

The Humber program is similar to Mohawk’s in that it also provides an introduction to ERP, in this case using SAP, and puts considerable emphasis on soft skills.

“I think the skills that are going to be needed are analytical, problem-solving skills,” says McKenna. “The technology solves 90 per cent of the issues, but there’s still that 10 per cent where you still have to think and become a problem solver.”

This isn’t just a matter of reading data reports – it’s also important to keep an eye on the evening news. “If there are labour negotiations going on in the port of Vancouver, you need to think about how a strike might affect your supply chain,” says McKenna. “If your boss has to bring you a problem, it’s probably too late.”

Calibration is key
Perhaps the toughest call for decision makers is the timing of major technology projects. “That’s a pretty big decision,” says Martinelli. “There is a classic case where you have legacy infrastructure and a competitor starts an online store tomorrow with a newer generation of technology that provides higher productivity, so they now have a cost advantage. You may be able to absorb that for a while based on your brand and customer relationships, but at some point, you have to face the tough question of when you will move to the new technology.”

Creative thinking will be key in making the transition to a tech-enabled warehouse environment. “I ask students why companies hire employees,” says McKenna, “and they say things like ‘because they have a job to fill’. But that’s not the real reason. They hire because they have a problem that needs solving.”