Management + Systems

Automation is firmly on the UK business agenda: Within two years, the majority of organisations plan to have automated at least 50% of supply chain operations, according to ‘Automation in Intralogistics’ – research undertaken by Sapio Research, on behalf of Jungheinrich UK Ltd.

However, the research shows that the way in which automation is being considered is not the stark man versus machine vision. Companies are looking to transform efficiency through highly focused collaboration between automated systems and an increasingly skilled workforce. The workforce of the future will no longer be required to undertake repetitive mundane activities. These tasks will be handled by machines, potentially 24/7; individuals instead will require new skills and expertise to undertake far more complex and valuable roles throughout the supply chain.

Automation is not just about driving small incremental efficiency gains. Automation is increasingly a platform for change as companies explore the smart, connected warehouse in tandem with Artificial Intelligence and improved forecasting to embrace more personalisation and anticipatory demand.

There is widespread acknowledgement that supply chains have become more complex in the past two years – and that trend will continue. The business implications for both cost and profitability are significant, with increasing SKUs and consumers demanding more flexible deliveries and faster shipping. The cost of order picking is estimated at 70% of distribution operations.

There are also clear signs that consumer expectations are evolving. The focus is no longer exclusively on next day, even same day, delivery; environmental awareness is creating a far more socially aware consumer base. Customer choice is still an essential component of service delivery, but increasingly that choice will include a ‘green’ delivery option as well as different delivery timelines. This is potentially adding another layer of complexity to the intralogistics model, as companies must consider the environmental impact of activities alongside speed, efficiency and accuracy.

Today, just 11% of UK organisations can claim to have automated more than half of all processes. However, while many companies have relied on a flexible labour force over the past decade to manage increasing customer demands, there seems to be a clear change in attitude.

Growing numbers of companies within the UK now recognise the value and importance of automation: 50% expect to have automated at least half of all processes within the next two years; 31% to have automated 60% or more. Furthermore, increased productivity and efficiency (48%) are cited as the primary benefit of automation within intralogistics, closely followed by lower operational costs (42%).

While automation is on the agenda, the goal is not always a fully lights out operation. Very few organisations have a vision of total automation. Indeed, just 13% believe the warehouse will be fully automated over the next five years. Instead, almost two thirds (64%) think warehouses will be ‘smart connected’ – with people still playing some part in the processes; and 20% expect warehouses to be somewhat automated, with people playing a large role in processes.

Given this collaborative vision, it is interesting to discover the priority areas for automation. To date many companies have focused on the administrative tasks, with the majority already using ERP and/or
Warehouse Management System (WMS) . As a result, 66% of companies have fully or partly automated inventory updates, with a further 18% expecting to achieve this within the next two years.

Payments and invoices (64% fully or party automated) and customer package tracking (62% fully or partly automated) are also areas that have already been widely addressed.

Embracing collaboration between man and machine
How are companies planning to achieve automation? Organisations across the board still recognise the importance of software systems, including WMS, and that these form the basis of future migration and transformation into automation projects. Within the distribution sector almost two thirds (62%) of UK companies are considering Goods-to-Person (GTP) technologies; but companies have many automation options, from automated pallet storage and retrieval to automated guided vehicles (AGV), conveyor systems and autonomous mobile robots. With so many opportunities to improve accuracy, reduce costs, and enhance speed of response, companies need to be very clear about the specific business objectives – and the way the technology will work within a partial or semi-automated environment.

With this strong drive towards the use of technology to automate repetitive operations and release the existing workforce to focus on added value tasks, the strategic thinking is collaborative.

Automation is not just about reducing headcount; companies are looking to combine automation with a skilled workforce to drive up productivity and manage increasing supply chain complexity.

Indeed, given the lack of skilled available talent in the market today, one of the compelling benefits is that growth can be achieved with the same headcount. Automation can deliver the essential workforce flexibility required to manage business scale.

Understanding and combatting barriers to change
Historically there has been a perception that automation can be expensive, so it is no surprise that the lack of access to capital investment (46%) remains the primary barrier to realising automation objectives.

Given the short-term nature of contracts and speed of change, it is important to make a compelling business case for investment that reflects both immediate and future business needs.

The complexity of integration is considered a major barrier for many (40%), especially for larger companies. Over the past decade, there has been a lack of investment in some sectors, so it is important for companies to recognise the significant changes in both hardware and software that have occurred over recent years. Changes that simplify and ease the integration process.

The widespread adoption of standard WMS and ERP systems, plus the availability of application programming interfaces (API), has made the integration of systems far more flexible, which can significantly reduce implementation time. With the right approach, concerns regarding cost, complexity and fear of business disruption can be allayed.

Given the collaborative automation vision, rather than focusing on the challenge of plugging different systems together, the real issue that companies need to consider is that a successful automation project combines people, process and technology.

Every automation project should be viewed with a company’s long-term objectives in mind, as well as a recognition of the changing customer expectations and the emerging technology solutions, including artificial intelligence.

An automated world at any level creates new operational challenges, which companies will need to consider within their strategic planning.

Increasing supply chain complexity is not the only trend driving automation strategies. Companies are also exploring the growing importance of technologies – such as augmented reality and artificial intelligence – and the role such platforms may play in meeting evolving operational challenges.

For example, with the increasing connectivity of equipment within operations, the use of big data to better predict the point of consumption – anticipatory logistics – offers significant opportunities to improve performance and drive down wastage.

Furthermore, the shift towards convenience logistics, such as customers ordering groceries and drugs online 24/7, is also set to create another shift in intralogistics demands. Companies that can leverage data to better understand trends, forecast more accurately and respond effectively will have an advantage.

Conclusion
Automation will play a vital role in enabling organisations to meet evolving intralogistics complexity. As customers’ demands for choice and speed continue to grow, along with environmental concerns, trends such as anticipatory demand and intelligent power consumption will be facilitated by the current shift away from manual processes towards the smart, connected warehouse.

However, technology alone is not enough. To enable a truly seamless and effective collaborative intralogistics model, companies must also inspire staff with new opportunities and create a highly motivated and skilled workforce.

To maximise the value of any investment there are some essential considerations, not least: Who is going to support the business throughout this process? Does the supplier understand the business processes of today and the future vision? Can it develop, deliver and support the entire automation life cycle? And can it help to make the business case for each stage of the automation journey? This is where a partner, rather than a supplier is vital.

With the speed of change, not only in customer expectations but also perceptions and attitudes, organisations will have to wrestle with a constantly evolving business model. The shift towards electric powered vehicles, including forklift trucks, opens new opportunities for efficiency and meeting environmental pledges, but also raises previously unforeseen issues regarding power consumption. New workforce skillsets are essential; companies need to consider the challenges of ensuring safety in a collaborative man:machine environment.

Automation raises a raft of new questions as well as delivering an extraordinary foundation, providing businesses with the flexibility and agility to rapidly embrace innovation and change.