Tompkins International Recognized as a Best Logistics Consulting Firm by ALM Intelligence
By Jim Tompkins
CEO, Tompkins International
Going into the new year, we expect to see many reports discussing problems faced during the 2018 holidays. We will also see many success stories from companies that learned from their past holidays and have joined the robot revolution.
If you have not yet taken this step, now is the time to re-evaluate your operations to understand what must be done to be successful in 2019. Any future strategy must consider alternatives that improve efficiency in space and labor, while providing the scalability and flexibility to adapt to unexpected business changes.
Projections from the Bureau of Labor Statistics show the labor force growing at a slightly lower rate than the warehouse employment over the next 10 years. For the foreseeable future it appears warehousing and distribution operations will need to figure out how to continue increasing production with minimal growth in headcount. The each supply chain driven by eCommerce and single unit store replenishment has intensified this problem by increasing the labor requirement and cost per item, while labor availability is shrinking. Historically, robots have been applied to the processes of storing and moving cases in the distribution center and only recently has the technology evolved to support each picking and sorting. This has opened up a whole new opportunity for distribution automation. “Robotics and automation technologies have increasing labor productivity by about 0.35% annually, which may not sound like much, but is on par with the impact felt by the steam engine from 1850 to 1910,” Harvard Business Review.
At the same time, warehouse space has become harder to find as online sales continue to increase the demand for distribution center capacity. This shortage has a direct correlation with the cost of industrial space. Automating the storage and retrieval of products in the warehouse has reduced the amount of space required in operation by greater than 50%, increasing the density of products that can be stored. The use of autonomous robots can further reduce the space required by eliminating fixed conveyor paths and much of the staging and buffer space requirements with conventional technologies.
We have all learned that projections and forecasts are never accurate. The only thing we know for sure is that eCommerce demand continues to outgrow projections year after year and that order profiles and customer requirements continue to change.
Automation used to be a rigid, inflexible solution that was typically over-built to support a five to seven year time horizon. These solutions were only at the proper capacity level at one point in time during those five to seven years and usually only ‘fit’ the business requirement in the early days of the implementation. Most robotic solutions grow with you, allowing you to incrementally invest the capital required when it is actually needed. These systems also provide the flexibility to change quickly without a major overhaul saving capital and resources.
Planning for holiday 2018 is over, it is time to execute. Once again, it will be fun to watch the winners and losers of 2018 and see who learned the most from past years. Who knows what 2019 will have in store for us. All we know is that labor will be scarce, space will be expensive, and business requirements will continue to change. It is time to equip yourself with the solutions that can address these challenges.