Automation: The Heart of the Modern Supply Chain

Automation: The Heart of the Modern Supply Chain

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Supplier villages, distribution centers, and e-commerce facilities are the new hotbed for automation and robotics technology. Here’s how technology is changing the way these facilities operate.

As the speed of global business continues to accelerate, and with more customers expecting same-day and next-day deliveries, organizations are updating their warehouse and manufacturing facilities to meet these demands. For many companies, that means investing and integrating automation, robotics, and other advanced technologies in a way that better utilizes labor while meeting customer expectations.

Within the Four Walls of the Warehouse

As the epicenter of the supply chain, the warehouse is going through some significant evolutions right now. “Every year, we see new, heightened demands being placed on the warehouse service time response, productivity and efficiency gains.” says Steve Gundlach, EVP of Americas Contract Logistics/SCM at DB Schenker.

With labor becoming more difficult to source and expensive to retain, for example, robotics has become a focal point for companies that are facing unprecedented logistics and supply chain challenges. According to LogisticsIQ, the global warehouse automation market will grow at a pace of 11.7% (compound annual growth rate or CAGR) to reach $27 billion by 2025, up from $13 billion in 2018.

“Robotics usage is clearly growing in the modern warehouse and DC,” says Gundlach, who points to the ongoing advancements in robotics, the need for better efficiencies, and the lower cost of the technology itself as two other reasons companies are increasingly interested in it.

Just five years ago, for instance, automated-guided vehicles (AGVs) were fairly cost-prohibitive for the average company. Comprising one or more computer-controlled, wheel-based load carriers (normally battery-powered), AGVs run on the plant or warehouse floor (or if outdoors on a paved area) without the need for an onboard operator or driver.

Fast-forward to 2020 and these vehicles are not only more technologically advanced, but they’re also packing more functionality and affordability for a broader range of companies. Gundlach sees AGVs as good additions to warehouses or DCs that want robots that can move material around at the floor level in partnership with their human workforce. With more companies focused on capacity, efficiency, and sustainability in fulfillment, automating at least some of those processes just makes good fiscal sense.

“For companies that want to do more in less time, and within customers’ delivery parameters,” Gundlach concludes, “robotics not only makes good business sense, but it also takes demand and stress off the human workforce.”

In its own warehouses, DB Schenker utilizes warehouse management systems (WMS) and enterprise resource planning systems (ERP) in conjunction with various types of robotics technology. “These are all included in the solution set that we offer our customers,” says Gundlach. “This allows us to differentiate in terms of the value that we offer to our customers while also leveraging our scale, financial stability, and our company’s willingness to invest in automation and technology advancement.”

Out on the Manufacturing Floor

As the U.S. manufacturing environment continues to shift in response to the trade wars and tariffs—and as more companies begin to “inshore” their production, the need for automation on the plant floor is growing. Once the domain of huge companies that used robotics to scale up their operations (think Ford or Toyota, for example), automated processes like 3D printing are beginning to gain traction.

“Companies that are bringing production and/or positions back into the Americas are now having to ‘catch up’ on the technology front,” says Gundlach. For example, those that previously outsourced much of their manufacturing to countries like China are establishing (or, reestablishing) their domestic plans, hiring workers, and investing in automation and new technology.

“Within the auto industry, we’re seeing companies bringing certain types of sub-assembly work back to the U.S. or Mexico,” Gundlach explains. “We’re working closely with them to help accelerate those plants and get them back up and running.”

DB Schenker is also helping those companies manage inventories, knowing that no manufacturer wants to get stuck holding too many “days on hand” of a particular component or part. “Much like the auto industry, companies are getting very disciplined about their inventory management,” he says, “and looking to third-party logistics companies (3PLs) to help them streamline that inventory and reduce costs.”

What’s Coming Next?

With e-tailers like Amazon continuing to push the envelope on very short delivery timeframes, companies across all industries are rethinking their fulfillment approaches, adding more automation to their operations, and turning to reliable logistics providers to help them run their end-to-end supply chains. “Warehouses today are built for velocity and for in and out quick-turn types of inventories,” says Gundlach, “where you can serve customers in a highly-populated area within hours.”

By helping manufacturers better understand their goals (i.e., cost savings, improved service, inventory reductions, or all of the above), DB Schenker builds out automated solution sets that are based on a consultative, whiteboard approach. Knowing that the environment could be completely different just six months down the road, this approach factors in the variables along the way and prepares companies for what’s coming around the next corner.

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