Automation- Key to Future ready Warehouses

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Automation- Key to Future ready Warehouses

Automation- Key to Future ready Warehouses

Dramatic changes to the warehouse are just beginning. Data-driven, flexible and robotic automation solutions are helping improve performance today while retaining the agility to adapt to tomorrow’s changes. With a greater thrust to make the warehouses and DCs GST ready, logistics automation has been seeping into the Indian warehouses slowly but surely. Warehouse operators mostly running manual operations today are rethinking their ability to extract full capacity and efficiency out of the current setup and the obvious answer lies in warehousing automation, writes Rupesh Narkar, Director of Sales, Swisslog Logistics, Inc.

Rupesh Narkar

Indian economy is poised to overtake developed economies soon. Constantly growing middle class, growth in consumption, record transactions in e-commerce and successful GST implementation are few key reasons fueling the growth of the economy. For any emerging economy, its blood veins are the logistics and transportation sector. As India demonstrated a sustained GDP growth of above 6.5% and projected further continuation of this trend, the transport, logistics and warehousing industry has gained focus. Government has allotted infrastructure status to the logistics industry. As per the economic survey 2017-18, the Indian logistics market is expected to reach $215 billion by 2020.

In view to this, GST has greatly simplified the complex tax structure levied on movement of goods across borders. Post GST, the logistics sector is booming thanks to faster movement of goods from point of manufacturing to destination. Warehouse (WH) and Distribution Centers (DC) are the backbone of logistics. GST has totally changed the warehousing scenario in the country. Earlier, warehouse operators would invest in multiple smaller warehouse locations strategically to avoid paying border taxes. According to a recent research by Knight & Frank, the future will see reduced needs to carry inventories, thus substantially reducing the need for small warehouses. This will free up the working capital to a great extent. Additionally, there would be an overall reduction of warehousing space and consolidation of small warehouses into larger; to benefit from economies of scale. With the progressing of this trend, some of the earlier smaller warehouses are now becoming redundant. Going forward, these companies would take up larger warehousing spaces and look at improving efficiency and capacity using automation. The biggest beneficiaries of this shift would be the warehouse and logistics automation businesses. In cognizance to this, Analytics India estimates that the Indian market for warehouse automation is projected to grow at a CAGR of 10-12% during 2018-2020, and the current warehousing operators will have to step up their game to compete with the larger warehouses.                                                                                                                                                                              

What is making automation such an attractive bet for warehouse operators? One obvious reason is getting the warehouses and DCs “GST ready”. The other is to gain a competitive edge. Warehouse operators mostly running manual operations today are rethinking their ability to extract full capacity and efficiency out of the current setup. The existing Indian warehousing landscape shows a grim picture, unable to attain higher capacity and productivity due to several factors:

  • Lack/absence of the appropriate scale and quality of warehousing infrastructure
  • Technology required to enable efficient use of resources
  • Low capacity utilization and operating efficiencies (i.e., poor utilization and throughput/unit space)
  • Limited capability for handling multimodal interfaces
  • Low level of productivity due to manual and non-value adding processes
  • Inappropriate level of Automation
  • Warehousing labor shortage, skill deficiencies and poor use of available resources

Typically, there is little to no technology deployed in warehousing that can complement the state-of- the-art infrastructure. 3PLs (3rd Party Logistics) and OEMs (Original Equipment Manufacturers) that operate their warehouses are now intently focused on increasing productivity by automating their material flow within warehouses. The developed world has been on the forefront implementing advance automation technologies in warehousing operations. Nevertheless, today, automation is not only limited to the developed world. It is possible to implement different scales and levels of state-of-the-art automated material flow solutions that can accurately store, retrieve and transport goods faster without sacrificing reliability. In addition, these automation solutions offer both flexibility & scalability, and are easily rationalized in emerging warehousing environments.

Dynamic systems that can store and retrieve goods, intelligent algorithms that can optimize storage space and provide real-time tracking, and state-of- the-art conveyance systems that can transport goods from storage to shipping lines are all being implemented in sophisticated warehousing environments globally.

Infographic depicts simple warehousing processes. Depending on the appetite of automation, the table clarifies what level of automation (automation of processes) can be adopted.

Why automate?

With the onset of warehouse space consolidation, Indian warehousing industry is witnessing rapid emergence of large warehousing spaces. Larger spaces are driving the need for efficient warehousing operations. Today, warehouse operators are aiming to achieve higher capacities in terms of better space utilization, higher productivity in terms of maximum goods inbound/outbound and improved efficiency in terms of better resource utilization. However, with the current manual processes, achieving a reliable, efficient and quick material flow within the warehouse remains a challenge. This is where automation can help. Let’s look at the reasons to automate…

Optimize / Maximize space utilization

In the warehousing world, available space is never enough. Operators strive hard to utilize every foot and inch out of warehouse space. In India, where land commands a high premium, optimal space utilization becomes even more relevant. Even though various manual, semi-automated, high reaching storage options are implemented, they can never compete with the high density that an AS/RS (Automated Storage/Retrieval System) can offer. AS/RSs also offer the ability to move the inventory storage up, i.e., utilize the vertical storage space thus greatly improving the storage efficiency factor. As a general observation, an AS/RS can store 50~60% more goods in the same space as a manual or semi-automated storage system.

Total inventory control, visibility and traceability

Large warehouses store large volume of goods. Though warehouse operators have excelled in organizing their inventory; quickly locating, tracking and controlling inventory remains a challenge. Imagine this multiplied several times due to SKU (Stock Keeping Unit) proliferation. Recording and updating where thousands of items are on excel sheets, running around the warehouse with clip pads to locate goods and then retrieving, tracking further consistently day in day out is close to impossible. Warehouses would need to deploy plenty of resources to achieve productivity levels even close to what machines can do and still worry about accuracy and efficiency. Machines can do this much better and consistently with accuracy. In addition, automation enables integration of Warehouse Management System (WMS) or Warehouse Execution System (WES) that provides total control of inventory on a finger’s click. Store, track, retrieve and manage inventory without even the need to walk the floor.

Higher levels of fulfilment and throughput capacity

Imagine the resources required to fulfill throughput demands in a large warehouse. Hordes of people, fleet of fork trucks just shuttling goods to and fro, struggling to keep up with demand. Now, consider meeting growth in demand as the business scales up or experiences peak activities. Achieving higher levels of throughput to meet the demand is just out of question. With automated warehousing; storage, retrieval, conveyance and intra-logistics becomes rapid and efficient. Automating the material flow can drive the throughput up four-fold as compared to manual warehousing. Additionally, automation can easily manage fluctuations in throughput demands. A flexible automation solution can enable capacity switch between inbound and outbound when needed. Also, automation can establish efficient picking processes, routes and sequences thus enabling better overall performance of the warehouse.

Higher productivity, efficiency and maximized capacity

Many of the challenges associated with warehouse productivity involve storage and material movement. Automation clubbed with warehouse management software addresses many issues by providing intelligent control of material flow. Software eliminates unnecessary or inefficient movements by orchestrating the flow of materials. It optimizes storage and retrieval, eliminates congestion, finds the best route, while prioritizing flows based on demand thus increasing the productivity of personnel and material movement. With the use of automation, errors are vastly reduced. Automated systems are faster, accurate and consistent in results. In addition to this, automation system can well perform tasks that are repetitive, monotonous and beyond human limits thus freeing up resources from non-value adding tasks. Most warehouses in developed countries have achieved 24 hours operations without shift layovers or breaks thus maximizing the shift utilization. All this collectively is driving higher levels of productivity and efficiency. It is observed that errors are dramatically reduced improving efficiency four-fold by use of automation. Automation can unlock 60~70% productivity from the get-go.

Reduced logistics and operational costs

India being an economy where plenty of labor is available at cheap rates, many may debate the investment in automation. While the upfront costs of the automation might seem high, the rewards are seen in the long run when compared to manual labor. As the operations scale, the single largest operating expense becomes human labor. Adding to it are inaccuracies, limitation on operating time, process waste, human errors, overtimes, labor dependencies, unreliable operations, etc. that hamper warehouse productivity thus raising the overall logistics cost. Automation resolves all these issues. ROIs often are calculated considering improvement in factors such as efficiency, speed, accuracy, round the clock operations, productivity, minimized errors etc. and pitched against the initial investment.

Improved operational safety

Large warehouses pose dangerous working environments even if adequate safety measures are adopted, implemented and monitored. Storing, retrieving at heights, conveyance using fork truck, foot traffic, handling bulky loads, operating in subzero environment etc. are common scenarios in daily warehouse operations. Even with a proper PPE, safety of operators isn’t guaranteed when working in hazardous environments. Humans make mistakes. When mistakes occur while operating in stressful environments or heavy machinery such as forklifts, it can result in a tragedy. Automation allows workers to work smarter and safer, creating less workplace injuries by taking over the dangerous repetitive tasks. Lifting, carrying, moving, storing (even at tall heights) heavy loads becomes automated thus removing manual labor from hazardous environments and re-allocating towards safer and more value adding tasks. This becomes more relevant in frozen or temperature-controlled warehouses.

Reference: Hayer’s scale of Automation

What to automate

Now that we have established why automate, let’s look at what can be automated. No two warehouses are alike. Automation can transform your warehouse into a facility that does exactly what you want and when you want it. The key is to determine objectives of automation and align it with the business strategy. For instance, an objective could be to double throughput in the existing warehouse, maximize the space utilization or achieve a 24x7 operation with improved productivity, etc.

It is also very important to think through the end-to-end objectives of automation. There is no point automating one process only to create further bottlenecks. A classic example is automating the internal inventory storage without considering what bottlenecks would be generated in the dispatch process and subsequent conveyance of goods to shipping docks. By automating a process, you will generate plenty of capacity but shift the bottleneck further down the process. For this, break the processes down into distinct areas. You achieve a firstcut result by tackling only part of the larger problem and then work your way through.

You must understand that automation solution should be flexible and modular. Flexible automation gives you the control over processes and offers ability to scale further.

Flexible automation solutions

In reference to the table above, there are some flexible and modular automation solutions that fit all levels of automation. In addition, any level including LO will benefit by deploying a warehouse management software platform that enables positive control over process and inventory. Let’s look at some of these:

Automated Storage and Retrieval Systems (AS/RS)

Warehouse environments that store materials on pallets or in a bin/tote can maximize throughput and storage density, while reducing energy consumption and keeping costs low, with stacker cranes and shuttle systems. Cranes or shuttle systems provide efficient, automated storage and retrieval of up to 60% more goods in the same space compared to manual systems.

For smaller size products, modular shuttle systems offer double- to quadruple-deep storage of totes, trays and cartons. Storage and retrieval vehicles are available with load handling devices in either fixed or adjustable widths to handle different product sizes.

Managed by the software platform, these automated pallet, case, tray or tote storage and retrieval systems retrieve products quickly and efficiently based on manufacturing demand, dramatically increase storage density and support optimized transport.

Automated Guided Vehicles (AGVs)

Intelligent AGVs bring increased flexibility and efficiency to material / Intra-logistics transport. AGV systems automate workflows by executing transport tasks based on optimized and flexible strategies managed by the navigation software.

They also provide the ultimate transport solution in flexibility and scalability. If additional capacity is required, more AGVs can be added to operate alongside the existing ones. They can be moved to another facility easily and one AGV can replace another during maintenance. Ideal for most types of material handling, AGVs safely and reliably fit into the manufacturing environment. Almost all of them come equipped with safety systems that can provide safe working environment for humans alongside AGVs with modern navigation options and customized load handling, they are efficient in highly complex logistics systems and simple A-B scenarios.

Good-to-Person Storage, Picking and Kitting