Inside Logistics

Paid Warehouse Automation Drives Operational ROI


May 1, 2019
by Dematic

Mississauga, ON – Labour availability, reliability, and costs are driving automation. Recently interviewed industry expert, Christoph Buchmann, Dematic Account Manager, explains the trends in the labour market and provides outlook into what the future holds for the workforce in warehousing and distribution.

What is the impact of automation now, and in the future, on human labour?

The impact of automation on human labour is significant and though it is a fact that machines can and are replacing human activities, automation enables growth and generates new jobs both inside and outside the distribution center. We see this in warehousing, most significantly in IT software today, and it will continue to expand to the operational floor.

We will unlikely see automation completely replace human labour, after all, every system is only as good as the person operating it.

What industries are feeling the biggest blow from the shrinking labour market and exceptionally low unemployment rates?

We currently work in an extremely competitive labour market. Employees have more choices than ever before in where they work, making employee retention a challenge. Companies involved in eCommerce, right now the retail and 3PL industries most especially, are facing significant labour related crises due to the peak season volatility of eComm operations.

Consumer volumes can spike by a factor of 1:10 or higher within short periods, making it a challenge to manage labour resources.

 

By implementing automated solutions, businesses can reduce exposure to [these] market volatilities and help:

  • Reduce overall required operational headcount
  • Facilitate labour & staffing management using forecasting capabilities (reliable system performance predictability, labour management software)
  • Guide operators through order fulfillment processes, thereby reducing the need for training

 

Is it possible to see immediate ROI after implementing new forms of automation? If not immediate, what is the expected timeline?

Fast ROI’s are business drivers. However, automated systems are often considered larger investments, so it is important to set expectations.

Typically, automated systems are in the 3 – 5 year ROI range, depending on the size and complexity of the system. Annual cost savings can be significant, but many industries are under the pressure of delivering fast ROI’s, which can be challenging. Companies need to be ready to commit to longer ROIs to reap the full benefits of automation.

ROI is often based on labour savings alone. However, automation does not only reduce operational headcount, it also delivers better space utilization, higher accuracy, more intelligent inventory management as well as security and safety. These must be factored into any business case evaluation when considering automation.

What technologies are emerging in the supply chain space that will have the most impact on warehouse/DC staffing and labour needs?

Most new technologies are developed following two principles: boost productivity and improve efficiency, thereby reducing labour needs.

While new technologies constantly emerge, the primary technology that has recently had the strongest impact is software. It has changed the entire approach to distribution center design.

Software solutions and smart analytics now drive the design of automated systems. Modern operations focus on powerful software solutions that manage inventory and material flow within the warehouse, from receiving to shipping. Intelligent software has a direct impact on labour needs. These software solutions offer labour management and staffing models, predictive algorithms and smart analytics, making them a vital part of any modern warehouse.

In addition to software, robotic solutions are emerging. These solutions can replace human activity or collaborate with human workers. So called ‘cobots’ (collaborative robots) are gaining popularity due to their simplicity and versatility.

Future technologies will be driven by the collaboration between man and machine.

Learn more about automated supply chain solutions at DEMATIC.COM.

With over a decade of experience in the supply chain industry, Christoph currently works as a Sales Account Manager at Dematic. Based on his engineering background, combined with sales management and project management experience, Christoph develops automated system solutions for supply chain and order fulfillment operations. He has worked in multiple countries and continents, exposing him to various work teams and markets. At Dematic, Christoph provides engineered logistics solutions for warehousing and distribution operations across Canada.