Warehousing is no longer the dumb, static component in the supply chain, but an area that’s ripe for smart transformation. Chris Middleton and Kayla Mathews report.
Customers want goods made to order and delivered as soon as possible, in a way that suits their flexible lifestyles. That’s a byproduct of the mobile, app-driven, on-demand age.
But for many organisations and their warehousing and logistics experts, those customer wants can shine a harsh spotlight on legacy business models.
Smart warehousing by the likes of Amazon and Ocado – and China’s Alibaba, where robots carry out 70 per cent of tasks – is making rapid technology advancements the norm. In turn, this is forcing those companies’ competitors to change how they manage their storage and logistics, in order to compete with next-day delivery cycles – and the giants’ cheaper, more efficient processes.
We know that broad-spectrum automation is happening on the back of advances in industrial robotics. And we know that related technologies, such as drones, are becoming faster and safer around human beings in complex settings, such as warehouses.
But what other trends are affecting warehousing? Internet of Business asked four experts for their predictions about how warehousing will develop in 2018 and beyond.
And, of course, we added some of our own.
1: Robotics and cognitive computing
Taking a cue from Amazon, Alibaba, et al, process automation will move centre stage – not only via the use of physical robots that replicate manual tasks, but also through robotic software applications and cognitive computing services, such as AI and machine learning.
Thiagu Bala, a senior manager at Deloitte Consulting with over 20 years of business and IT experience, says: “In 2018, two technologies will combine: robotic process automation (RPA) — involving small, repeatable software programmes or bots — and cognitive computing.
“This will make a huge difference when it comes to data, by enabling labour to focus on truly mission-critical activities. When RPA is combined with cognitive analysis, it gives programs the ability to act like humans by making business decisions on the fly.
“When you combine the transactional processing of purely repeatable tasks with business processes – and also root-based decision-support systems – that’s truly a game-changer.”
2: Predictive maintenance
A mix of different technologies is impacting on the traditional idea of maintenance.
Until the advent of the Internet of Things (IoT) and supporting technologies, maintenance had long been a passive, reactive process: i.e. waiting for things to break, then fixing them.
Today a mix of technologies, including enterprise asset management (EAM), digital twins – exploded 3D representations of objects and their components – sensors, RFID tags, smart supply chains, and AI, is allowing organisations to gain unprecedented insight into the lifecycle of products, components, and even materials.
Using these and other technologies, objects can not only tell organisations when they need fixing, maintenance, or upgrade, but also predict when they’re likely to fail, enabling end-to-end lifecycle management.
Warehouses around the world are increasingly adopting proactive maintenance processes so that costly and time-consuming equipment failures are less likely to happen. And, of course, the same processes can be used to protect perishable stock.
Eberhard Klotz is the head of the Industry 4.0 division at Festo, a company focused on industrial automation and control. He says, “There will be comprehensive condition monitoring, which helps to avoid or reduce downtime and optimises maintenance procedures and mobile maintenance.
“Essentially, the faster we can be made aware of an issue and analyse it, the faster we can implement a repair before a minor issue becomes a major problem.”
3: Warehousing on demand
Everyone is familiar with how sharing-economy platforms and apps, such as Uber, Airbnb, and Laundrapp, have disrupted centuries-old sectors, such as personal transport, accommodation, and cleaning. But what few people realise is that the model is now being applied to industrial warehousing.
Startups such as Flexe in the US and Stowga in the UK have created apps and cloud platforms that transform both the buy and sell sides of the market. They’re allowing warehouse owners to lease out spare capacity, and clients to rent it on demand over timescales that range from days to months.
The idea might seem simple enough, but the implications could be transformative.
For example, organisations no longer need to think of warehousing in terms of massive regional hubs that require long-distance road haulage (with the expense and environmental impact that entails). Instead, they can now manage it as a national or international grid of smaller facilities that can be expanded or contracted on demand.
Meanwhile on the sell side of the equation, organisations no longer need to carry vast amounts of unused capacity that costs them money, especially when the economy is unpredictable. With these new on-demand platforms, unused space becomes a commercial asset.
In turn, the model could help regenerate brownfield sites and unused buildings, in the same way that Airbnb has pushed people to invest in and renovate private accommodation.
“If you have it on a flexible model, you can just dial down your warehousing in line with your business needs and reduce your liability,” said Stowga CEO Charlie Pool in a recent interview with IoB editor, Chris Middleton.
“From our customers’ perspective, in good times it allows them to be agile, move quickly, open a new market – or close a new market, which is equally important. They can test it, and if it doesn’t work out they can try it somewhere else.”
4. 3D printing and cobots
In the future, the distinctions between factory floor and warehouse may begin to disappear. Once some factories move away from monolithic, mass-production and distribution cycles (see Internet of Business says below) and into fabrication on demand, the implications could be transformative.
For example, some warehouses may become smaller, smarter, and more closely integrated with manufacturing, even as others follow the Alibaba model by becoming larger and more automated.
Technologies such as programmable cobots – robots that work alongside human beings – will be increasingly important in these cases, following the smartphone model by becoming programmable platforms for a range of process- or industry-specific apps. (Why invest in a massive, single-use machine when you can invest in a smart, upgradable platform that can be redeployed elsewhere?)
3D printing will be another ingredient in the mix. Most organisations are familiar with the concept of using this emergent technology for small, specialised projects. However, some Industry 4.0 analysts believe that 3D printing will become an increasingly important tool on a larger scale.
Andrew Hughes, a principal analyst at LNS Research with 30 years’ experience in the manufacturing industry, sees a prominent role for 3D printing in rapid fulfilment: “3D printing brings design, manufacturing, and service flexibility to many industries,” he says. “As speed, quality, and materials improve, those that exploit the new possibilities will be the winners.
“What you make today is a limiting factor for most manufacturers, but we are already seeing ‘manufacturing hubs’, where a facility can produce items to order for an enormous variety of customers and deliver in a short timescale.
“Manufacturing really is becoming a critical part of the supply chain and logistics. Print-to-order manufacturing flexibility means having the right printers, materials, and designs ready for any customer order. It brings us back to the fact that Industry 4.0 is, in fact, all about data.”
Here’s a video about how one company, sports shoes giant Adidas, is reinventing the traditional concept of the factory.
5. IoT Standards and regulations
Today’s smart warehouses are increasingly rolling out transformation strategies that deploy sensors connected to the IoT – so that robots, workers, managers, and even smart vehicles, know the location of every item and can track them on their journeys.
But as Kristi Montgomery, VP of innovation at Kenco Innovation Labs, points out, no standards yet define how IoT devices should communicate with each other, or store and process information.
She thinks that will change, and soon: “The promise of IoT is disrupting all industries, and it seems like the future is bright. The emergence of IoT is an amazing thing for supply chain executives. And it’s especially exciting as the enabling technology is becoming less expensive and more readily available, meaning that large-scale deployments are now possible.
“However, despite all the excitement and possibilities, some real roadblocks remain: namely, that IoT technology is like the Wild West: there are no existing standards.
“These will define how IoT devices will communicate and how data will be collected, processed, handled, stored, and summarised. Those concerns extend from 2018 into the future, as companies work to establish a regulatory standard, though nothing has emerged yet.”
Internet of Business says
Of course, blockchain will have an impact on the latter, too. But what all of the above technologies are really about is a much bigger picture: the shift from monolithic, slow, reactive supply chains (global scale), to smarter, faster, automated networks (local scale).
For example, instead of manufacturing a million trainers in China and then shipping them worldwide at vast expense and environmental impact – a glacially slow, inefficient process – why not make a single pair to order in a smart, automated local facility, and deliver the shoes the next day? That’s the real-world concept being developed by Adidas with its Speedfactories (see video, above).
This is the ‘PAL’ value chain concept discussed by Sean Culey in his excellent report for Internet of Business: an integrated manufacturing and distribution model that is personalised, automated, and localised. We urge you to read it.
In this new, connected world, the manufacturing dominance of China – and even the need for offshore outsourcing itself – suddenly seem antiquated. Matching manufacturing, distribution, and logistics to customer need, and not to the lowest labour cost: in an automated world, that’s the real opportunity.
Coming soon: Our Internet of Supply Chain conference.