Warehouse Automation - Challenges and opportunities

Warehouse automation is in buzz nowadays and everyone wants to implement it in their warehouses, which can eventually act as an exhibit of their capabilities in adopting the change and can be a USP for their Sales team.

However, it would be pertinent to point out that the cost of automation may not vary much between nations such as Japan and India. But the pay-back period of 2-3 years in Japan, becomes 8-10 years in India. This has been a deterrent in deploying automation in Indian warehouse. However, the increasing service level demand of different industries and especially e-commerce with extremely skewed operation requirements, compel Indian companies to go for automation.

With a rising requirement of automation, lot of new start-ups enter this field of automation, with new developments/innovations, cost of automation reduces significantly and now payback for automation is around 5-8 years.

Why Automation – With any amount of automation, the goal is to increase the profitability of the operation, reduce lead time, scale-up for peaks and increase the safety of operation. Few of the benefits of automation would be:

Lower rentals (due to better space management)

Reduction in labour cost (due to better productivity or replacement of manual work by machine)

Efficient material flow

Safe operations

Reduction in inventory

Reduced operating cost

AUTOMATION LEADS TO OPPORTUNITIES

Scaling up – with the deployment of automation in the warehouse, one can scale up capacity or throughput of the warehouse without going through the pain of shifting existing warehouse to a bigger one.

Skewness handling – Automation in the warehouse can enhance the capabilities of the company to handle extreme peaks without any dependencies on labour

Labour upgradation – Adding automation systems support workers in their tasks while removing the monotonous, non-productive, ‘Low to No’ value, reduction in fatigue or mistake-prone aspects of their jobs. These workers can be trained and can be used more efficiently.

CHALLENGES TO OVERCOME

Selection of the right product – Nowadays, there are many automation products available in the market for every process in the warehouse. But one should identify which one is best suitable for their operation. Things that works well for one organisation, may not work similarly for another one. Therefore, forming the right team to take call on automation product is very critical; and availability of such trained resources is a must.
Silo working – Any company going for automation must look at supply chain as a complete umbrella & not just a warehouse (where implementation of automation is planned). If your upstream suppliers can perform certain activities cost-effectively than you can at your warehouse, then it makes sense for partners to perform these tasks. Similarly, if performing certain tasks at your warehouse (for a marginal increase in labour costs) results in significant labour savings downstream (e.g., faster receiving and shelf replenishment at the stores), then those tasks should be done at your warehouse
Start small and build a scalable solution – The path to advanced automation sometimes involves going through each level of automation sequentially as the business matures. When making the first upgrade decision, you should think ahead and pick an automation solution that is scalable and can be easily integrated with future solutions.
Ever changing business requirements – With frequent changes in SKUs or addition of new products or changes or fluctuation in demands, there is a direct impact on the design of automated system developed for the warehouse. Therefore, it is very important that you design the automation system considering future demand for operation. Also, the automation system should be easily scalable & modular, so that any changes in business can be catered smoothly & efficiently.
Change Management – One of the major challenges in implementing automation in any warehouse is change management, because business processes, workflows need to be rewritten with the implementation of automation. This means that the manpower involved in warehouse operations need to learn as well as adhere to new processes. As a human tendency, there is always a reluctance to change and changing this mindset is imperative.
Say NO to “One Size Fits All” – There is no “one-size-fits-all” automation solution, and rarely we find that optimisation/ productivity improvement achieved at one location gets replicated at other location, where same automation has been implemented. Every warehouse has some unique characteristics and before replicating any automation system, one should carefully evaluate all the checkpoints and then go for implementation.

In conclusion, it would, however, be important to point out that one of the reasons for the boom in warehouse automation to its real momentum has been post the introduction of e-commerce. At Mahindra Logistics, we strongly believe that these new-age businesses such as e-commerce have their own operational characteristics and therefore require new techniques to manage the real game which is possible only through the adoption of automation, especially in warehouses. Over the years, we have adapted to these changes and we believe that automation is on its way to make unprecedented leaps in the supply chain industry of the country.