Warehouse 4.0: Distribution's Disruptive Moment

Today’s warehouse and distribution center managers are becoming familiar with the terms “Industry 4.0,” “digital warehouse,” or “dark warehouse."

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Today’s warehouse and distribution center managers are becoming familiar with the terms “Industry 4.0,” “digital warehouse,” or “dark warehouse.” According to Deloitte in a recent article on the transformation of distribution operations through innovation, today’s round of technical innovations are disrupting the current model and introducing Warehouse 4.0.
“This marriage of digital and physical systems—known as Industry 4.0—has paved the way for increasingly connected experiences that impact everything from product design and planning to supply chain and production. Beyond the processes of designing and producing goods, however, the technologies inherent in Industry 4.0 can also impact the manner in which finished goods are moved, warehoused, and distributed.”
In warehousing, the implementation of new technology has always been a slow process.  Industry 4.0 technologies, however, not only improve productivity, increase capacity and lower costs, but they are inherently easier to adopt, both operationally and financially. This also makes them more compatible and available to a broader segment of the market. By their very nature, Industry 4.0 technologies are flexible, scalable, and responsive to changing market conditions. 

Fixed Vs. Flexible Automation

The differentiator in industrial automation today is the choice between “fixed” automation and “flexible” automation.

Fixed automation systems, such complex automated storage and retrieval systems (AS/RS) and carousel goods-to-person systems, are valuable to larger, higher volume distribution centers that require large-scale density and higher throughput.

However, the implementation of these types of advanced automation require extensive installations and facility modifications. For this reason, automation projects may take years to design, implement, and iterate upon after deployment. Operational decisions based on automation purchases were irreversible, and facilities were locked-in with equipment whether or not it functioned as expected.

“Flexible” automation, or drop-in equipment such as mobile robots, is more versatile and costs less overall.

Additionally, as requirements for DC operations evolve, there’s a growing need for smarter, adaptable, automation equipment that is easily adjustable to meet future needs.  For example, e-Commerce order profiles have shifted to 1-5 items per order and inventory must now ship within hours of being received.

Today’s flexible mobile-robot deployments carry different challenges than fixed automation installations; but those can be unplugged, packed up, and operations may return as they were previously if equipment requirements change.

Democratization of Automation

While past and present automation solutions address the volume requirements for large retailers, high capital costs and the inherent inflexibility of the highly engineered systems make them inaccessible to most warehouse operations.

Low barriers to entry with mobile robots allow distribution centers to deploy small pilots of flexible automation in specific zones and monitor its impact on an operation.  Today, big and small, everyone has access to pilot and adopt new forms of automation.

Finally, new pricing schemes also serve to extend automation to a greater number of operations. Projects can be financed in a variety of ways to manage costs on an operational basis thereby avoiding long-term capital investments.  This offers a huge advantage to small players who otherwise wouldn’t invest in a fixed AS/RS.

Advantages of Robots in Warehousing 4.0

According to an MHI Annual Survey as reported in Logistics Management, a majority of the market expects disruption and believes that robotics will be a driving factor.
In 2015, only 39% viewed robotics and automation as such a driver for change, but now 61% see robotics as a source of opportunity or disruption .
Deloitte outlined what to expect from Warehousing 4.0 robotic technologies:
  • Enable greater operational flexibility
  • Reduce operational costs
  • Drive more modular and adaptable automation
  • Promote business growth
A fine-tuned and highly adaptable system utilized to improve customer satisfaction and increase margins helps leadership teams adapt to changing markets and emerging customer demands.

Getting Started with Your Warehouse 4.0

Organizations interested in getting the most out of their distribution center using automation and robotics can begin by asking themselves a few fundamental questions:

  • Is my order profile driving the need for automation?
  • How much of my SKU mix is suitable for full, flexible automation?
  • What is my inventory velocity between receiving and shipping?
  • How can I optimize my warehouse environment to enable fully autonomous functions such as picking and packing?
  • How would I set up a pilot to test the benefits of Warehouse 4.0?

Tomorrow’s demand for more efficient distribution centers and the reality of labor shortages in logistics cannot be ignored by companies who wish to compete for tomorrow’s clientele. Next-gen warehouses are channels for meeting emerging customer demands, iterating on evolving business models, and improving service all around.

The companies that adapt and grow are the companies who endure, and agile newcomers have the opportunity to deliver on customer satisfaction better than today’s incumbents.

Those who explore and iterate with flexible automation are best prepared to generate new levels of customer satisfaction, and automation adoption is a requirement for the future opportunity to compete.

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