In this very special situation with a pandemic, resilience have become a buzzword. Every business not only supply chain is talking about resilience. However, what does resilience mean regarding warehouse logistics? Is it really something new in warehouse logistics?
I subscribe to newsletters from several major global management-consulting companies and they mention the pandemic and social distancing as an main factor for automating logistics in order to create a resilient flow. I think these firms need to come down on earth a little bit and see warehouse operations in real life. Also, consider the financial figures in an automation project (You need to close a ROI))
First, I would say a well-configured warehouse is perfectly safe to work in despite the pandemic. If you work actively with your flow using ABC analysis and optimize workload in all departments and/or working areas of the warehouse, you avoid crowded aisles. Bottlenecks and queues are a big no no in all logistics flows. Waiting time is one of the biggest reasons for inefficiency in warehouse flow. There is no difference at all from a production unit.
I totally agree resilience should be a part of every warehouse strategy. Resilience against poor service level, poor quality, technical breakdowns, under-capacity and of course secure staffing resources (we have the season with flu every year) etc. In every warehouse, a disruption like the ones I mention above means lost sales. For an e-commerce B2C business the consequence is you lose customers and turnover. There is no customer loyalty, if you do not deliver as promised, they look at a competitor instead.
If you read the newsletters from these global management-consulting firms, it seems that increasing the level of automation is the answer to everything. However, a big reason many companies is so careful regarding automation is the risks it also means with a flow that is more complex. Complex integrations between different hardware and software means you also build in risks in your flow. That is the price for a higher efficiency. It is often worth it, not because of social distancing but because you need to decrease logistics costs compared to the turnover. There is many things to have in mind when decreasing the risks of automation. All of them cost money, how reliable is the solution? Do the supplier of automation have a big service network? How does the support agreement look? Do you need to hire in-house technical competence? Do you need power backup? (A very big investment). Do you need investments in fire sprinkler? Etc.
Do not get me wrong I am a strong advocate of technical solutions that can increase efficiency, service, etc. but it should be done for the right reason and there must be a balance between opportunities and risks.
Another risk with too much automation is you often decrease the level of agility in the flow. Can you still handle the peaks without losing service level and customer expectations? If you automate, it is good to be able to have a parallel manual flow in order to manage the pressure in peaks like Black Friday. In lean they call technical bottlenecks “monuments”. Something you cannot move aside or bypass.
As I have written before I propose to start with a competent WMS before automating. You can do so much with a modern WMS also regarding efficiency now when many WMS suppliers use AI/ML to optimizing the flow. In this way, you also keep the agility and can easily scale up resources in peaks. When it is not possible to keep a high level of or increase efficiency anymore, it is time to look at automation solutions. Of course, another reason to automate is volume efficiency. You don´t have enough space and relocate is not an option you increase the volume efficiency with automation.
Modern warehouse operations is already resilient but maybe for different reasons. It has been part of the warehouse logistics strategy for many years. It is a necessity for successful businesses. Many warehouse operations invest in automation and this trend will increase it is necessary in order to have competitive service and increase margins.