Labour market tightness drives warehouse innovation

Execution in the supply chain demands more and more attention from companies. Among other things, this is leading to an increasing demand for automation and robotisation in logistics. During the new, Dutch-language SCM Podcast, Supply Chain Movement editor-in-chief Martijn Lofvers discussed this with Jack Pool of Districon and Alain Beerens of Groenewout. ‘Over the last five to ten years, the range of storage and order picking systems has grown enormously.’

By Marcel te Lindert

With all the volatility and uncertainty, it is more difficult than ever to implement supply chain processes quickly and smoothly as planned. The continuing tightness in the labour market is an additional complicating factor. ‘This has led to new issues and is driving innovation,’ states Jack Pool, business development director at consultancy firm Districon. ‘And the shortage will only increase due to the ageing population, while the availability of migrant workers from countries such as Poland is decreasing. There are two options: either we have to source labour migrants from countries further away or we have to work smarter.’

Expansion within four walls

Pool is joined by Alain Beerens. ‘The number of distribution channels has increased enormously in recent years. This has led to a greater diversity in order profiles and a decreasing shipment size. As a result, more hands are needed to get all the goods out the door. That partly explains the labour shortage,’ says the managing partner of consultancy firm Groenewout. ‘Other complicating factors are the nitrogen issue and congestion on the electricity grid, which impact the construction of new warehouses.’

Not only the labour shortage, but also the limited opportunities for new construction are putting more and more companies on the track of automation and robotisation. ‘We see companies looking for ways to increase storage and order-processing capacity within the four walls of their existing warehouse much faster than before. Then you quickly talk about automation and robotisation,’ says Beerens. ‘In doing so, congestion on the electricity grid is still a challenge. The possibilities of getting a larger connection to the electricity grid remain limited.’

Maturity versus adoption

Discussion leader Martijn Lofvers uses a chart by McKinsey to show what forms of automation are available. The chart compares the various forms in terms of maturity and degree of adoption. At the very top right is warehouse management software (WMS), of which almost every warehouse is equipped. The least mature are automation solutions for unloading containers and trailers at the bottom left. Pool: ‘There are quite a few developments in this area, but the number of people employed in unloading goods is limited. For the time being, this makes it difficult to recoup an investment in its automation.’

Somewhere between the two extremes are automated storage and order picking systems and autonomous mobile robots (AMRs). ‘In the last ten to fifteen years in particular, the number of new storage and order picking concepts has grown enormously, from fast shuttle systems and cubic storage systems to flexible AMR solutions,’ Beerens knows. Lofvers cites Exotec’s robots that crawl up racks as the most talked-about solution, but also points to Amazon’s acquisition of Kiva. Kiva developed a unique concept with robots that bring an entire rack to an order picking station. ‘That concept has been copied by many other robot suppliers since Amazon took over.’

Start analysing data

So how do you choose the right form of automation or robotisation out of the large supply? To help companies answer that question, Groenewout and Districon largely take the same approach. That starts with analysing data such as the order profile and the assortment. ‘An important point of attention is the capacity the system has to deliver. For this, we look at the peaks in the workload,’ says Beerens. ‘Another question concerns the expected growth. Is it necessary to invest now in the capacity the company thinks it will need in five or ten years’ time?’

Based on the number of order lines and the number of stock-keeping units, among other things, it is possible to determine which system fits best. Increasingly, companies are opting for a hybrid solution with multiple systems, as one system is not suitable for all products. In addition, Beerens sees an increasing interest in autonomous mobile robots. ‘We see that they are increasingly being used for internal transport flows. So basically as a replacement for traditional roller conveyors, which often get in the way when you want to adjust your processes. These robots are a lot more intelligent, so you can also use them for sorting shipments at the end of the process, for example.’

Reluctance among logistics service providers

Districon sees most orders coming from stockholding companies. Logistics service providers remain cautious about automation and robotisation. ‘This is largely due to logistics service providers’ short-term contracts. Automation and robotisation require a different way of working together with a long-term vision. As a logistics service provider, you are not going to invest millions in a solution for a client who might want to part with it tomorrow,’ explains Pool. ‘If logistics service providers invest at all, it is mainly in their warehouses where they work for multiple clients.’

An appealing assignment is that of Hunkemöller, the fast-growing lingerie chain that built a new distribution centre in the Dutch city of Almere. Districon provided support in setting up the operation. ‘We have put a nice solution here with Geek+ mobile robots, says Pool. Once again, we have noticed that setting up a robotised warehouse requires a lot more than setting up a manual warehouse. Especially when it comes to the coordination between the suppliers of the robots and the IT systems and the testing beforehand.’

Digital twin of the warehouse

Groenewout carried out an assignment for My Jewellery, which will also deploy robots from Geek+ at its new distribution centre in the Dutch town of Den Bosch. Beerens explains that the fast-growing jeweller had to move to a larger distribution centre due to lack of space. ‘Initially, My Jewellery chose to transfer the existing manual process with the same WMS to the new premises. At the same time, we started investigating how to increase storage density and order processing capacity in the new premises. This led to the choice of mobile robots, which are now being implemented in the second phase.’

Finally, Lofvers asks what opportunities both advisers see for digital twins. Beerens indicates that a digital twin can help keep the warehouse up-to-date. ‘Instead of making a one-off design for the next five years, we can then check every six months whether the design is still adequate.’ Pool also sees that a digital twin offers great potential, but at the same time steps on the brakes. ‘Don’t start building a digital warehouse twin right away, but first look at other solutions that can help you further. Many warehouses can improve their productivity by 5% to 10% by thinking better about which item should be in which storage location.’