Over the last 1-2 years the economic climate we are working in has shifted considerably. Interest rates have gone up, inflation has shot up and we’re all still holding our breath on when the cost to do business will finally settle. What is quickly becoming clear is that this high-cost high interest rate environment is the new normal and we need to change the way we build business cases for Warehouse Automation and technology investments in general.
In order to adapt, we thought it would be helpful to summarise some of the key trends we’re seeing in decision making for capital projects in Warehousing:
- Digital Transformation: Warehousing, logistics, and supply chain management are undergoing a significant digital transformation, with advancements in technologies such as AI, IoT, and blockchain reshaping traditional processes. Companies are increasingly leveraging data analytics to optimize inventory management, demand forecasting, and distribution strategies. Moving from systems of record to systems of real-time insights. Both the software and hardware has achieved a next gen with advancements in Coding (Such as cloud based microservices), integration of AI Assistants and dedicated 5G networks the next generation of solutions awaits.
- E-commerce Boom: The rapid growth of e-commerce has revolutionized the way goods are stored, picked, packed, and shipped. Warehouses are evolving to meet the demands of omnichannel retail, with an emphasis on speed, accuracy, and scalability. Last-mile delivery solutions are also becoming increasingly important in meeting customer expectations for fast and reliable shipping.
- Supply Chain Resilience: The COVID-19 pandemic highlighted the importance of supply chain resilience. Companies are reevaluating their supply chain strategies to mitigate risks, diversify sourcing, and enhance agility. Technologies such as real-time tracking, predictive analytics, and digital twins are being employed to build more resilient supply chains capable of adapting to disruptions. Property design can also be a big component of risk. Resilience is also become about how a supply chain operating model is affected by inflationary cost measure like property lease costs, fuel, energy, insurances, etc.
- Sustainability Initiatives: There is growing emphasis on sustainability within warehousing, logistics, and supply chain management. Companies are implementing green practices to reduce carbon emissions, minimize waste, and optimize transportation routes. From eco-friendly packaging solutions to energy-efficient warehouse operations, sustainability is becoming a key focus area for industry players.
- Labour Challenges and Automation: The industry faces ongoing challenges related to labour shortages, rising wages, and the need for increased efficiency. Automation technologies such as robotics, autonomous vehicles, and automated picking systems are being adopted to augment human labour, improve productivity, and reduce reliance on manual processes. However, the implementation of automation also brings about challenges related to workforce upskilling, job displacement, and ethical considerations.
While the financial part of the equation for warehouse and logistics investment has been toughening, we have continued to experience a rapid development in warehouse technologies which are worth understanding when shaping your transformation strategy:
Artificial Intelligence (AI):
- AI is revolutionizing the supply chain industry by enabling advanced data analysis, predictive modelling, and decision-making capabilities. Gen AI, a subset of AI, refers to the generation of AI systems that can improve themselves over time, leading to more efficient and effective supply chain operations. AI plays a crucial role in resource optimization by analyzing data to identify inefficiencies and recommend optimal resource allocation strategies. Additionally, AI enhances flow management by providing real-time insights into inventory levels, demand forecasting, and logistics routing, enabling smoother and more responsive supply chain flows.
Impact on Supply Chain Industry:
- Improved operational efficiency and cost reduction
- Enhanced demand forecasting and inventory management
- Increased agility and responsiveness to market changes
Robotics:
- Robotics technology is reshaping the supply chain industry by automating repetitive tasks, increasing productivity, and improving safety in warehouse and logistics operations. Warehouse automation, including automated guided vehicles (AGVs) and robotic arms, streamlines material handling processes, reducing manual labour and errors. Materials handling technology, such as conveyor systems and robotic palletisers, optimizes warehouse layouts and facilitates efficient goods movement. Humanoid robots and collaborative robots (cobots) are increasingly being integrated into supply chain workflows to perform tasks alongside human workers, enhancing productivity and flexibility.
Impact on Supply Chain Industry:
- Increased efficiency and throughput in warehouse operations
- Reduced labour costs and improved workplace safety
- Enhanced flexibility and adaptability to changing demands
Digital Technology:
- Digital technology, including the Internet of Things (IoT), simulation, and 5G connectivity, is driving innovation and connectivity throughout the supply chain ecosystem. IoT devices, such as sensors and RFID tags, provide real-time visibility into assets, inventory, and transportation fleets, enabling end-to-end supply chain visibility and tracking. Simulation technology allows supply chain managers to model and optimize processes, from warehouse layouts to transportation routes, before implementation, reducing risks and maximizing efficiency. 5G connectivity offers high-speed, low-latency communication capabilities, facilitating faster data transmission and enabling the deployment of advanced applications such as autonomous vehicles and remote operation of machinery.
Impact on Supply Chain Industry:
- Enhanced visibility and traceability across the supply chain
- Improved decision-making through data-driven insights
- Accelerated innovation and adoption of emerging technologies
As you have read, although the financial landscape has become tougher, technology has advanced and is helping to extract more benefits from its implementation. It is important to make sure you look at building the business case for change & future-proofing your operation.
Find out more about Argon & Co’s Intralogistics service offering here
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Jeffrey Triantafilo
Associate Partner, Australia
