The Future Warehouse: What are you risking by not embracing the age of automation?

the-future-warehouse-what-are-you-risking-by-not-embracing-the-age-of-automation

Your supply chain needs a road map to automation for future warehouses. Here are the stepping stones to how and why:

A man sprints along a busy sidewalk. Darting in and out people, he’s running late for a meeting. A strong gust of wind whips at a contract in his hand and they spill everywhere onto the sidewalk. His knees as weights, he frantically picks at paper corners… unaware he has stopped on top of a large shadow swaying in the shape of a piano. While he attempts to gather his work and still make the meeting on time, a frayed rope above starts to unravel. There are a couple of “OH NO!” and “Lookout!” exclamations, and then… snap.

The story doesn’t usually turn out well for the guy under the piano. You think, “geez,” all he had to do was look up, realize the risk, take five steps to his right and he is out of harm’s way. Problem solved. In real life, it isn’t always that simple to identify risk and take the necessary steps to move yourself, or a business perhaps, out of harm’s way.  

Warehouse logistics operations currently experience a significant amount of unassumed risk to their business. Like the swaying piano, the confluence of market conditions cause manual labor pools to shrink. This creates higher labor costs, turnover, training needs, human error, and opportunities for accidents or death. These conditions are only getting worse and threaten the health and stability of the global logistics industry.  If any of that rings true to you, then I promise you are not alone.

I bet I have your attention right about now.

I’m going to show you how automation is key to taking those five steps to the right and to move your business (and possibly your career) out of harm’s way. Stick with me and I’ll give you the stepping stones to adding automation to your operation and put you on a path to lower your overall business risk and cost while increasing safety, reliability, and operational efficiencies.

The Swaying Piano

Sometimes, we cannot see risk clearly– not because we lack acute observational skills or an intuitive human nature, but rather we become distracted. Distractions come in all shapes and sizes and from every facet of life, both personally and professionally. Four years ago, my twins, London and Logan, were born; I have to believe they are the most lovable and worthwhile distractions I have ever experienced in my life. Sleep deprivation has a funny way of keeping your entire world just a bit out of focus and your brain processing like a three-toed sloth attempting to solve differential equations. HA! I digress…

Logistics operations are hyper-focused on making sure orders are processed on time and shipped to the right location. Even with technology assisting the labor force, this can take a significant effort everyday to make sure their business’s economic engine, so to speak, is running on all cylinders.

The swaying piano for logistics managers and IT professionals is a series of market conditions that are creating unassuming risk to the future success of their businesses.  So, where’s the risk coming from? It’s not just one condition, but several conditions that have all come together at once and are creating the risk. That’s why it’s not easy to stop and just lookup and say “hey wait a second… I need to move over there” and re-position your business operations.

Take a Minute

So, what are the market conditions creating risks to your business? As I’m sure you know, there has been an e-commerce explosion in the past several years and it’s creating significant demand on the available labor pool. CBRE has estimated that a total of 452,000 additional workers are needed through 2019.

Therefore, demand for laborers is up, but the available labor pool projections for these jobs continue to shrink. Amazon recently walked away disappointed when they received 20,000 resumes during an on-the-spot Job Day event prior to their busy season; they were expecting to hire more than twice that total.  Higher demand with a smaller labor pool means that competition for the existing labor force rises to the point where perks and incentives need to be handed out like candy to keep a strong attraction.

Faster on-boarding, $150 weekly retention bonuses, $1,500 in referral bonuses, paid breaks, and perhaps perks like the use of personal headphones during work are all examples of employers attempting to entice and retain new workers. High demand and a dwindling labor pool means labor costs are skyrocketing without the hope of a plateau anytime in the near future.

Even with retention incentives, physical labor jobs are not popular among millennials, which as of 2016 has become the largest generation of workers in the labor market. So, where’s the risk? All of these market conditions are creating unexpected risk to logistics operations. Younger, inexperienced laborers are barely being hired as fast as they are being lost. How can you run effective operations if you’re constantly working with a shortage of laborers… especially if the majority you do have are unskilled and barely trained to do their jobs? Can you see where this is headed?

All of this is putting a strain on businesses: from human resources, to Information Technology, to management. Supervisors are now spending more time managing an inexperienced labor force that is constantly changing. More human error and more OSHA safety violations means more headaches for everyone. Remember the story at the beginning of this blog? These are the papers on the sidewalk. This is the ultimate distraction. Operations managers are too busy picking up the papers to see the real threat that looms from above.

It’s Time to Look Up

When you combine an unsafe work environment with increased costs and declining quality and reliability, it can have disastrous results: it’s a recipe for damage to a business’s profitability, brand integrity, and even loss of life.

At some point the rope will snap, resulting in a severe accident or a death due to inexperience or lack of training. Higher costs due to unreliable services means a balance sheet too far into the red to recover without legal assistance; insurance premiums will start to escalate. Culture and morale will be crushed under the weight of it all.

The piano will fall. The business will suffer and potentially your career along with it. There is no doubt that there will be a turning point. I would imagine that several highly-publicized accounts will need to be published for the industry to take notice. This will be the next revolution of automation; this is the trigger that will help bring calm to weary logistics managers and supervisors.

 

Why Use Automation?

A business’s biggest cost is its people– human beings.  Wages, benefits, personal time off, human error, and increased insurance premiums keep employing people at the top of the list of cost burdens. Of course. without people, there would be no value to drive the business; people ARE the business. But, with people comes liability. Mitigating business cost and liability can have a significant impact on performance, reliability, and profitability. Using automation for operations that have physically demanding and highly repetitive processes can have a significant impact on reducing business cost and liability in the long-term. Here are just a few of the many benefits of automation:

  1. Hard hats, yellow reflective vests, steel-toe boots and protective eyewear. Large metal signs tracking the number of accident free days. Anyone who has been in a warehouse can picture trucks whizzing by in and out of aisles carrying the crushing weight of two metal forks skewering wooden pallets three stories in the air. What could possibly go wrong?  

    If you ask any warehouse manager what is the most important part of their operation, they are likely to point to safety as number one on their list. Keeping employees safe with training and protective gear can only go so far to mitigate risk for safety. Automation can take over tasks that are high risk for injury. For example, pick or putaway functions can be managed electronically using Automated Guided Vehicles (AGVs). Humans are then removed from harm’s way and safety is increased.
  2. “To err is to be human” is a proverb we all know well; i.e. humans make mistakes. This is often compounded when new employees are not properly trained due to high turnover or poorly implemented processes, you rate of human error increases. Supplement error prone tasking with automation can reduce these errors significantly and improve the performance and reliability of a system.
  3. Due do the market conditions and the outlook of the logistics resource labor pool, businesses need to prioritize the reduction of the human element from repetitious (boring) jobs, reducing turnover. Add manual labor, repetitive work, and an environment that can be -10F in freezers or over 150F in the heat of a southern summer and you have a recipe for unhappy workers. The current labor pool does not have an affinity for manual labor. Adding repetition into someone’s daily responsibilities becomes mundane and tiresume. Let automation take on the boring jobs and see your efficiency skyrocket.Adding automation to tasks that are laborious and boring while focusing your labor on more rewarding tasks helps to keep your employees happy. Happy employees demand less pay and reduce your turnover rate, indirectly reducing training costs, human error, and the potential for accidents.
  4. Automation gives you the flexibility to extend your business potential. Reassigning workers to tasking that is not suitable for automation (yet) can help add additional value to the operations and the business. Ordering pick and deliver straight from the warehouse, ala Amazon Fulfillment, may be an interesting solution in order to continue adding value to your business.

If reducing your labor costs, lowering turnover rates, increasing safety, and giving your business new potential to grow and expand isn’t enough for you to consider a change, then here is one last point: your competition will absolutely be adding automation to their operations. Automation is the logical conclusion to solve the current market climate and demand.

How can you afford to keep doing the same thing over and over while your competitor is improving, becoming more efficient, and driving your profits even lower? Lower profits and higher costs do not create a positive outlook on the future success of your business. If you want to help your business keep and grow its market share, beat the competition and give them an edge. Automation is the answer you are looking for.

The Resistance

“Robots are going to take all of our jobs!” Well, no… not really. They will take jobs that the current, and future, labor force don’t want. Using automation lowers labor costs and creates an opportunity to convert low skill, low wage earners into high skilled, high wage earners driving new value for the business. Everybody likes more money and the promise of a new career path, right? Well, everybody likes more money at least.

Automation can be a difficult topic to discuss. In a cultural climate of ensuring an evergreen field of job growth for human beings, discussing automation and removing the need for human labor from processes feels… cold. But the truth is even colder: logistics operations are in trouble.

The current and future market climate will not allow the market to grow and expand without dramatically increasing cost or risk to the health of businesses, which is not sustainable. Automation is the only solution to a global problem. This is why we are seeing the beginning of what has been coined as the “fourth industrial revolution.”

What you are going to hear:

“We do not have the budget” and “we are not familiar with robots or automation.” Or, “there is too little time and numerous other issues that we need to address.” Okay, these are fair points. Especially when logistics operations are currently overburdened with their distractions. How could you possibly have time to look at one more technology solution that you know very little about? But, my challenge to you is: what is the cost to your company, your time, and your reputation if you do not start evaluating the benefits and path to automation now for your organization? I promise your competition will if they are not already building their plan.

Five Steps to the Right

Okay, so you have looked up and you see the swinging piano. Excellent. Now, how are you going to take your five steps to move out of harm’s way? You are going to need a plan. Here’s where I can help. Start by advocating for automation within your peer group and with employees. Educate them on the risks and the benefits and continue to do so. You are going to get resistance, but that’s okay and expected. My advice to you is: be persistent. Make it your mission to become an advocate for automation within your organization. There is a lot of influence potential in social proof, so keep tabs on what your competition is doing and forward any articles to key people that may suggest that automation is a strategic objective for your biggest competitors.  

Take out a pen and paper and write down all of the operational processes that are highly repetitive and or introduce significant risk to the safety of your employees. You may need to pull your supervisors together and gain consensus on what would (and would not be) suitable for your operation. Consider asking yourself the following questions to get yourself started:

    • How do I provide continuous coaching and training when I have a high turnover rate?
    • How do I remove the human element from tasking that is high risk for accidents?
    • How can I provide the tools to my employees that encourages them to optimize their work performance?
    • How can I simplify human-based tasking so that training no longer becomes a strong factor in keeping people safe?

Once you have the list, start your search for automation solutions in both hardware and software that provide solutions to the tasks you have identified on your list and start to provide answers to your questions.

Tip: Having trouble finding the right answers to your questions? You can contact industry trade groups or niche market distribution companies that specialize in robotics, automation, or AI. Or, give me a shout and I would be happy to help point you in the right direction. Industry experts can give you a quick overview of major players and what solutions may be right for you. I can help you evaluate industry experts and give you an unbiased evaluation of what may be the best fit for your needs.

Stepping Stones

Do you have to jump into automation with both feet? The answer is no, not at all. As you start considering your plan to an automated future, there are several solutions in the market today that augment human interactions and enhance workers’ experiences. This also adds a benefit as you’re getting your peers and employees used to more automation in their jobs. The more they see the benefit now, the less resistance to change you’ll see in the future.

Drones have now shown up on the list of automation technologies and are an excellent way to get your feet wet. Companies like PINC and Eyesee have fully autonomous drone solutions that will perform cycle counting and other inventory management functionality typically performed by humans. Keeping people out of aisles reduces your safety risk considerably.

Augmented Reality (AR) is starting to take off with adopters seeing huge benefits in real-time training and process flow management. Contextually based information can be applied to users’ environments, helping with work performance. Companies like UpSkill or PTC’s Vuforia provide complete turnkey solutions that deliver a fully immersive AR experience in your environment.

With AR, you can “see” what your workers are seeing, help with training by providing instructional videos right into their glasses, and provide turn-by-turn directions while driving a fork truck. You can also provide “sticky notes” on equipment, machines, or any physically bound object in the users’ environments to help enrich their surroundings enhance their performances.

If you are interested dabbing a toe in robotics, then take a look at a company called Fetch Robotics. Fetch is the first cloud-based Autonomous Mobile Robot solution (AMR) that addresses material handling needs and performs inventory management functions.  

Are you flush with capital and itching to build your first fully autonomous “dark warehouse?” Then congrats, that’s awesome! Give me a shout so I can help guide you though any of the pitfalls of automation and deliver insights into who the major solution providers are and where they fit into the market.

Summary

The labor pool is shrinking in an economic climate where demand is going up. People are not interested in physical labor or jobs that introduce risk to their health or safety (thank you, “helicopter parents”). This is where the first stepping stones to automation can be achieved. Replacing human beings with autonomous robots logistics operations for high risk and repetitive tasks can quickly lower your businesses accident risk profile, and lower your insurance premiums. This keeps your business and your reputation profitable and healthy.

You don’t need to jump in right away; capital needs and operational challenges can be monstrous to convert and entire operations, but that shouldn’t discourage you. Automation will be a marathon and not a sprint. Be methodical and start small. Put your learning hat on and start to review what you could be doing tomorrow, and the day after tomorrow, while you consider what you can be doing today.

Consider taking stepping stones to automating your warehouse. You will absolutely get resistance within your organization, but the market conditions are not going to sustain logistics operations with human labor any longer. The human element in logistics is dead. It’s just not widely publicized, yet. Automation is the only solution to a future that demands more for its logistics organizations: more products, more space, more efficiencies, and more cost reduction.

Don’t take my word for it. I encourage you to do your homework. Ask yourself if you have a turnover or training problem? If so, when did it start to get bad? Do you have more human errors in your process flow that you ever had before? Are you having more accidents in the last 18 months than how many you’ve had in 18 years?

Put down the papers and take a minute to look up. Do you see the swaying piano? Okay. So, what’s your plan?