The Warehouse of Tomorrow: Sensing and Adapting to Change

An Interview with John Santagate, Vice President, Robotics at Körber Supply Chain

VP of RoboticsVP of RoboticsARC Advisory Group, in partnership with DC Velocity magazine, conducted survey-based research on the changing practices, priorities, and expectations of warehouse executives. This recently completed research uncovered many interesting insights, including the expectations for a rapid migration toward the adoption of warehouse automation. I decided to reach out to John Santagate, VP of Robotics at Körber Supply Chain, to obtain his perspective on these findings.

Clint:  ARC’s recently completed warehouse research shows that we are in the midst of a rapid migration toward warehouse automation. A full 96 percent of survey respondents indicated that they expect the warehouse automation value proposition (in comparison to the manual alternative) to increase over the next 3 years. As a VP of Robotics at Körber Supply Chain, you appear well positioned for experiencing some exciting changes.

John:  Investment in warehouse automation has certainly been growing rapidly. But warehouse robotics are truly reshaping the way organizations are handling materials within the four walls of their warehouse. They enable organizations to get a deeper level of insight about their operations through the amount of data they are delivering as connected assets. When technologies across the warehouse are connected together, delivering end-to-end flow of products and information, that’s the recipe for holistic optimization.

Clint:  Yes, holistic optimization and the breaking down of traditional silos is certainly a leading supply chain concept today. It’s a broad concept that has organizational, business process, and technology elements. Can you provide more detail on your perspective on this topic?

John:  Historically, logistics functions were approached as independent operating entities, in the sense that their focal scope was narrow – with limited insights on their function’s interrelationship with others. The process of optimizing independently tended to transfer inefficiencies elsewhere. Incentives were also structured in a way that prioritized the goals of the siloed operation rather than the extended operation. As processes and technologies matured, logistics operations began optimizing more holistically. Today’s sophisticated warehouses use digital technologies to establish the connective tissue of fulfillment operations, enabling broad-based performance improvements.

Clint:  Can you provide some more color on the mechanisms behind digital connectivity in the warehouse enabling performance improvements?

John:  For example, in periods of peak demand, warehouses have to adapt processes to handle the higher volumes. End-to-end visibility of the warehouse provides the ability to understand how a process change in one area of the warehouse will impact other areas of the warehouse. Leveraging digital technologies that are connected to physical assets, but managed by a central software application, delivers the level of visibility required to sense and respond more effectively than you can if you’re operating in silos.

Clint:  Speaking of digital technologies, we asked survey respondents to indicate the one warehouse technology investment that is the highest priority/importance to their organizations over the next three years. WMS was by far the most frequently chosen technology, as one may expect due to its necessity. But AGVs was the second most prevalent response. That surprised me. What are your thoughts about these findings?

John:  Actually, I wonder if some respondents took AGVs to mean autonomous mobile robotics (AMRs), with the nascency of the market I see this frequently. There is certainly use for both AGV and AMR in the market, but I do still see some misunderstanding that the two are a bit different. But I think WMS being the most frequently chosen technology is in line with today’s market. The fact is, there is increased demand on warehousing today. The fulfillment environment is far more complex, with more SKUs, more storage locations, and wider networks. Legacy WMS systems just aren’t capable of executing in today’s dynamic environment.

The complexities of the current operational environment are also compounded by the complexity of the technology landscape. If organizations are looking to deploy other warehouse technologies such as AMRs, the best practice is to tie them into the WMS to obtain a fully automated workflow. I believe organizations realize that integrating into a home-grown WMS is going to be more complex and costly than purchasing a modern WMS that has pre-built integration modules. So, I think that the WMS investment is in part driven by the increased demand for the other complementary technology areas.

Clint:  Let’s close with a discussion on growth expectations for fulfillment along various channels. Direct-to-consumer (e-commerce) fulfillment was the standout, with 51 percent of respondents expecting fulfillment of these orders to increase extensively over the next three years. Furthermore, when broken down by respondent industry, 70 percent of 3PLs expect their direct-to-consumer fulfillment volumes to increase extensively, while 58 percent of retailers have the same expectations. What are your thoughts on those findings?

John:  There is clearly a rapid increase in individual products being shipped to the consumer’s home, along with a large increase in returns processing. I think this trend is also responsible for the increase in piece picking volumes, fulfillment costs, and adoption of AMRs. I think they’re all interrelated. The expected increase in direct-to-consumer is going to put significant strain on organizations that aren’t prepared to evolve and don’t have flexible processes and technologies that allow them to adapt to a continuously changing environment. Today’s operations need to be capable of flexing and adapting, not just to peak season demand, but also changing product mixes. That’s especially true for 3PLs that are running multi-tenant warehouses and bringing in new customers on a regular basis. Adaptability is critical. A number of these organization are adopting AMRs, as they are tailored to these challenges. Collaborative AMRs, like Locus Robotics, are especially adaptable. Meanwhile, the constrained robot enabled automation, like Geek+, might be the better fit for an environment with higher velocity and more consistency.

Clint:  Agreed John. Flexibility is certainly a desirable characteristic for those looking to adopt warehouse automation and robotics in today’s fulfillment environment. Thank you for your insightful perspective. We look forward to learning more about Körber and its robotics practice.