The prevalence of eCommerce has significantly increased in the post-Covid world. Consequently, warehouses have become a critical strategic point in the entire value chain. Companies must put in efforts to increase productivity and accuracy in their warehouse management operations. The goal is to attain operational excellence i.e. to strategize warehouse processes and functions in a way that improves efficiency, management, and safety along with reducing errors and operational costs. In today’s world, automation plays a great role in the whole process. It gives a much sought-after competitive advantage to the company. This blog highlights the importance of and presents a practical roadmap for achieving Warehouse Operational Excellence through automation.
Online shopping has become popular in recent years because it offers the customers the convenience of shopping any item or items of their choice from anywhere, anytime, having them delivered in required quantities at places of their choice, and paying for them in their preferred mode. The COVID 19 related restrictions on people from visiting crowded places, such as shopping complexes, has also contributed to nudging the people in favor of online shopping. The buyers enjoy the online shopping experience from the moment they feel the urge to buy something to its fulfillment. Some of the things that contribute to the attractiveness of the online shopping are the ease with which shoppers can access all the information required to arrive at the buy-decision, place the order by the click of a button with the proviso that the bought item could be returned if the buyer is not satisfied with it & get the refund, and the expectation of quick gratification. As a consequence of these attractions online shopping has become the shopping norm for many and this spurs, on one hand, the growth of the e-commerce companies and their businesses and, on the other, intensifies the competition.
Warehouses become centers of operational excellence
With the e-commerce business becoming popular and highly competitive, the warehouses have emerged as strategically important order fulfillment centers. These facilities cannot merely remain places where goods are temporarily stored with most of the associated tasks, such as sorting, picking packaging, shipping, etc., that are often boring, low-skilled, and uninteresting, being performed manually by indifferent workers.
Increasing strategic importance of these facilities to the success of e-commerce companies, whose fortunes are on the rise because of the growing popularity of the online shopping, and the intensively competitive nature in which these companies are operating, are compelling them to manage their order fulfillment centers in an efficient and productive manner. Therefore, the e-commerce & retailer companies and their value chain partners are initiating actions, which will help them achieve operational excellence in their warehouse operations and gain the competitive advantage. Operational Excellence (OpX) involves attaining the best-in-class performance in productivity, quality, delivery, etc. while ensuring customer fulfillment.
Prerequisites for achieving operational excellence
In order to achieve operational excellence in the warehouse operations it is necessary for the companies to perform the warehouse related tasks and processes involved in the order fulfillment cycle efficiently and effectively. In effect it means the more efficient use of all resources, achieving higher throughput, avoiding excess inventory buildup or stock out occurrences, performing tasks / running processes faster and in an error free, consistent, and accurate manner, etc. – the prerequisites for achieving operational excellence. The order fulfillment related tasks include receiving and storing incoming goods from various sources, picking, sorting, & packing them depending on orders, and correctly shipping the ordered goods. The associated processes include procuring goods, receiving orders, managing inventory, and supporting the customers who may have to report problems or desire goods to be exchanged / returned etc.
The time tested means for executing business tasks and processes efficiently and effectively and performing them speedily in an error-free, consistent, and accurate manner is through automation. Since automating many of the physical tasks that are related to warehouse operations required autonomous- mobility capabilities, warehouse automation had to wait for the commercial availability of such robots, autonomous mobile robots (AMRs). It was the Amazon’s purchase of Kiva Systems, manufacturer of mobile robotic fulfillment systems, in 2012 and their rapid deployment in its warehouses that announced the arrival of AMRs to the world and created awareness about their application potential, especially in warehouses. That apart, its rapid successful deployment also provided the proof of concept.
Roadmap for achieving operational excellence
Automation systems, such as AMRs, WMS, WCS, etc., built around digital technologies, such as internet of things, edge & cloud computing, artificial intelligence, machine learning, etc., can execute the task and process related activities not only more intelligently but also collaboratively with humans. The other benefit of deploying such automation systems is that data from these systems can be integrated so that they seamlessly share data among themselves and thereby facilitate fact-based decision making.
The roadmap for achieving operational excellence in warehouse operations is to
- automate the tasks associated with physical movement of goods into, within, and out of their facilities to customers, such as receiving of goods, deconsolidation, picking, packing, loading / shipping etc.,
- automate the processes involved in managing inventory, procurement of goods, receiving the orders, ensuring accurate order fulfillment without delays or failures, analyzing customers’ purchase behavior, handling returns, resource allocation, tracking financials etc.,
- tightly integrate all physical and process activities in order to achieve the business objectives by system integrating the automation systems, such as AMRs, WMS, WCS, etc., to create a unified information base, which will help companies in decision making; effective and efficient warehouse management requires aggregating data from different sources so as to create a single source of truth
Automated and data driven warehouse operation help companies achieve increased throughput, improve productivity and efficiency, enhance resource utilization, improve customer fulfillment, real-time inventory management, faster and coordinated response to customers, reduce human errors & operational costs, stock out occurrences, improve workplace safety, etc. All these directly contribute to companies achieving operational excellence, gaining competitive advantage, and benefitting from increased revenues, profitability, and satisfied customers.
Implementation holds the key
While business compulsions will compel e-commerce & retailer companies and their value chain partners to automate warehouse activities, the ultimate success of the automation project will depend on how well the project is executed. Execution will involve significant amount of application engineering work, decision making, and project management and require human resources having technical knowledge and experience relating to warehouse operations, warehouse automation design-engineering, supply chain management, project implementation, system integration, etc. It will be beneficial for companies to engage a recognized implementation partner, which has to its credit past track record in successfully implementing multiple warehouse automation projects. Körber Supply Chain Division fits this description well. This division of Körber AG, a strategic management holding company headquartered in Hamburg, Germany and operating in over 100 locations worldwide, provides best-in-class supply chain solutions, automation, robotics, materials handling equipment, and software consulting & implementation services that system integrates all together. With its ability to offer end-to-end solutions, Körber Supply Chain Division is well positioned to help warehouse owner operators to overcome their supply chain complexities and achieve operational excellence. The Körber AG’s stated goal is to remain its customers’ first choice for innovative, technologically leading-edge, and digital products and solutions. This commitment is essential to ensure successful automation of warehouses.
Rajabahadur V. Arcot is a Senior Advisor, Quadrant Knowledge Solutions