Automation: Four trends driving automation

What’s the state of automation? And what’s driving its adoption today? That was one of the topics I discussed last week with John White and Mike Dunn, two senior executives with the consulting firm Fortna.

Like Modern, White and Dunn are seeing a significant increase in the interest in automated materials handling solutions. They identified four major trends they’re seeing among their customers and prospects at Fortna.

1. Justified automation: Europe and Japan have long outpaced North America when it comes to the adoption of automation. That is changing thanks to a trend that White and Dunn refer to as justified automation. “Not that long ago, companies took a one size fits all approach to distribution,” says White. “You did things with a pick module or you picked off a rack or you used very narrow aisle storage. Today, the ability to analyze SKUs and order volume profiles has afforded us the opportunity to create subsystems of automation within a DC to drive greater productivity.” For instance, for a large pharmaceutical wholesaler, Fortna is developing a goods-to-person solution that uses free-roaming fork AGVs to retrieve pallets from a storage area in a traditional 32-foot high building and deliver them to a picking station. “That’s the type of project we would not have been able to justify in the past,” says White.

2. Multi-channel distribution. “The retailers we’re working with want to bring their store replenishment, wholesale distribution and ecommerce all under one roof with shared inventory,” says Dunn. He adds that Fortna is in the process of building a new distribution center for a children’s apparel manufacturer that will handle volumes of 1 million units a day, most of which are piece picked.

3. The impact of ecommerce: The increase in ecommerce is a double-edged sword for many distributors. For one, they are now operating in a world where cheap or free shipping dominates. Even wholesale businesses are having to guarantee next-day delivery to meet the expectations of business customers that are influenced by consumer expectations. And, they are dealing with a growing number of SKUs even if they aren’t increasing their product lines. “Value-added services such as shipping an item on a hangar to a retail store or in a poly bag to a consumer is driving up the SKU count even for companies that are reducing the number of products they carry,” says Dunn. That is driving a demand for new solutions from companies that build their DCs ten or fifteen years ago to handle pallets and full cases.

4. The globalization of automation: Ecommerce is driving the demand for automation outside of the developed world as retailers in emerging markets adapt to ecommerce in their geographies. That is true even in markets such as Latin America, where labor costs are still relatively cheap. “They are justifying projects on things other than labor, such as security and quality concerns,” says Dunn.