The flood gates are supposed to be opening up on warehouse automation right now. The thinking is that with the surge in e-commerce experienced during the pandemic, and the struggles of finding enough available labor force, DC operations will need to step up automation investments.
That surge in automation may soon start happening, but supply chain practitioners who completed a recent survey for us told a slightly different story. In short, we found that most have decent budgets for further automation, but as of September when the survey was conducted, 2020 has focused on scrambling to adjust things like layouts and inventory levels, while also taking steps to keep workers safe.
I’m talking about our annual Warehouse Operations and Trends survey, which Peerless Research Group conducts, and whose findings appear in both Modern Materials Handling and Logistics Management magazines. You can find the 2020 story here.
For several years now, I’ve had the privilege of summarizing key trends from this survey, which asks people questions about the nature and size of their DC networks, e-commerce activity, and operational challenges like being able to find enough workers. This year, we added some questions about coping with the Covid-19 pandemic, such as use of protective gear and implementation of social distancing in facilities.
The reassuring finding is that the vast majority of respondents are taking steps for worker health and safety during the pandemic: 94% report protective masks are used within their operations, and the same percentage say equipment is regularly sanitized. Interestingly, 87% plan on continuing at least some of these practices even after the pandemic subsides.
The survey found that respondents’ budgets remain fairly healthy. However, it’s not like most of them rushed into rolling out new technologies like mobile robots this year. Our survey found only 6% currently use mobile robots or automatic guided vehicles, far less than the nearly 90% who use lift trucks at their facilities, or the 85% now using a warehouse management system (WMS) of some type.
Signs suggest these respondents will be deploying more automation. The average projected capex budget is on the upswing, and already in 2020, 25% said they added more automation. Plenty of respondents also report that they’ve experienced significantly more e-commerce work since the pandemic began. For 10% of respondents, e-commerce activity increased by 60% or more, and a combined 24% experienced e-commerce growth of more than 30%, but under 59%.
One way of looking at this finding is that many respondents saw an e-commerce surge, but have yet to enact a surge in use of more automation. That’s understandable. It takes time to figure out which automation technologies to start adding, and projects require human resources at a time when companies are scrambling to get goods out the door. It only makes sense to first adjust existing systems or layouts before putting in more automation.
When asked about actions taken since March to adjust operations, the survey found that many of these are business process adjustments or otherwise low-tech tweaks. The three leading actions taken since March to adjust operations were to improve warehouse processes, change layouts or re-arrange workstations, and increase wages.
Increased use of automation will come. The need is there, because e-commerce activity has ballooned, and many operations can’t find enough workers (this again was ranked as the top issue/challenge for operations). With e-commerce fulfillment requiring more labor if done with manual processes, and labor being hard to find, the status quo of sticking with manual processes won’t cut it for long.
The new breed of automation such as mobile robots are already being used and will likely be used at a growing rate, but in this year of disruption, most DCs had to scramble to change things like how far apart people should stand when punching in at time clocks, or how many can be in the break room or lunch room at once, or adding plexiglass dividers between closely spaced work areas like packout stations.
In early part of 2021, we will do a different annual survey project that is more focused on readers’ equipment and automation investment outlook. It will be interesting to see if this “automation” survey (catch it in Modern’s February 2021 issue) shows if there is an automation surge taking shape to help counteract the e-commerce surge many operations have been dealing with since the pandemic hit.
For a detailed discussion of how advanced automation is evolving and can help warehouse operations over the long term, a good resource is MHI’s “Transformation Age” paper, part MHI’s Roadmap Series. One caveat to all the anticipation: It takes time to see broad scale industry adoption of technologies. For example, consider the slow but steady adoption of radio-frequency (RF) assisted picking, a technology that has been around for decades. In our 2020 operations survey, only 46% of respondents said they used paper-based picking, the lowest in the past four years, while picking with the help of RF-enabled devices connected to WMS or other software topped more than 60% for the first time. Adoption of technology will come, but it can take time to become mainstream.