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Warehouses of the future - What it takes to reach there? Part I

I was wondering how would the warehouse of the future look like? Say even 10 to 15 years from now. Well not all of them would have transformed by then, but some of them might have definitely. Maybe, some of them have already had, or are in the process of doing so.

So what is the transformation we are talking about? And how would it affect the way we operate these warehouses? Well, we are looking at how warehousing will be transformed into a highly automated environment. There would be no labour required in the first place, in fact they will be no space for humans to walk (except for service engineers). There will be rails and tracks all around on which automated pick Robots would move to pick and putaway pallets and cases around the warehouse. These robots would move on horizontal and vertical tracks and can reach every location within each zone where they operate. There will be sensors all over the warehouse to guide robots, round the clock.

Now to have such a warehouse to turn into reality (there are quite a few out there), we need to understand what building blocks to be put in place first. First, we need to design the warehouse in such a way that maximum space is occupied, for e.g. these robots will move in rails vertically and horizontally, we do not have to waste space between aisles as there would be no Forklift trucks to be used. Secondly, the size of the carton/box should be of standard sizes, within the maximum limits that each robot can lift and place cartons from one location to another.

There will be extensive use of conveyor systems both for inbound and outbound operations. Zone Picking would be the preferred method to adopt since a set of robots can be positioned to work within a confined zone, rather than having them scaling the entire warehouse to carry out putaway and picking operations. Each zone will be linked to a lane that would join the main conveyor moving goods in/out of the warehouse. These will be of two types, the inbound and the outbound conveyor. So what kind of WMS system would run such a warehouse? Well, that would be the nervous system of the warehouse. It will be like any other WMS, except that it will not print a pick ticket, send instructions to a RF gun or print a work order. No human dependency to report back to the system. Instead, it will send instructions to a large PLC or multiple PLCs to operate all the automated robots and conveyors in the warehouse. We will touch upon these aspects in next part of this blog. 



Future warehouses would still need to address two basic challenges: address complexities involved in material handling - storage and retrieval, reduce the time gap in shipping an order to a customer from the point of order to accelerate profit and earn goodwill. So with this in mind, choreographing a warehouse will continue to be a challenge even after 15 years as it involves more automation, better control and less redundancy.

Though automation will be the key, it is hard to imagine a warehouse without humans even by that time. I believe humans will not be completely excluded in the scheme of operations but see them more qualified, better trained, and more motivated than now but fewer in number to achieve tighter control.

Usage of 100% robots will be a point to ponder as it presents a greater problem in terms of technical complexity, cost involved along with the maintenance and control requirements even after 10 to 15 years and the above factors would be critically examined even then.

Advanced design of AS/RS, AGV and carousels will fit into future layouts and will find more usage as compared to today's warehouses. Also, we can see this trend going live only in Western countries and not in Asia as we are yet to reach their standards even today.

The thing that will definitely be achieved when talking about future warehouses will be 'Layout Optimisation', which is the utilisation of space horizontally and vertically thereby bringing the need for Advanced MH systems and consequently, the automation we require.

Warehousing has always been a non value added activity and does not add value to the end customer. Though it's a necessary evil, completely automating the warehousing activity would only add further waste to the value chain.

The future in the U.S. appears to be a continuation of the 1980’s. In fact, the trend is toward greater centralization of distribution warehouses as layers of distribution will be eliminated and the pull for goods will be directly from the central warehouse to the consumer of the finished goods. This trend will require centralized warehouses to perform more small picks, i.e., more single case and individual part picks. In fact, the second greatest area of growth in warehouses automation over the next decade will be in order picking. The automated order picking systems of the future will not be labour Intensive but will have greater responsiveness, will be more flexible and will be more modular than systems today. In support of this higher throughput order picking environment, conveyor systems will play an even more significant role in warehousing than in the past.

The greatest area of growth will be in Real Time Warehouse Control Systems (RTWCS). The reduced costs of warehouse control systems will place these systems well within the reach of warehouses who in the past could not afford warehouse automation. The reduced costs and increased performance of warehouse control systems will result in automated warehouse control systems with traditional material handling equipment being a superior alternative to AS/RS.

The lesson for Indian companies should be that automation has, and will, continue to be a significant part of warehousing. Companies, worldwide, have achieved significant operational efficiencies by adopting the right technologies. The economic liberalization In India has heralded a phase of unprecedented growth and possibilities in manufacturing. The one area that can no longer be ignored by Indian companies is warehousing, when modernization plans are drawn up.

The proper way to approach automation in warehousing is not by asking, “Is automation right for me”? Rather the questions should be “What is the correct level of automation”? “How is it justified”?, and “How will automation be phased in”? The introduction of automation in warehousing should be a foregone conclusion. The approach and technology best suited for an individual company will depend on their requirements. This will require an appropriate level of planning for warehouse automation.

Rawat, thanks for posting your thoughts about warehouses of the future.

I tend to agree with Arun on his point of view that we cannot eliminate the human interaction at all in the future. Yes, it will get minimized a lot as technology will take over.

I tend to have a simplistic view to this question. If you look at any industry which is automated using technology, be it Banking or SCM or Manufacturing, it basically has taken the following route:

1. How it can help customers to do more business with me faster and without much of my intervention (Stuff like Internet banking changed the way people do banking )
2. How it addresses the major pain areas of the industry, be it reducing the overall lead time, etc.
3. How can it give me economies of scale?
4. How it can improve the overall efficiency

So I feel the industry will adopt all the latest technological changes that might happen over this period and use it to the benefit of addressing the above issues. For e.g., if you asked this question in 1975, I am not sure whether many of us might have even dreamt about how the Internet can bring about change in making business more simpler and profitable. We are now allowing customers to view their inventory over the web which was not a reality those days. Shopping over the web is happening like nobody's business. Similarly if any path breaking technological changes come in the future (I am sure these are on the cards), those will get implemented.

At this moment, I feel some of the existing technologies that are being deployed are pretty expensive and everyone cannot afford to use them in developing countries and even in developed countries. I guess over a period of the next few years, these prices might come down which will increase the demand of the usage of these technolgies more effectivley. Once more people start using these technologies, other supplementing technologies might evolve which will supplement the core technology or even might replace at a very minimal cost. For e.g., usage of Robots and Conveyers in developing countries are a far fetched dream today. Similarly was the case few years back on the usage of PCs in the developing world. Today, it is a commodity. Same holds good for mobile phones as well, even in 1995 a person using a phone in India was a luxury, but today everybody has a mobile and it is a commodity. Hence, it is imperative that prices of new technology will come down which will lead to more innovation of other technology pieces.

I also feel a lot of Simulator / Optimizer based technolgies will evolve which can suggest very cost effective warehouse layouts / designs. Today, one of the major challenges is to design a good warehouse keeping logistics and other cost aspects in mind. Also, implementing the company's vision is also getting difficult. I feel more optimizers will come out in the future which will minimize the human intervention and can suggest an optimal warehouse design. This could also be due to a lot of learning that is getting stored in the system and based on various parameters it could help consultants to come out with the best possible suggestions. Today, I guess more of these are person dependent and it depends on what that consultant thinks is the best. Over a period of time, all the knowledge will get automated and these best practices will improve the overall effeciency and hence reduction in cost without compromising quality.

I am not sure whether I can guess what it will be after 15 or 20 years, but I can bet it will be something drastic than what we can imagine.

I think these future warehouses are already a reality. A couple of customers that I know in US have already implemented all these. Although I am not sure of the bottom line savings for these customers, as automation doesn't automatically equate to cost savings always.

Thanks to Rawat for bringing such a nice concept to discuss.

We need to look differently at different markets. May be in developed countries, it could be close to possible. However, in Asia, especially in countries like India, China, Philipines, it is not possible. I even feel that due to the economic downturn, these countries can start utilising the 'Human' power effectively instead of investing on more advanced technology as the technology would tarnish the thin profit margin.

Going forward, companies will start working more on Pull Mode of SCM rather than Push Mode.(i.e. Made-to-Order scenario rather than Stocking).

Another possibility could be selling in standard pack quantityy (no break-bulking) or design the products in Easy to Assemble.

In the above cases, they can directly deliver the goods to the consumer instead of stocking & distributing. This will shrink the Warehouse space requirement.

There's a video on YouTube that demonstrates this actual concept.

On another note, Partha makes a valid observation about the market dynamics in developing Asian countries wherein the consumer profile or even political interests may either not permit or might make it challenging for bulk sales to be economical. Take the example of the warehouse sales concept- Metro Markets in India wherein sales are restricted only to businesses due to political motivation vs. the Costco/BJs/Sams Club model in the US.

Not that I support Cargill, but here's an interesting advert Cargill runs in the US markets (and may be elsewhere) to demonstrate the need to reach micromarkets. Tiendas(small shops, or in Desi-speak, the neighborhood baniya) in Mexico are featured in this ad.

URL: (PDF download from Cargill's website)

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