How Will Warehouse Automation Overcome Supply Chain Weaknesses Exposed By COVID-19?

Any reflection on the year 2020 would be incomplete without considering the impact of the COVID-19 pandemic. In manufacturing and logistics, global shutdowns caused supply chain interruptions, production slowdowns, and missed fulfillment deadlines prompting widespread shortages of essential products.

From many perspectives, these shortages and interruptions are cause for concern. The good news is that the supply chain weaknesses exposed by COVID-19 are nothing new; the pandemic has simply intensified the urgency to address them. And widely available automated solutions can already solve a good proportion of these problems.

These realities make the economic benefits of automation greater than ever, and point to shifting perceptions toward automation, readiness to embrace it, and a future where manual and machine labor is increasingly blended.

Challenge 1) Labor Shortages & Worker Safety

Labor shortages and worker safety concerns are closely related: it’s harder to attract and retain skilled workers in dangerous or uncomfortable working environments. The skilled labor shortage has been affecting manufacturing and logistics for years. The pandemic intensified this trend, contributing to workforce absences and adding the threat of contagion to safety concerns.

Automation is ideal for performing two broad classes of tasks: 1) the mundane, repetitive, and easily predictable, and 2) high-precision tasks beyond the capabilities of human skill. In both scenarios, automated systems lessen the burden on individual workers, enhance their productivity, and minimize accidents and injuries. 

For instance, the top five types of workplace injuries are caused by contact with harmful objects (40%), overexertion (24%), slips and falls (19%), repetitive motion (8%), and contact with hazardous substances or chemicals (6%)¹ Material handling solutions, such as automated guided vehicles (AGVs), automated storage and retrieval systems (AS/RS), and goods-to-person transport solutions (G2P), readily address these hazards by reducing physical labor, working in hazardous environments, and by transporting dangerous substances. Few workplace accidents have been attributed to these types of solutions, and today’s smart AGVs come equipped with innovative safety features to make them capable of responding and reacting to the surrounding environment.

In one recent cross-industry survey of CFOs, 78% said they plan to reconfigure worksites to promote physical distancing, 53% will change shifts and/or alternate crews to reduce exposure, and 44% will specifically prioritize automation as a new way of working.² In manufacturing and logistics, automated systems are key to accomplishing the first two goals, as machines can reduce human contact and enable 24/7 production while minimizing operational costs.

A popular but flawed criticism of automation is that it replaces human workers, robbing them of their livelihoods. The COVID-19 pandemic could help shift this negative perception by underscoring the positive impact of automation on worker safety. Automation doesn’t replace workers; it supplements and protects them. When repetitive or dangerous tasks are automated, companies can shift employees to other areas and increase cross-training, helping people to perform valuable roles in more comfortable working environments.

Challenge 2) Ecommerce Fulfillment Pressure

Brick-and-mortar shopping has been losing ground to ecommerce for decades, but 2020 compounded that trend into a necessity. Reliance on online ordering pressures warehouses and fulfillment centers to increase SKUs and fulfill orders at lightning speed to stay competitive. It has also highlighted needs and opportunities within the cold supply chain, with food and groceries as the second-fastest growing category in ecommerce.³

The repetitive, predictable nature of warehouse and fulfillment operations makes them an ideal candidate for increased automation. Warehouse automation is the second largest investment area for logistics companies, just behind cloud logistics, which could be viewed as related technology since cloud solutions underpin massive automation endeavors.⁴ 99% of cold chain businesses say their planned automation investments, which were already significant before the pandemic, will remain the same or increase in light of new demand.⁵

The benefits of warehouse automation in the fulfillment sector are clear and widely accepted. Best-in-class automated distribution centers achieve 95% on-time deliveries, one and a half times more often than the national average.⁶ They also realize up to 85% in space savings, thanks to the small footprints and compact integration of various automation technologies.

Challenge 3) The Drive Toward Home Production

Historically, many industries have concentrated production operations in countries with the lowest manufacturing costs, with China topping the list.⁷ In recent years, experts in the U.S. and Europe have called for increased domestic production. While some of this desire is rooted in dissatisfaction over quality or delivery time, there are also environmental, political, and socioeconomic arguments that have deepened since the onset of the pandemic. 

Environmentalists have criticized Chinese producers for pollution and waste, with some experts attesting that more rigorous Chinese anti-pollution laws passed in 2016 are insufficient to address the scope and scale of the problem.⁸ Nevertheless, overseas production inherently contributes to carbon emissions because of its reliance on long-distance transportation. Since some experts believe that habitat destruction and climate change contribute to pandemics, environmental concerns are heightened.⁹

From a political and economic perspective, supply chain interruptions highlighted a need for domestic manufacturing, especially for products deemed essential. A prime example is the U.S. government’s efforts to rebuild the country’s pharmaceutical manufacturing industry, with billions of dollars in public and private funds already committed.¹⁰

Confronting environmental challenges requires domestic production and energy-efficient facilities. The biggest barrier to domestic production is cost. How can onshore manufacturing operations compete with overseas prices with minimal environmental impact? Once again, automation holds the answer.

While robots and automated machinery do perform energy-intensive processes, many of today’s machines are designed to consume as little electricity as possible. Prior to the pandemic, increased energy efficiency was considered a major contributing factor in the growth of the industrial automation market.¹¹ The green potential of industrial automation lies in the connected and programmable nature of these automated processes, which grants precision control over when and how these systems consume power, especially when integrated into larger energy management strategies. 

Synergistically, consuming less power also keeps overall production costs down. Increased automation is associated with up to 65% decrease in operational costs¹² thanks to energy efficiency, process efficiency, higher throughput, and less reliance on manual intervention – all without sacrificing quality. Furthermore, automation enables 24/7 production, further driving cost competitiveness and business value.

Will Demand for Automation Drive Advances in Technology?

While we may have yet to see the full impact of COVID-19, the economic case for automation is greater than ever. Many businesses will increasingly blend cost-effective automation technology into manual operations to stay competitive. 

Investors and stakeholders may wonder if standard industrial automation solutions like guided carts or AGVs will be quickly phased out by more advanced, free-moving, artificially intelligent robots. While advanced robotics holds promise and may one day become the industry norm, and advances are constantly being made, the classic question of cost and scale will likely keep much of today’s automated technology in play for a long time. 

While enterprises like Amazon are known for warehouse and distribution innovation,  small-to-medium size operations are likely to see ROI on today’s core automated technologies, saving on operational costs, repurposing labor for value-driven tasks, and increasing productivity. For many facilities, 2020 has been the tipping point for turning these solutions into business necessities.

Gain a Competitive Edge with Warehouse Automation

Start your warehouse automation journey today to reap the benefits of cost savings, faster ecommerce fulfillment, and more competitive operations tomorrow. Explore Murata Machinery’s AS/RS, AGVs), and goods-to-person case and tote picking solutions.

For guidance on selecting the equipment that can drive the most value for your business, contact Murata Machinery USA. We can answer your technical questions and connect you with an expert that understands the complexities of your decisions. 

This article was written by Scott Matlock, General Manager, Logistics & Automation at Murata Machinery USA, Inc., makers of fully customizable automated warehouse solutions that help today’s manufacturers and suppliers stay competitive.

References

1. https://www.assemblymag.com/ext/resources/White_Papers/2019/sep/UR_Workplace-Injuries-White-Paper-Final_May2019.pdf
2. https://www.pwc.com/us/en/library/covid-19/pwc-covid-19-cfo-pulse-survey.html
3. https://www.semrush.com/blog/2020-digital-marketing-trends-in-ecommerce/
4. https://www.statista.com/statistics/780763/inventory-management-investments-retailers-manufacturers/
5. https://www.gcca.org/sites/default/files/ImpactsCOVID-19onColdChain-May%202020-final.pdf
6. https://www.roboticsbusinessreview.com/supply-chain/full-warehouse-automation-is-the-goal-and-the-opportunity-for-both-provider/
7. https://www.usnews.com/news/best-countries/slideshows/countries-seen-to-have-the-lowest-manufacturing-costs
8. https://scholar.harvard.edu/files/jaldy/files/the_debate_forum_2018_sept-oct.pdf
9. https://www.medpagetoday.com/infectiousdisease/covid19/86325
10. https://www.bmj.com/content/370/bmj.m3393
11. https://www.vdcresearch.com/News-events/ias-blog/Five-Industrial-Automation-Trends-in-2017.html
12. https://www.vdcresearch.com/News-events/ias-blog/Five-Industrial-Automation-Trends-in-2017.html