MHI Solutions


SOLUTIONS COMMUNITY: Crawl, Walk, Run Approach Helps Overcome Barriers to Implementing New Technology

* By John Paxton, COO, MHI *

With e-commerce continuing to grow, customers increasingly expecting orders to be delivered yesterday and a shortage of talented labor, it’s no secret that supply chains are being pushed to the max. Adding new automation technologies to warehouses and distribution centers is essential to streamline processes and increase capacity. But it also is a daunting undertaking that poses considerable risk in terms of capital investments and disruptions to operations.

At the recent MHI Annual Conference, the Solutions Community membership was asked to define the top barriers to implementing new technologies. The feedback from the 75 members was:

  • Lack of a clear return on investment (ROI)
  • Demand forecast uncertainty and the ability to scale
  • The availability of capital fundings
  • Skilled implementation resources at the user

Perceived risk of the new technologies and disruption to current business operations.

Fresh off this feedback, Dwight Klappich, vice president for supply chain research at Gartner, seemed like the ideal person to speak with about managing the risk and overcoming the barriers to implementing advanced automation.

Klappich said that in the past, introducing conventional automation technology into a warehouse or distribution center was a long process, starting with the design/build phase and going through implementation, and it required a huge upfront investment with a long payback period. There was built-in risk for companies because these automation systems weren’t very adaptable.

Klappich said he recently spoke with one client who implemented a conventional automation system about a decade ago, before the rapid rise of e-commerce, and now found his company’s system inadequate for its high order volume.

That upfront cost and risk associated with new technology have led some warehouses and distribution centers to invest instead in workers, who could easily be scaled up or down according to demand and retrained relatively quickly to handle different tasks. But with the unemployment rate at historic lows, that solution has its limitations.

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Leading manufacturing and supply chain executives agree that technology is the key to future success. As they digitize their supply chains they are generating more data than ever before, giving them the power to leverage that data to see their businesses in new ways and to make better decisions. These early adopters are creating real and measurable competitive advantage. When it comes to technology investment start small but think big. Build on your successes and learn from your failures. By investing wisely, you’ll create additional value in your supply chain and widen your advantage over the competition.

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