MHI Solutions

Solutions Spotlight

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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This issue of MHI Solutions tackles the important topic of digital technologies in the supply chain industry, especially as it relates the transportation and logistics. Transportation plays a central role in supply chains, whether they are local or global enterprises. And just like the overall supply chain, transportation is facing a digital revolution including new solutions for tracking road, rail, sea and air freight and parcel transportation. These digital technologies are disrupting the industry, but they are also providing im-portant new solutions for transportation inefficiencies and urban logistics challenges. They are also creating new digital business models that enhance transparency and sustainability and contribute to end-to-end supply chain visibility. Like the innovations impacting supply chains, these trends are being driven by the growth of e-commerce and the consumers’ never-ending need for better, faster and cheaper. Ignoring them is done at your own peril.

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