At warehouses and distribution centers, the migration toward automation is taking on greater urgency in 2022, and late adopters are realizing they can’t afford to sit on the sidelines any longer.
Workers haven’t been this scarce and expensive in decades, prices for products have been rising steadily, and COVID-19 still is lingering. At the same time, e-commerce companies are trying to fulfill three times as many orders as just a few short years ago, and in one-third of the time. In today’s highly competitive e-commerce marketplace, meeting consumers’ demands for quick delivery is essential to a retailer’s long-term survival.
Rupesh Narkar, director of sales, consumer goods for MHI member Swisslog Logistics Inc., said customers who shifted to online shopping amid the pandemic have grown accustomed to the convenience of free, two-day shipping and nearby in-store pickup. Due to the labor shortage and the rapid growth in order volume, however, companies are struggling to meet those expectations, driving the adoption of automated material handling solutions, he said.
“Meeting these increasing expectations for customer service is only possible if there is automation built into the fulfillment network,” Narkar said.
Companies that can’t ship orders promptly risk losing market share, and that prospect is spurring many retailers to embrace automation, according to Ed Romaine, vice president of marketing and business development for MHI member Conveyco. Concerns over customer satisfaction, coupled with rising labor costs, are forcing companies to take swift action, he said.
“The labor situation is driving the necessity for automation today more than anything else,” Romaine said. “I’ve actually been in rooms where retail executives have been told by their supply chain and senior management teams that if they don’t automate and reduce their labor requirements, they risk going out of business within a certain amount of time.”
Jeffrey Gavenas, senior vice president for sales and marketing at MHI member Fives Intralogistics Corp., said the need for companies to automate quickly is giving solutions providers a chance to show off their creativity. In the past, an e-commerce company may have stuck with the design-bid-build model, hiring a contractor to design a solution and then putting that project out to bid.
To streamline the process, end-users increasingly are using the design-build model, inviting multiple solutions providers to come up with their own plan. This strategy often shaves months off a project’s timeline and gives end-users a variety of solutions to choose from instead of simply going with the lowest bidder, Gavenas said.
Solutions providers are constantly adapting to new developments in the e-commerce marketplace. Gavenas said his company recently conducted a successful pilot project using a new conveyor-based system designed to automatically transport and sort large or irregularly shaped products that traditionally have required manpower to handle.
A surge in order volume during a labor shortage is especially problematic for retailers specializing in bulky or oddly shaped products such as rugs, tires and furniture. These objects currently account for about 5% of order volume, and that figure is expected to reach 10% in the near term, presenting a real issue for understaffed shippers, Gavenas said.
MHI Solutions Community members are the industry’s thought leaders on automation, software, hardware, equipment and services that support a fully integrated supply chain. This includes suppliers, integrators, consultants, media, academia and users. They collaborate on solutions worldwide and in virtually every major manufacturing and distribution sector. For more information, go to mhi.org/solutions-community.