Many companies were unprepared last year for a rise in online orders by percentages of up to 500 per cent. How should we prepare our warehouses for a future with more disruptions like COVID-19?
Two warehouses with two different stories. One warehouse was forced to shut down the company's webshop in spring 2020 - it lacked the capacity to process any more orders. The other warehouse, however, was able to increase order processing capacity sufficiently. As a result, in three months, online sales made the growth leap for which the company initially thought it would need three years. "In fact, this warehouse managed to add fulfilment for an online shop from another country within 24 hours. The same goes for the fulfilment of two major brands: the warehouse in one country was able to deliver orders to customers in another country faster than the local warehouse. If, like this warehouse, you are able to handle an unexpected shift from the offline to the online channel without any problems, you can make the difference in the market. That is the most important lesson COVID-19 teaches us looking to the future.
Small online orders
With many companies slowly emerging from the crisis, new questions arise. Questions about the warehouse of the future. What should it look like to be prepared for disruptions? What processes and systems will it need? And what role will humans play in the warehouse of the future? The biggest challenge is processing online orders that often consist of only one or two items. Many warehouses are used to working at pallet or box level, but picking, packing and shipping small orders is something completely different. Especially given the tight cut-off time many web shops use. Warehouses do not have three days to process an order, but have to ship their parcels the same day. Warehouses that do not adjust their processes lose efficiency. Without measures, an order profile with more small orders leads to a lower picking density. This means that warehouses have to look for new solutions that allow them to work sufficiently efficiently, despite the many small orders.
Man & machine
One possible solution is automation and mechanisation of processes. That offers warehouses extra order processing capacity and possibly extra storage capacity. But also consider robots that are increasingly capable of performing physical operations at piece level. Automation and robotisation are crucial for a fast, reliable and efficient fulfilment process. The expectations of using robots are high - they can partially replace order pickers. The great advantage of robots is that companies can flexibly increase capacity in the warehouse without committing in advance to a large-scale automation system with a limited capacity. Capacity, moreover, that must be reached within three, four or five years to make the high investments profitable. Whether companies opt for automation or robotisation: it is important that humans continue to play a role in the warehouse. Not all operations can be performed by machines or robots. People provide flexibility, for example when handling large or fragile products. In addition, they offer the ability to scale up quickly at peaks. An unexpected increase in online orders cannot be met by quickly adding a machine.
Gamification
The question is how work in warehouses remains attractive to people. How much fun is order picking still when robots are the closest colleagues? The answer to this question is gamification. Think of a fitness app like Strava, popular with cyclists who want to measure and compare their performance with their friends. Similarly, we can also give employees in the warehouse new challenges all the time. We can reward them if people take up that challenge and complete it successfully. We can compare employees' performance with others, but in a fair way. After all, moving a pallet cannot be compared to moving a box or a loose item. If performance is good, employees can earn points for, say, a gadget or an extra hour of leave. But managers can also set up joint challenges, for example by setting one million picks as a goal. With gamification, we can keep work attractive to younger generations, especially digital natives. That way, we can actually improve productivity in the workplace and increase motivation among employees.
Decorative software
Besides robotisation and gamification, artificial intelligence is another key element of the warehouse of the future. Whoever wants to be able to process and ship even that last order on time will have to pull those orders through the system, so to speak. You can increase picking density in the warehouse by merging orders into batches, but then you have to sort the picked items by order again. That in turn requires extra time. Artificial intelligence helps ensure that all orders are shipped on time. Artificial intelligence makes it possible to plan the operation. By comparing today's order profile with past order profiles, the system can predict with great accuracy how much time is needed to process all orders. Based on that analysis, the warehouse management system can release the right orders at the right time. Importantly with this kind of innovation, with the advance of the cloud, we are moving to versionless software. With this, companies always have access to the latest innovations, for instance when it comes to applications of artificial intelligence. The speed at which we can implement innovations will determine our competitive position. If processes and systems cannot keep up with the speed of change in the business, a company will not survive the future.
By: Pieter Van den Broecke, managing director Benelux and Germany at Manhattan Associates
