Predicting growth is difficult. Selecting the right automation for your warehouse to accommodate that growth can be even more challenging. Overspend and you get stuck with an under-utilized facility that you might “grow into” — or not. Penny-pinch and you end up with a system that fails to meet your needs a few months after you deploy it, leaving you with an expensive replacement project.

The uncertain growth isn’t the only problem when it comes to selecting the right automation system. The market can throw all kinds of monkey wrenches into even the best of plans. How about seasonal demand jumps that require a warehouse to 5x throughput for a few months every year? Or surprise changes in channel mix, like COVID-induced growth of e-commerce, that place discreet needs on the automation system? And then there are those viral buying trends that can crush an unprepared facility with a sudden spike in demand. All of these factors can create a costly case of unfilled orders.

It’s enough to give any inventory management executive the willies. But there is a solution: A new generation of warehouse robotics is stepping up to the front lines of the business world to help navigate an exceedingly complicated landscape. As they replace legacy automation installations that have long been hampered by inflexible footprints, these next-generation systems optimize the supply chain and provide faster, more flexible, and cost-effective ways to fulfill orders.

Making Optimal Use of Space

Square footage is expensive. Just this year, average warehouse rental prices in the U.S. hit a record $9.59 a square foot, 16.1% higher than the same period last year. Robotics lets a business get more done in less space. It’s hard for legacy automation to efficiently utilize all of the vertical space. Doing so requires installing a steel infrastructure with stairs and mezzanines. “It gets really difficult to get the product up to the fourth level of a pick module,” said Zac Boehm, vice president of robotics solutions with Hy-Tek Intralogistics. Here again, advanced installations can shine. “Robotics can utilize the full vertical cube, all the way up to what ceiling height allows.” 

“Robotics are providing new possibilities to create dense systems with high throughput,” says Andy Williams, executive vice president of sales, North America, at Exotec, a goods-to-person robotics provider. “This is a game changer. Where I might previously have needed two or three facilities to handle all of my inventory movement, now a single installation can support all of the different channels, including wholesale, retail, and e-commerce.” 

And because more work can get done in a smaller footprint, companies are able to strategically position their warehouses closer to suppliers and customers, further assisting fulfillment. This enhances supply chain flexibility and customer satisfaction. A distribution center that is positioned closer to a vendor or customer can stock less inventory and deliver it faster.

Power in Simplicity

So, what’s the secret to robotics power? One big advantage is the simpler, more streamlined design. “In traditional single-level shuttle systems, aisles are needed to access all of the SKUs,” Williams says. “And a shuttle is needed on every single level of each aisle. Then a conveyor front zone must support maybe two to three aisles, and that is attached to another conveyor system so everything can be reached. And all of that infrastructure has to be staffed.”

These legacy shuttle systems are a marvel of engineering that is purely optimized for throughput. Unfortunately, this also means that once they are built, any alterations to the system become extremely challenging.  “A profile switch from retail to e-commerce would dramatically impact all the systems and require a complete workaround,” notes Williams.

A robotics system removes all of those constraints, all of that machinery, and all of that hard-fixed automation. It provides the flexibility to get from any location in the system to any pick point. It can switch effortlessly between the channels and serve them concurrently. It also solves the problem of handling peaks, such as a big monthly wholesale surge, or seasonal spikes. 

That streamlined and efficient design also reduces the company’s need for support staff, adds Williams. “If I have a slow day where I'm only going to have 25% of my pick volume, then I can staff 25% of the labor and still maintain full connectivity to the SKU base.”

Finally, due to a more efficient design, robotic solutions offer faster deployments which translates to a quicker time-to-value. Some of the next-generation robotics can be installed within months as opposed to the years that it would take to install a traditional automation system. 

Futureproofing: Flexibility

The new robotic solutions are also much more flexible when it comes to scaling the system.  “We know that every business will change in some way,” says Williams. “It may add more SKUs, or a large portion of its transaction flow will shift from retail to e-commerce, or from e-commerce to wholesale. Being able to handle all of those different channels and changing future requirements in the same system is critical.”

Scalability and flexibility are just what a robotics system provides. “No one’s forecasts are ever right when it comes to such things as order profiles, viral trends, evolving channel mixes and seasonal demand fluctuations,” says Boehm. “So a business wants to make sure it has a system that can scale very easily. Robots offer a perfect solution to market changes, as they can be added or taken away as needs require.”

Flexibility arises from plug-and-play modularity. “When designing a robotic system, it’s possible to plan for future growth,” says Boehm. “What starts with five stations might easily expand with 10 more. It’s like taking Legos and plugging them together.”

Evolution and Growth, Post-COVID

Take the case of Ariat, an equestrian boot and accessory maker that experienced an unexpected surge in transactions when the economy emerged from COVID-19. This market transformation came at a time when the company was already undergoing rapid change. “Ariat had grown so fast that we outpaced our strategic plans,” says Matthew Hardenberg, the company’s senior manager of building operations. “So, we've had to rapidly evolve our tactical approach in terms of the number of distribution centers, as well as capacity for our warehouses, factories, and transportation systems.”

While growth is a good thing, it can also pose problems. Not only was Ariat faced with the task of increasing its warehouse capacity, but its customers also changed behavior in ways that strained their operations. Faced with their own capacity constraints, some customers began to alternate the way they ordered merchandise, sometimes ordering for delivery to their warehouses to take advantage of the available economics, and other times ordering for their stores to avoid stockouts.

While that alternation made economic sense, it presented Ariat with a challenge. An order for something like 2,000 units of a size large gray shirt to ship to individual stores, for example, might require 1,000 individual transactions of lines of two, instead of 20 transactions for cases of 100 to be shipped to a couple of warehouses. The need to switch back and forth between the two buying patterns strained the company’s distribution centers.

At the same time, customers were changing their order profiles in response to cash flow problems that arose during the post-pandemic rebound. “If cash flow is tight, a retailer may decide to risk having an empty spot on the shelf by engaging in smaller, more frequent ordering, buying one or two items at a time to fill shelf spots as they arise, rather than buying cartons,” says Hardenberg. “We have seen our parcel portion move from around 70% of our business to 50%, then back to 80%. When you are dealing with 6,000 different wholesale customers, that can put a very dramatic strain on our system.”

Transaction patterns can also be altered significantly at the company when events such as rodeos or big horse shows drive spikes in demand. Even the changing of the weather can affect sales. Viral shopping trends, finally, can strain the system when a particular style of boot or clothing suddenly becomes a hot topic on social media.

It was clear that Ariat needed to evolve its warehouse operations. Expanding their current manual pick environment system was out of the question, given the demands of the project and the time required. “They would essentially have to overbuild their pick module for some unknown future increase, or they would have to put in a steel infrastructure conveyor,” says Boehm.

Instead, Ariat installed a new robotics system in a matter of months and with no interruptions to ongoing operations, providing just the flexibility the company required. “Now they are trying to drive even more volume out of their building than what they had forecasted three years ago,” Boehm says.

A big advantage of Ariat’s new system was flexibility. While the company installed some 29 new robots, they could have selected whatever number made the most sense for them, in terms of future growth projections and financial concerns. “Because it’s possible to determine just how much each individual robot will contribute to driving the system, a company can add just the number of additional units that will provide the needed horsepower without overspending,” notes Boehm.

Unlike legacy automation, the new system can easily handle the company’s variances in business volume. When needed, additional robots can even be rented — an option unavailable with fixed pick modules and conveyor belts. “The customization and rapid deployment capability of our robotics system is due to its component nature,” said Hardenberg. “It allows us to adapt to a rapidly changing environment.”

Future Perfect

Companies of all sizes can move goods more efficiently and serve customers more quickly and accurately, thanks to more sophisticated inventory management systems. “I think the most impactful trend we're seeing today is the convergence of robotic capabilities in terms of flexibility, density and throughput,” says Williams. That convergence is giving companies the ability to center their business cases on the entire supply chain, in the process reducing the bullwhip effect, cutting the number of days inventory is on hand, and lowering transportation costs by engineering better route sequences. “Today’s companies can evaluate their supply chain options very differently,” says Williams. “The ability to think beyond the individual warehouse level is enabled by a new generation of robotic systems.”

Resource Link: www.exotec.com