The warehouse automation market generally and that for robotics specifically remains hot. More on that in just a bit.
Just recently, I was doing some work in this area and came upon an excellent article on this subject from the high-end consultants at McKinsey from last December. Since I assume most SCDigest readers also missed this article when released, I thought it would be worthwhile to provide a summary.
I’ll start by noting that it must be a very hot topic if it caught the attention of McKinsey, which generally operates at highly strategic levels of the consulting spectrum. So here we go.
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The potential benefits increase as these strategies get bigger and bolder, but so do costs, implementation timelines, payback periods, and execution risks.
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McKinsey starts by noting that “Supply chain robots are flying off,the shelves as warehouse automation gets its due after years on the outskirts of the Fourth Industrial Revolution.”
It adds that some expert sources expect robot shipments to jump 50% each year through 2030, with warehouse automation growing by more than 10% annually.
For good reason, McKinsey says, commenting that “In the quest for greater resilience, companies are now looking for ways to boost the speed, reliability, flexibility, and productivity of their warehouse and distribution operations. Automation has emerged as the answer.”
The technology keeps getting better and more targeted.
McKinsey notes, for example, In the material-movement category, autonomous mobile robot (AMR) systems are primarily used for piece-pick or, more recently, full-pallet operations. Shuttle systems are designed to allow higher density and productivity in case and unit picking. Emerging autonomous solutions (such as cobots mounted on AMRs) could help repurpose legacy infrastructure with enhanced technology.
With that bullish intro, McKinsey drops the bomb: for many, the results are falling short of expectations.
Why? McKinsey cites three factors: lack of cohesive vision, a poor understanding of automation technology by leadership, and misalignment of beliefs and principles within the organization.
McKinsey notes that “Creating a robust, comprehensive warehouse automation strategy is challenging. At a high level, the available options range from point solutions, implemented to address specific issues within existing facilities, all the way to complete networks of new, fully automated facilities built on greenfield sites.”
But even within each of those categories, there is a wide choice of technologies and vendors. The potential benefits increase as these strategies get bigger and bolder, but so do costs, implementation timelines, payback periods, and execution risks.
What to do?
McKinsey first offers a list of seven best practices, which range from the fairly obvious (e.g., clarify the business needs) to the more useful (think of network solutions, not automation islands).
Its recommendations also include using a playbook of best practices, which can help companies extract more value, including creating a centralized control tower to keep stakeholders aligned; optimized scoping, procurement, and contracting; and proactive risk management.
 After the seven best practices we get three actions for executives to take right now with regard to warehouse automation. Those are:
Formulate your vision and think big: Articulate your strategy for supply chain automation and lay out a clear roadmap to achieve it. Make sure that the overall plan is based upon robust, granular forecasts that consider growth aspirations for total storage and throughput needs, as well as operational KPIs such as order profile, mix variability, handling units, and picking types.
Educate your board and leadership on the art of the possible: Leading players are developing new business and operating models to support their supply chain automation ambitions. These can include partnerships with emerging vendors to create tailored solutions or integrating use cases with other vendors and shippers to generate synergies through collaboration.
Secure business-wide alignment on a set of core beliefs and design principles: Establish a cross-functional transformation office to set the ground rules for the project, including key stakeholders from functions such as finance, operations, IT, and HR.
In the end, “Automation could solve pressing challenges in warehousing and fulfillment while also helping companies meet long-term growth goals,” McKinsey concludes.
For me, the key message here is this: warehouse automation and use of robotics is shifting from DC-centric to an executive and even board-level issue, with all that entails in terms of strategy work, risk management, and more.
But in general, it good for most of us that AMRs and more are moving to board room issues.
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