February 15, 2020

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Manhattan Associates: Margin erosion is turning the spotlight on the warehouse | Warehousing

For retailers, shopper demand for quicker, extra seen ecommerce deliveries and spiraling returns are creating huge downward stress on margins. There is rising board degree recognition that current warehouse operations are merely not designed to assist the challenges of omnichannel fulfilment. A extremely automated warehouse is now important if retailers are to fulfill rising buyer expectation whereas remaining worthwhile.

Robotics are clearly set to play a key function in enhancing choosing and packing processes; however automation is simply half one in every of the equation. How can retailers create an environment friendly warehouse operation that helps each retailer and direct-to-customer fulfilment? What is the optimum stability between man and machine? From guaranteeing robotics and staff work together successfully with fastidiously honed ‘co-bot’ processes, to embracing order streaming to effectively mix multichannel fulfilment, Craig Summers, UK Managing Director, Manhattan Associates explains how the subsequent technology of warehouse operations won’t solely halt margin erosion however ship new ranges of retail profitability.

Multichannel Fulfilment Challenge

Over the previous decade, retailers have made valiant makes an attempt to fulfil clients’ evolving expectations throughout a number of gross sales channels. But with returns spiking and demand for subsequent day supply now ubiquitous, present logistics processes are now not satisfactory: the price of fulfilment is driving margins right down to untenable ranges.

Despite the big rise in ecommerce, few retailers would declare to have warehouse operations really optimised to assist present calls for. These warehouses had been designed to assist fulfilment to retailer, leveraging the ‘Wave’ method to effectively decide and pack huge batches of predictable demand. Adding giant numbers of extremely unpredictable, quick turnaround, particular person buyer orders into the combine creates a really completely different, very difficult warehouse surroundings. 

For many retailers, the solely method to meet buyer supply pledges is to throw further employees into the combine. But this is not a sustainable method: with a troublesome economic system, including employees is unaffordable, eroding margins even additional. With the extremely publicised recruitment challenges, including employees is typically unachievable, particularly throughout any brief sale occasions. Additionally, the arms race so as cut-off time for Next Day fulfilment locations additional pressure on the warehouse, resulting in staffing up on costly night time shifts that solely erode margins additional. 

How can retailers optimise warehouse operations to assist the new fulfilment calls for? What is the finest method to cheaply and effectively handle each retailer and buyer fulfilment to deal with the apparently inexorable margin erosion?

Next Generation Robotics

Automation and robotics are no doubt key areas of investigation in 2019, as retailers acquire confidence in the rising maturity of the know-how on provide. From autonomous cellular robots (AMRs) to sorting tools, conveyors and automatic storing and retrieval techniques (ASRS), there are any variety of choices for streamlining operations. Certainly, the productiveness advantages are compelling: a current market survey performed at IDC discovered that over 70% of the time, industrial service robotic know-how delivered double-digit enhancements to productiveness, effectivity and capability.

While not designed to switch folks, the newest technology of AMRs provides new ranges of sophistication, enabling retailers to seamlessly mix man and machine to optimise effectivity. For instance, cellular robots with arms can carry out choosing; robotic arms can be utilized for sorting; whereas robots geared up with RFID readers can automate stock administration. 

The most notable step ahead is that robotic know-how is now designed to work with folks, to collaborate with the human workforce all through a warehouse surroundings. With sensors and imaginative and prescient, in addition to synthetic intelligence, robotic design features a raft of security options to allow efficient and managed human interplay.  This degree of innovation opens the door to new ‘co-bot’ workflows that supply vital enhancements in flexibility and productiveness to additional scale back warehouse prices and improve margin. 


Co-Bot Efficiency

With the capacity to successfully mix man and machine all through the warehouse, retailers have the alternative to rethink the handiest approach a warehouse operation can deal with the new calls for created by a blended fulfilment mannequin.  To fulfil a number of small orders, retailers have added new areas for product packing and dispatch, affecting the design of the warehouse operation. The approach order picks are prioritised inside a multichannel warehouse operation is additionally far more difficult and sophisticated.

The Wave method of bundling quite a lot of orders into one batch that is picked over longer time scale – equivalent to two hours – works brilliantly for retailer fulfilment. The Waveless mannequin, in distinction, manages each order as a discrete allocation of labor, enabling quick, responsive fulfilment for small, extra pressing orders and it is preferrred for direct-to-consumer order fulfilment. 

For warehouse operations now tasked with fulfilling these very various necessities, what is the optimum methodology for combining Wave and Waveless operations while nonetheless guaranteeing important targets – equivalent to hitting a courier pickup window – are prioritised? This is the place order streaming is invaluable, offering a way for optimally processing orders of every type with simultaneous Wave and Waveless operations.

Using order streaming, a retailer can mix Wave and Waveless approaches to maximise each effectivity and employees/ robotic utilisation, decreasing prices and delivering better product margin for each in-store and direct-to-consumer gross sales. As orders are fulfilled – by staff, machines or a mixture of each – the use of machine studying creates a means of continuous enchancment. By harnessing ‘time to pick’ information, for instance, the system positive aspects a greater understanding of job completion patterns, guaranteeing the proper degree of labor is allotted to the proper useful resource.  Essentially, the warehouse is in a means of continuous enchancment and optimisation, driving down prices and enabling retailers to incrementally handle margin erosion.


As the profitability of the ecommerce mannequin comes underneath ever better scrutiny, it is the approach during which retailers method the warehouse in 2019 that might separate the winners and losers.  Automation applied sciences, together with robotics, are extremely thrilling, providing vital alternatives for enchancment and effectivity acquire. But these applied sciences can’t be deployed in isolation. Creating seamless co-bot workflows will maximise the worth of automation, enabling retailers to do extra with much less in the warehouse; however the surroundings should even be optimised to assist the frequently evolving blended fulfilment requirement.

By making a warehouse surroundings the place more and more refined robotics and automation can function seamlessly and successfully with people, while constantly studying to drive additional effectivity and enchancment, retailers will be capable of fulfil ever rising buyer expectations with out compromising profitability.

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