It’s no secret that e-commerce has exploded in recent years. Fueled by the global pandemic, a US Census Bureau study showed e-commerce grew 43% in 2020. Two years later, it’s still going strong and likely never to return to pre-pandemic levels despite some short-term signs of economic slowdown.
Today, online shopping accounts for 20% of total retail sales worldwide, and that figure is expected to reach 30% by the end of the decade.
But the digital economy does not operate in silos. It includes an extensive network of packaging, shipping, warehousing and distribution systems that deliver on the digital promise. This physical infrastructure is what keeps the digital e-commerce world functioning.
But along with the growing popularity of online shopping, the e-commerce segment has also experienced growing pains. For example, consumer demands are — well — endless. Traditional peak shopping cycles like back-to-school and the holiday season have been supplanted by an “everyday is a holiday” mentality. An increasingly savvy consumer market means shoppers are putting major pressure on retail companies to deliver more, at a faster rate, more reliably and more socially responsible than ever before. Expedited shipping is no longer enough.
At the same time, the global supply chain is anything but reliable. And while it’s improving, according to the Global Supply Chain Pressure Index, companies still face the pressure of extended delays. In addition to consumer pressures and supply chain challenges, companies are facing talent shortages – struggling to staff not just their retail stores, but also their warehouses.
The ongoing issues have left many retailers wondering how to meet the growing demands of the e-commerce segment while remaining profitable. For a growing number of businesses, an investment in warehouse automation can be the right start.
Transforming the traditional warehouse setting
Traditionally, warehouses and distribution centers have been labor-intensive operations centers, with a large number of employees moving inventory to the right place. Typically located in rural areas – though Amazon is slowly changing that with its fulfillment centers – these centers have played a huge, albeit hidden, role in keeping our economy going. And while the supply chain challenges and pandemic issues have definitely changed things, we were starting to see an increasing number of companies turning to other technologies to reduce the risk in their supply chains. , before 2020.
These organizations were increasingly turning to warehouse automation. According to a recent report that the team at Futurum Research conducted in partnership with Honeywell, this option has steadily grown in popularity, but it is far from mature, which leaves a lot of room for growth for the coming.
From Autonomous Mobile Robots (AMR) that help grab, sort and pick up items from the warehouse floor to aerial drones that help with inventory, these options will be in warehouses everywhere for the next decade I’m sure. .
Over the past three quarters, robot sales in the United States have hit record highs. In the last quarter, 12,305 units were moved, an increase of 25% compared to the same period last year. Amazon has announced that it will invest $1 billion in warehouse automation solutions like robots and AI. To keep pace, Walmart says it will invest $14 billion in warehouse automation and other areas. Other companies are investing hundreds of millions in their own proprietary robots. Even for small businesses, the economic benefits of investing in warehouse automation are clear. Robots are reliable and cheaper than humans.
Advantages of warehouse automation
Whatever form it takes, warehouse automation offers many benefits and companies around the world are embracing it. According to our recent report, some of the key benefits include:
- A more efficient workplace. With warehouse automation solutions like autonomous mobile robots (ARMs), drones, and automated storage/retrieval systems, businesses can fulfill orders faster, safer, and more predictably than with workers humans. This not only means happier customers, but businesses working more efficiently and with less risk overall.
- A more agile “workforce”. With so many issues plaguing the retail segment, businesses need to be nimble and ready to change in no time. For example, during the pandemic, many companies have moved to a purely online, direct-to-consumer (DTC) model to create a stronger connection with their customers. While humans may need extensive training after such a major business model change, robots do not. This allows companies to be more flexible and responsive to the current environment.
- Less dependence on humans. Since many people left the workforce during the Great Resignation, a move towards warehouse automation means less disruption and less downtime when humans aren’t available to work. Indeed, the warehouse sector was once a human-intensive industry. But with robots, there’s no training, no need for breaks, and no shortage of staff. The robots can even work around the clock to meet demand.
- A more accurate inventory. Human error is a problem for every business, but using warehouse automation and AI can help create more accurate numbers overall, whether it’s inventory count, location of production, shipping details, etc. Again, this is a huge bonus when it comes to customer satisfaction. , because shoppers want to know that the products they order are available as promised, rather than receiving an “out of stock” notice or an unexpected shipping delay after an order has already been placed.
- Data-rich environment. This is a data-driven economy. And because warehouse automation is driven by AI, it enables data acquisition throughout its lifecycle. This could be used for asset tracking, quality assurance, or any number of processes associated with the Internet of Things (IoT).
- Staff increased. Finally, warehouse automation can be used to not only replace, but also augment the capacity of current staff so they can focus on more important things, whether it’s business strategy, demands customer service or sales.
Warehouse automation and the future of e-commerce
Although currently some warehouses and distribution centers are operating in survival mode, I am confident that we will see an expansion of warehouse automation in the future. Although some may argue that fully autonomous warehouses would be the ultimate goal, I believe that automation technologies and humans will work together, driving the future of e-commerce forward. This symbiotic partnership between humans and machines (automation, robots, AI) was the thesis of the book “Man/Machine” that Olivier Blanchard and I wrote in 2019, and we see it today come to fruition with automation. warehouses being a good example.
I think over the next decade we’re going to see a greater reliance on warehouse automation to be more resilient and agile. Today’s forward-thinking organizations need to understand the opportunity to leverage their current automation plans and push them further, building a foundation that will meet the needs of the future of e-commerce. Those who don’t could struggle to exist by the end of the decade.