You're in good company. Even the leading-edge DCs are shying away from the revolutionary in favor of more traditional equipment that's better, cheaper and faster and increasingly controlled by computers.
When it comes to creative robotics, material handling engineers, not action picture screenwriters, are the true visionaries. At the latest Council of Logistics Management conference in Chicago, attendees were wowed by brightly colored animations of robotic inventory handling systems that would make a James Bond movie villain green with envy. But the visioneering aside, there have been few revolutionary developments in DC technology in recent years. Despite the hype surrounding the potential benefits of radio-frequency identification tags, for example, the chips have had limited acceptance as an inventory handling device.And advanced robotic systems, while impressive, are still beyond the budget of all but the largest manufacturers.
What's generally happening in leading-edge DCs is the same as always—only better, cheaper and faster. And increasingly controlled by computers. "The whole material handling industry is evolving," says Don Derewecki, a consultant with Gross & Associates in Woodbridge, N.J. "RFID has been around for a while but hasn't gained critical mass because of the costs and lack of … standards. Robotics able to handle materials automatically have been around since the '60s.What has actually happened is the controls for them have become more flexible, sophisticated and cost-effective. It's the same thing with automatically guided vehicles. They've become more flexible, with a broader range of applications and better integration with software to enhance their range of use."
Not many companies are going over to fully automated warehousing, Derewecki says. If you were to go to an industrial park in search of a totally automated system, you'd have to walk through the whole park to find one. "It's still very rare," he says, "except in specific cases based on requirements for control, high throughput, limited time frames or harsh environments like freezers."
Derewecki adds that most of the automation projects he has seen have been prompted by mass merchant retailers, such as Wal-Mart and Target. "They have these massive conveyor systems for both full-case and loose piece operations. And they in turn drive technology down through their suppliers, because once they have it, they want their suppliers to have technology that is, if not parallel, at least compatible with their systems,"Derewecki says. "They want their goods to arrive a particular way."
Semiautomatic pilots
But tough economic times mean companies are cautious about adopting new technology. "The economy has caused them to be frugal and look very carefully at appropriate technology rather than wanting cutting-edge equipment," says Mike Kotecki, senior vice president of HK Systems in New Berlin, Wis., which sells both hardware and software for DCs. Consequently, Kotecki says, the line between automated and non-automated warehousing is blurring. "There used to be a clear line between automated and conventional, but now it's not the decision it used to be. There's a lot of semi-automation, or leveraging the advantages of automation," he says. For example, HK Systems markets an automated forklift truck with a 40-foot reach that performs the same functions as an automatic storage/retrieval system (AS/RS), but using existing storage designed for driveroperated trucks. "It fully automates a conventional rack without the expense," Kotecki says. Another powered cart capable of reaching into stacks eight pallets deep can be operated either automatically or by a driver. "In the past, a 110-foot tall, lights-out automated system was required to do the same thing, which is extremely expensive. We're taking the fundamentals of AS/RS and applying them to conventional warehousing.
"Automation is still very critical, but the clients' thinking is that I'm going to customize and throttle my automation to what's exactly appropriate," Kotecki says. "Clients are coming to us now with problems rather than requests for quotes (RFQs). It used to be they'd decide before they ever came to us that they needed an automatic vehicle system. Now they come in and ask, for example, 'I need to speed up my conveyor system, how can I do that?'We play a more consultative role now. It means people are getting appropriate solutions, and that often means hybrid automation."
Bob Ouellette, general manager for the logistics and technology division at consulting firm The Progress Group in Atlanta, says most of his clients are not pushing at the edges of DC technology. "Clients typically will go for leadingedge technology rather than bleeding-edge technology. To turn on something radically new in a distribution center or warehouse, you run the risk of shutting things down or missing key shipment dates," says Ouellette. That explains why RFID technology has yet to unseat the bar code as the identification technology of choice in America's DCs. He does note, however, that radio-frequency voice technology, where order pickers wear wireless headphones that guide them to picking bins and tell them how many items to pick, is becoming popular.
All systems go
All in all, the most popular new technology to install in a DC seems to be software. Some companies put software to work even before a new distribution center is built. When Emile Lemay was brought in as senior vice president of operations at Lantis Eyewear, he installed enterprise resource planning (ERP) software from J.D. Edwards and used it to run through the various options for consolidating the eyewear company's manufacturing and distribution operations. The company had three different warehouses spread across New Jersey, and used five to seven public warehouses, depending on seasonal demand. Lantis's business is highly complex: It offers private labeling for retailers plus a lot of value-added services such as putting sunglasses on a rotating rack, ready to be placed in a store, and shipping it complete with swing tickets and bar-code labels. This last service was beyond the company's capability, and it had to outsource the job.
Lemay guided the company into building a single facility in Secaucus, N.J., where all of Lantis's value-added services can be performed in house. Having the ERP system up and running well in advance of the move in October 2001 made it easier, Lemay says. "ERP played a significant role in allowing us to bring other technology in on the floor." The warehouse management software even hooks into a company intranet, allowing outside sales reps to dial in on the Web and find out where a specific customer's order is as it moves through the distribution process. Paperwork is a thing of the past. "It's really transformed the company," says Lemay. "Prior to this we were dragging our knuckles."
A typical manufacturer these days has been using ERP software for a while and has gradually been adding other computer controls to his warehousing operations—for example, an order management system from Manugistics or i2, load tendering and shipping status software from Nistevo or Descartes, and warehouse management software from Manhattan Associates or SwissLog. One level down, there's increasing use of warehouse control software, which takes the planning commands from the WMS and interprets them to manage automated functions such as conveyor or sortation systems or storage and retrieval systems.
Five years ago, it would have been hard to juggle all those different software systems, but Ouellette says one of the greatest advances in recent years is that warehouse management software vendors, such as Manhattan, Provia, RedPrairie and Catalyst, are making their different systems more compatible with others. "The available technology from the manufacturers, the operating systems, and the communications and messaging protocols are all getting to be non-proprietary," says Ouellette. "It's not quite plug and play yet, but we're getting much closer to that ability to integrate different systems."
That trend toward getting diverse software programs on speaking terms is even taking hold outside the distribution center's four walls, Ouellette says. "Application technology is having the biggest impact on distribution today. If you can bridge the gap between your WMS and your suppliers' systems, you have a much better view of what's been ordered, what's expected to come in and how you're going to manage the resources within your four walls," Oullette says.
Hooking up warehouse management software with transportation management systems is next, Ouellette says. "We're at a place in logistics where people are finding opportunities to reduce transport costs through better negotiation with suppliers or the better planning that transportation management software supplies. The impact on the DC is you could significantly reduce shipping costs depending on how you ship during the course of the day, how you provide and plan loads. It goes all the way back to the picking activity.Warehouse management and transport management software need to work hand in hand and the suppliers have responded to that, just as clients have recognized the need to do it."
Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.
An LMI reading above 50 indicates growth across warehousing and transportation markets, and a reading below 50 indicates contraction. The LMI has remained in the mid- to high 50s range for most of the past year, indicating moderate, consistent growth in logistics markets.
Inventory levels rose 8.5 points from December, driven by downstream retailers stocking up ahead of the Trump administration’s potential tariffs on imports from Mexico, Canada, and China. Those increases led to higher costs throughout the industry: inventory costs, warehousing prices, and transportation prices all expanded to readings above 70, indicating strong growth. This occurred alongside slowing growth in warehousing and transportation capacity, suggesting that prices are up due to demand rather than other factors, such as inflation, according to the LMI researchers.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.
In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.
Rogers graduated from Princeton University and went to work for a medical device startup in China before moving to a hedge fund company, where he became a Chartered Financial Analyst (CFA). After that, he joined the U.S. Marine Corps, serving eight years in the infantry. Following two combat tours, he earned an MBA from the Harvard Business School and became a consultant for McKinsey & Co.
During this time, he founded Local Motors, a next-generation vehicle manufacturer that launched the world's first 3D-printed car, the Strati, in 2014. In 2021, he brought the technology to the furniture industry to launch Haddy. The father of four boys, Rogers is also a director of the RBR Foundation, a philanthropic organization focused on education and health care.
Rogers spoke recently with DC Velocity Group Editorial Director David Maloney on an episode of the "Logistics Matters" podcast.
Q: Could you tell us about Haddy and how this unique company came to be?
A: Absolutely. We have believed in the future of distributed digital manufacturing for a long time. The world has gone from being heavily globalized to one where lengthy supply chains are a liability—thanks to factors like the growing risk of terrorist attacks and the threat of tariffs. At the same time, there are more capabilities to produce things locally. Haddy is an outgrowth of those general trends.
Adoption of the technologies used in 3D printing has been decidedly uneven, although we do hear about applications like tissue bioprinting and food printing as well as the printing of trays for dental aligners. At Haddy, we saw an opportunity to take advantage of large-scale structural printing to approach the furniture and furnishings industry. The technology and software that make this possible are already here.
Q: Furniture is a very mature market. Why did you see this as a market that was ripe for disruption?
A:The furniture market has actually been disrupted many times in the last 200 years. The manufacturing of furniture for U.S. consumption originally took place in England. It then moved to Boston and from there to New Amsterdam, the Midwest, and North Carolina. Eventually, it went to Taiwan, then China, and now Vietnam, Indonesia, and Thailand. And each of those moves brought some type of disruption.
Other disruptions have been based on design. You can look at things like the advent of glue-laminated wood with Herman Miller, MillerKnoll, and the Eames [furniture design and manufacturing] movement. And you can look at changes in the way manufacturing is powered—the move from manual operations to machine-driven operations powered by steam and electricity. So the furniture industry has been continuously disrupted, sometimes by labor markets and sometimes by machines and methods.
What's happening now is that we're seeing changes in the way that labor is applied in furniture manufacturing. Furniture has traditionally been put together by human hands. But today, we have an opportunity to reassign those hands to processes that take place around the edges of furniture production. The hands are now directing robotics through programming and design; they're not actually making the furniture.
And so, we see this mature market as being one that's been continuously disrupted during the last 200 years. And this disruption now has a lot to do with changing the way that labor interacts with the making of furniture.
Q: How do your 3D printers actually create the furniture?
A:All 3D printing is not the same. The 3D printers we use are so-called "hybrid" systems. When we say hybrid, what we mean is that they're not just printers—they are holders, printers, polishers, and cutters, and they also do milling and things like that. We measure things and then print things, which is the additive portion. Then we can do subtractive and polishing work—re-measuring, moving, and printing parts again. And so, these hybrid systems are the actual makers of the furniture.
Q: What types of products are you making?
A: We've started with hardline or case goods, as they're sometimes known, for both residential and commercial use—cabinets, wall bookshelves, freestanding bookshelves, tables, rigid chairs, planters, and the like. Basically, we've been concentrating on products that don't have upholstery.
It's not that upholstery isn't necessary in furniture, as it is used in many pieces. But right now, we have found that digital furniture manufacturing becomes analog again when you have to factor in the sewing process. And so, to move quickly and fully leverage the advantages of digital manufacturing, we're sticking to the hardline groups, except for a couple of pieces that we have debuted that have 3D-printed cushions, which are super cool.
Q: Of course, 3D printers create objects in layers. What types of materials are you running through your 3D printers to create this furniture?
A: We use recycled materials, primarily polymer composites—a bio-compostable polymer or a synthetic polymer. We look for either recycled or bio-compostable [materials], which we then reinforce with fibers and fillers, and that's what makes them composites. To create the bio-compostables, we marry them with bio-fibers, such as hemp or bamboo. For synthetic materials, we marry them with things like glass or carbon fibers.
Q: Does producing goods via 3D printing allow you to customize products easily?
A: Absolutely. The real problem in the furniture and furnishings industries is that when you tool up to make something with a jig, a fixture, or a mold, you tend to be less creative because you now feel you have to make and sell a lot of that item to justify the investment.
One of the great promises of 3D printing is that it doesn't have a mold and doesn't require tooling. It exists in the digital realm before it becomes physical, and so customization is part and parcel of the process.
I would also add that people aren't necessarily looking for one-off furniture. Just because we can customize doesn't mean we're telling customers that once we've delivered a product, we break the digital mold, so to speak. We still feel that people like styles and trends created by designers, but the customization really allows enterprise clients—like businesses, retailers, and architects—to think more freely.
Customization is most useful in allowing people to "iterate" quickly. Our designers can do something digitally first without having to build a tool, which frees them to be more creative. Plus, because our material is fully recyclable, if we print something for the first time and find it doesn't work, we can just recycle it. So there's really no penalty for a failed first printing—in fact, those failures bring their own rewards in the form of lessons we can apply in future digital and physical iterations.
Q: You currently produce your furniture in an automated microfactory in Florida, with plans to set up several more. Could you talk a little about what your microfactory looks like and how you distribute the finished goods?
A: Our microfactory is a 30,000-square-foot box that mainly contains the robots that make our furniture along with shipping docks. But we don't intend for our microfactories to be storage warehouses and trans-shipment facilities like the kind you'd typically see in the furniture industry—all of the trappings of a global supply chain. Instead, a microfactory is meant to be a site where you print the product, put it on a dock, and then ship it out. So a microfactory is essentially an enabler of regional manufacturing and distribution.
Q: Do you manufacture your products on a print-to-order basis as opposed to a print-to-stock model?
A: No. We may someday get to the point where we receive an order digitally, print it, and then send it out on a truck the next day. But right now, we aren't set up to do a mini-delivery to one customer out of a microfactory.
We are an enterprise company that partners with architects, designers, builders, and retailers, who then distribute our furnishings to their customers. We are not trying to go direct-to-consumer at this stage. It's not the way a microfactory is set up to distribute goods.
Q: You've mentioned your company's use of recycled materials. Could you talk a little bit about other ways you're looking to reduce waste and help support a circular economy?
A: Yes. Sustainability and a circular economy are really something that you have to plan for. In our case, our plans call for moving toward a distributed digital manufacturing model, where we establish microfactories in various regions around the world to serve customers within a 10-hour driving radius of the factory. That is a pretty large area, so we could cover the United States with just four or five microfactories.
That also means that we can credibly build our recycling network as part of our microfactory setup. As I mentioned, we use recycled polymer stock in our production, so we're keeping that material out of a landfill. And then we tell our enterprise customers that while the furniture they're buying is extremely durable, when they're ready to run a special and offer customers a credit for turning in their used furniture, we'll buy back the material. Buying back that material actually reduces our costs because it's already been composited and created and recaptured. So our microfactory network is well designed for circularity in concert with our enterprise customers.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.