As pandemic concerns resurface, industry professionals sharpen their focus on risk mitigation and supply chain visibility to manage peak-season challenges.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
The supply chain disruptions that have characterized the past year and a half have put a sharp focus on risk management, a theme that was intensifying as the supply chain prepared for peak shipping season over the summer. Pandemic concerns resurfaced with the spread of the Covid-19 delta variant, further straining an already stressed global supply chain and causing experts from all corners of the industry to warn of capacity constraints, bottlenecks, and the challenges of accelerating e-commerce activity.
“I think what everyone is starting to think about is, what is going to be the impact of delta?” Bill Thayer, co-founder and co-CEO of logistics-as-a-service platformFillogic, said in August as companies were gearing up for peak-season shipping activity. “We were already going into a very difficult third and fourth quarter. Delta will just make that worse.”
Logistics technology companies like Fillogic—which helps retailers manage their middle- and last-mile deliveries through its mall-based microdistribution network—are witnessing the problem firsthand, and they report a growing awareness among shippers, carriers, and logistics services providers alike about the need to manage risk in the face of rising disruptions. Leveraging technology investments, rethinking inventory strategies, and getting a better handle on the last mile remain key tasks as supply chain companies head into the busiest season of the year, they say.
PUTTING TECH TO WORK
Mark Stanton, general manager of asset management solutions providerPowerFleet agrees that one of the most worrisome risks heading into peak season is the delta variant and its potential impact on global supply chains. As of late summer, delta had already been blamed for slowdowns in Asia, where outbreaks shuttered operations at factories in China and Vietnam, and temporarily closed a major terminal at China’s Ningbo container port. Although such shutdowns have had varying impacts on global supply chains depending on their location and length, they are a reminder of how supply chain vulnerabilities have been exacerbated since the onset of the coronavirus pandemic.
“There is a huge amount of backlog” in the supply chain, Stanton explains, pointing to the compounded effect of the pandemic on seasonal supply chain stresses such as back-to-school and holiday shipping demand. “Every link in this supply chain … is really being stretched, and has been stretched.”
Technology is one tool that can help address some of those problems, especially by improving visibility across the supply chain.Stanton says companies such asPowerFleet—which provides telemetry solutions for over-the-road vehicles and material handling equipment, including electronic logging devices (ELDs) and asset-tracking and condition-monitoring devices—can help provide some of that insight. PowerFleet’s equipment can be used in the field—on trucks, vans, containers, chassis, and the like—as well as in the warehouse, where it can be used on forklifts, in storage containers, and on other equipment. Data derived from such technology can help companies collaborate and communicate more effectively, improving their ability to react and respond to disruptions. Incremental gains in productivity and efficiency add up as well.
“Anyone in this space is being asked to be more efficient,” Stanton explains, adding that companies have been much more attuned to this need since the pandemic hit and, as a result, are more focused on implementing new technology and using it to its fullest potential. “I think there’s a lot more focus on risk mitigation and trying to plan for the future. And there’s been more emphasis on making sure that whatever the technology platform is, you are getting the most out of it.”
Stanton says customers are asking what more they can do with technology tools and whether or not they can get added value out of the information gleaned from them. As an example, he cites the case of a prospective customer that was looking to improve management of its refrigerated tractor trailers: The customer had recently lost a trailerload of seafood due to delays that resulted in the load’s spoiling before it reached its destination. The loss to the customer was about $177,000, a figure that multiplies when you factor in the ripple effect of that loss through the entire supply chain.
“What did that do to the supply chain when that product didn’t get where it was supposed to be? It’s not just $177,000; it could be hundreds of thousands more, even millions in lost sales because that product didn’t get there,” he notes, adding that greater visibility into the trailer and improved monitoring can help fleet managers avoid such situations—and learn from them. “Customers want to know, ‘How do I manage my risk so that doesn’t happen next time?’ There really is a great deal more emphasis today on the technology that will help them get to where they need to be and beyond.”
Thayer agrees, and points to warehousing capacity constraints and a resulting need for alternative fulfillment strategies. Demand for logistics real estatecontinues to outpace supply, and Fillogic is one company that is benefiting from the trend. As of late summer, its tech-enabled microdistribution hubs were coordinating e-commerce fulfillment and delivery activities for retailers at five locations nationwide, with plans to add another 22 locations by the end of the year.
“Logistics networks are overwhelmed,” placing additional stress on e-commerce fulfillment networks, he explains. “Everyone is looking for an alternative.”
SHIFTING STRATEGIES
Spencer Shute, a consultant with supply chain and procurement consulting firmProxima Group, agrees that there is a growing appreciation for the tools and strategies required to better manage supply chain risk. As one example, Shute says more companies will be focused on switching from a just-in-time inventory model this peak season to a just-in-case or hybrid method that allows them to store more inventory close to where it’s needed. Executing on those tasks will require an innovative mindset, he says.
“That could mean changing the processes that we do today, or it could mean implementing new software,” Shute explains, emphasizing the need to take steps that expand visibility throughout the supply chain. “As we move forward, that’s going to need to be a part of risk management. You need visibility into your supply chain to assess risk.”
You can’t eliminate all risk, Shute adds, but you need to be able to see it in order to deal with it. Companies that have spent the past couple of years investing in tools to improve visibility are in the best position to weather the current storm—especially when it comes to dealing with accelerating e-commerce activity, which is expected to reach record levels again this holiday season.
“If they haven’t been putting in the work to make their networks more e-commerce friendly, [companies] will be behind the eight ball,” Shute warns. “The biggest risk is [around] customer promises and customer expectations; meeting those will be challenging for all shippers.”
Shute says businesses will adapt their shipping strategies to deal with those challenges, moving away from free, fast shipping toward strategies that place more conditions on free shipping—such as spending minimums, early orders, and slower shipping routes.
“Those are things retailers will have to consider,” Shute says. “Retailers are going to start passing more of that cost on to customers—but in more creative ways.”
Robotic technology has been sweeping through warehouses nationwide as companies seek to automate repetitive tasks in a bid to speed operations and free up human labor for other activities. Many of those implementations have been focused on picking tasks, a trend driven largely by the need to fill accelerating e-commerce orders. But as the robotic-picking market matures and e-commerce growth levels off, the robotic revolution is shifting behind the picking lines, with many companies investing in pallet-handling robots as a way to keep efficiency gains coming.
“Earlier in this decade and the previous decade, we [saw] a lot of [material handling] transformation around e-commerce and the handling of goods to order,” explains Josh Kivenko, chief marketing officer and senior vice president at Vecna Robotics, which provides autonomous mobile robots (AMRs) for pallet handling and logistics operations. “Now we’re talking about pallets—moving material in bulk behind that line.”
Kivenko explains that whether items are being packaged and shipped directly to a customer’s home address or moved as finished goods to a shipping bay for store delivery, those items are first moved in bulk in some way, often by human hands and with human-operated equipment. He describes warehouses as chaotic environments in which humans move pallets and cartons in multiple ways—up and down, side to side, from receiving to storage, from storage to shipping, or via cross-docking. Automation can help bring order to that chaos.
“What we’re trying to do is relieve some of the pressure [on the] humans [doing] this work,” Kivenko says of companies that develop pallet-handling robotic technologies. “At the end of the day, we’re trying to automate some of those flows, relieve labor pressure, save costs, and keep the goods flowing.”
But automated pallet handling isn’t right for every situation, so it’s important to understand the warehouse conditions required and the protocols and best practices needed to make it a win. Here are some guidelines for applying pallet-handling robots and gaining the most from your investment.
FIRST, UNDERSTAND THE TECHNOLOGY
Pallet-handling robots fall into four general categories, explains Rich O’Connor, vice president of storage and automation for Raymond West Group, a business unit of lift truck manufacturer The Raymond Corp. They include:
Palletizing/depalletizing robots, which are used to load or unload items onto and off of pallets, usually with the use of a robotic arm for picking and placing. Today, these systems are being increasingly integrated with automated storage and retrieval systems (AS/RS) to further streamline pallet handling in the warehouse, O’Connor explains.
Autonomous guided vehicles (AGVs) and autonomous mobile robots (AMRs), which are used to transport pallets within the warehouse. Often outfitted with lift decks or conveyors, or designed to tug or tow items, these robots move pallets from point A to B within a facility. AGVs, which often follow a marked guide-path or wire in the floor, have been around for many years, but the advent of high-performance guidance and vision systems is allowing them more flexibility today, O’Connor says. AMRs are self-guided vehicles that use software and sensors to navigate their way through the warehouse.
Forklift AGVs and AMRs, which can move products both horizontally, from place to place, and vertically, into and out of storage racks. They come in various styles—including stackers, counterbalanced trucks, reach trucks, and even very narrow aisle (VNA) vehicles for use in densely packed warehouses. These vehicles are more complex than those used only for horizontal transport, O’Connor explains. They must be “highly integrated” into the facility’s warehouse management system (WMS) or warehouse execution system (WES) so that they know precisely where to retrieve and deliver pallets within the facility.
Robotic pallet shuttles, which move pallets into, out of, and within dense storage racking. The Raymond Corp. describes such a system as “a standalone, automated deep-lane pallet storage system that utilizes self-powered shuttle carriages to move pallets toward the back or front in a racking channel. Shuttles are motor driven and travel along rails within a storage lane.”
O’Connor and others say that no matter which of these technologies you’re investing in, it’s important to remember that they are all part of a larger system designed to optimize operations throughout the warehouse.
“The expanding role of all these different styles working together is what’s amazing today,” O’Connor says.
SECOND, ENSURE THE TECHNOLOGY IS A FIT
Kivenko, of Vecna, also emphasizes the importance of pallet-handling robots working in concert, particularly AMRs and AGVs.
“The magic isn’t just that the robots are autonomous and driving by themselves. The magic is multiple robots—when you have a [whole integrated] system [in place],” he says. “[It’s] how the fleet operates autonomously and optimizes itself for continuous improvement. That’s where the exponential gains are. [It’s] not just about automating what a worker does; it’s about automating a system.”
But you can’t install these systems in just any warehouse and expect magic. Kivenko and others point to certain conditions that enable the best robotic pallet-handling outcomes, especially when it comes to transportation-based and forklift-type AMRs and AGVs.
“The robots that I sell are large-load machines with very expensive technology,” Kivenko explains. “They move material, generally, in larger facilities. And in order for them to produce a return [on investment]—because that’s the name of the game here—they have to be higher-velocity facilities.”
He says pallet-handling robots work best in large facilities running multiple shifts, usually more than five days a week. Wider aisles allow the equipment to move more freely through the facility and at higher speeds, to optimize efficiency and productivity. Strong Wi-Fi networks and clean, dry environments also help keep equipment running at top performance.
O’Connor agrees that pallet-handling robots are best suited to facilities with multishift operations, where they can ease labor constraints and boost productivity. And he says many customers are willing to extend the typical two- to three-year ROI period to five years in order to achieve those gains. But there is even more to it than that. O’Connor’s colleague John Rosenberger says customers must first step back and analyze their processes to ensure that, even if they have the right facility for pallet-handling AMRs or AGVs, they are moving material in the most efficient way to begin with.
“Many times, we find that the processes in place [are inefficient],” says Rosenberger, who is director of iWarehouse Gateway and global telematics for The Raymond Corp. He emphasizes the importance of analyzing existing data—from an equipment telematics system or similar—to determine the best path toward automation.
“Do you have congestion zones now?” he asks. “They’ll still exist if you automate [those processes exactly].”
THIRD, MAKE SIMPLICITY A PRIORITY
Another basic rule of thumb when implementing pallet-handling robotics: Keep it simple.
Andy Lockhart, director of strategic engagement for global warehouse and logistics process automation company Vanderlande, says that when designing a pallet-handling robotics system, “you want to minimize the processes you [automate]. When you can create [an automated system] that focuses on one task—for example, AMRs delivering pallets from a high-bay [storage rack] directly to the palletizing cell—you can do that efficiently and effectively. When you ask the AMR to do this and this and this … you are adding risk of failure.”
Lockhart’s colleague Jake Heldenberg advises customers to first test their target processes via pilot programs within the warehouse or DC. Heldenberg is Vanderlande’s head of solution design, warehousing, North America.
“If AGVs or AMRs for pallet handling are interesting [to a customer], the best thing to do is pilot one or two in an existing DC,” he says, explaining that the process can help companies troubleshoot, understand integration timelines, and gauge ROI. But pilot programs can add expense to a project, making it unaffordable for some.
“If that’s the case, then the best advice is work with a vendor who has experience integrating [the technology],” Heldenberg says. “Use their experience to benefit your business. You won’t have the same hiccups and challenges you would with a less-experienced vendor.”
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
While many companies are launching artificial intelligence (AI) products for use as generic “co-pilots” or consumer-focused gadgets, the Swedish enterprise resource planning (ERP) software vendor IFS says its “Industrial AI” version supports industry-specific processes in “hardcore” sectors based on assets such as power grids, cell phone networks, aircraft maintenance, elevator operation, and construction management.
“Industrial AI is at the very core the solutions we are powering for customers. They are pushing us for ready-to-use AI that they can adopt quickly to solve real industrial challenges like labor shortages, supply chain disruption, [and] stagnated productivity," IFS's Chief Customer Officer, Cathie Hall, said in a release.
In presentations at its user conference in Orlando today, known as "IFS Unleashed," the company said that its latest IFS Cloud 24R2 release supports more than 60 in-depth Industrial AI scenarios. They span generative AI examples like: content generation for training and reports; recommendations for sourcing and suppliers; and contextual knowledge for assembly instruction. The tools also include predictive AI applications like event forecasting; optimization of resources and capacity; and anomaly detection for proactive quality control.
In remarks from the keynote stage, new IFS CEO Mark Moffat—who was appointed to the top office in January—said the company may be less well known than ERP vendors such as SAP, IBM, Oracle, and Infor, but it benefits from a tighter focus on its core users. Instead of selling software across dozens of industries, IFS serves just six industries: aerospace and defense, construction and engineering, energy and utilities, manufacturing, service, and telecommunications.
Thanks to that tight approach, he said the company has earned top Gartner rankings for its software products in field service management (FSM), enterprise asset management (EAM), enterprise resource planning (ERP), and enterprise service management (ESM). And to compound that advantage, Moffat said IFS continues to grow swiftly through acquisition, having bought up a handful of companies in recent months: Assyst, Ultimo, Boka, empowermx, Bolo, Tobin, Merrick, and Copperleaf.
“You need an AI business plan” Moffat told the room. “If you have an AI business plan, that’s terrific, but you can improve it. This area is just moving so fast.”
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”