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Dwight Klappich is research vice president at Gartner and a Gartner Fellow in Gartner's Logistics and Customer Fulfillment team. His research focuses on the strategic role logistics plays in leading-edge SCM organizations and how SCM leaders' technology strategies and tactics are differentiated from their peers. Klappich is a recognized authority on logistics technologies notably warehouse and transportation management systems. His primary focus is on the role that technology plays in transforming logistics operations. He works with brand owners, vendors of logistics technologies and the IT-related issues with supply chain outsourcing to 3PLs. His focus on outsourcing is on how technology supports, enables, and transforms the shipper/3PL relationship.
Klappich also studies the challenges of managing a federated supply chain, where SCM organizations need to manage multi-enterprise business processes where numerous parties participate in an end-to-end business process. His research finds that, in the majority of global logistics operations, some processes continue to reside within the enterprise and others are increasingly outsourced to third parties, and these organizations are struggling to develop an architecture that allows all parties to collaborate effectively across an extended, federated, supply chain. His research has identified two promising and intersecting models - supply chain execution convergence and multi-enterprise business process platforms - that are emerging to address the needs of global logistics. He believes that the intersection of these models will help address the need to synchronize end-to-end processes across multiple enterprises.
Klappich joined Gartner in April 2005 with the acquisition of Meta Group, where he spent five years as a research vice president leading supply chain management coverage. His focus was on enterprise business applications, with an emphasis on supply chain management. His application research covered warehouse management, global trade management, transportation management demand fulfillment, and supply chain planning. Before Meta Group, Klappich was vice president of manufacturing marketing for Ross Systems and director of marketing for LPA Software (renamed Xelus and subsequently acquired by ClickCommerce and later Servigistics). Previously, he held positions with supply chain management vendors Manugistics (supply chain planning and transportation) and Distribution Management Systems (warehouse and fulfillment management).
Klappich has 32 years of experience in the IT Industry, including more than 10 years with Gartner and 30 years of SCM process automation and supporting technologies experience.
David Maloney, Editorial Director, DC Velocity 00:01
The future impact of warehouse robotics. Taking stock of tech investments. And new research reveals last-mile delivery trends.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Beckhoff. Have the entire digital fufillment center at your fingertips with automation by Beckhoff. It's digital transformation done right. For more information, please visit Beckhoff.com/intralogistics.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week. But to begin today: Robots continue to take over many of the repetitive and mundane jobs in our distribution centers, and new research shows that many facilities will eventually have multiple types of robots from different vendors working harmoniously together. To find out more about that research and some future predictions, here is Ben with today's guest. Ben.
Ben Ames, Senior News Editor, DC Velocity 01:17
Thanks, Dave. As we head into the new year, we've recently seen the annual supply chain technology predictions from Gartner, the big analyst firm, and one of those that caught our eye concerned warehouse robotics, which of course have gotten a ton of attention in recent years and are spreading fast, but still can be found in just a small percentage of the total DCs out there. Still, robotics have a growing importance for helping logistics operations cope with big challenges of the day, like, of course, the e-commerce boom and later labor shortages and a push for next-day delivery. So here with us today to discuss the future of robotics in the warehouse we have Dwight Klappich. Dwight is the research vice president and Gartner Fellow in Gartner's logistics and customer fulfillment team. Welcome, Dwight.
Dwight Klappich, Research Vice President, Gartner 02:07
Great. Thanks, Ben. Appreciate it.
Ben Ames, Senior News Editor, DC Velocity 02:08
Oh, yeah. It's great to have you here. I know you've been in the business a long time, so I look forward to the conversation. Part of your research from your latest report here looks at the trend that robots today are designed to support a fairly narrow set of missions — maybe delivering goods to person, or moving a heavy load, or even unloading trucks — but you say that companies are really expanding their use of robots, so they'll soon have fleets of mixed robots from different vendors performing a variety of tasks. Is that right?
Dwight Klappich, Research Vice President, Gartner 02:42
Correct. Yeah, I mean, what our research finds, a study we did Q4 of last year, we asked supply chain professionals what their plans were for supply chain technologies. One of the areas we explored was robotics. What was very interesting to us was 97% of the response — about 500 respondents, cross geography, cross size company, cross industry — said that they either were or they planned to invest in cyber physical automation. Now, cyber physical automation, to us, covers broader areas. It can be into what we'll call conventional automation, like conveyor and other things, but about half of the companies said that they were either investing or planning to invest in robots — specifically in robots. So, what are your plans for the future? 94% of those companies said that they plan to explore other use cases. So, the good news is they were getting the benefits they expected. They're actually finally exceeded their ROI, which is all great news. So, one area, they were going to expand the fleets that they had — so if I had 10 locusts, robots I'm going to go to 25, 50, 100, whatever — but also, they're saying, "Hey, we're looking at our operation. What are other things that we could could automate?" Now you raise a great point, and the challenge is that robots are really designed to solve a particular problem. You got a picking robots, you've got a heavy-payload transport robot, collaborative picking robots, on and on, and if you just really look at it, the technology that's there is quite different, and it's just not as kind of flexible as humans, to the point that we're tracking 34 different subcategories of robots. And then we kind of lump that all together. We kind of coined the phrase "Intralogistics smart robots" to say, okay, you know, like the automotive industry, people don't buy the automotive industry, they buy SUVs and pickup trucks or sports cars. Same thing here. You know, I'm not going to try to haul 10,000 pounds of dirt in a two-seat sports car. And the same thing is true the robots.
Ben Ames, Senior News Editor, DC Velocity 05:00
Got it, 34 kinds. So, why is this trend happening. Is it sort of just a way to use specialist robots to play to their strengths, like having different instruments or musicians in an orchestra, or are, like, the workflows within the DC getting more complex, or what's driving the move here?
Dwight Klappich, Research Vice President, Gartner 05:21
Great. Great. And I love the orchestra analogy. As you know, I'm a musician, but I think that is absolutely an apt analogy is, you look at a symphony orchestra, each of the instruments has role. I mean, I play the trombone, and, you know, we're great at playing loud in a Mahler symphony. Well, the piccolo is something different. The bass is something different, and they they're, they're really optimized for the thing, the role that they play. Trombone is never going to be able to play the same part of the piccolo. Just think back to Peter and the Wolf, right, you know, it's like, you know, you had the duck and the wolf and it's the same thing, and it really, it gets down to, in many cases, the mechanics. You know, what it takes even within say, just a picking robot, a single kind of picking robot, imagine how different it would be to have a picking robot pick up a carton of eggs, a T-shirt, and a 30-pound kettlebell. Now humans can adapt. This is where humans, we're finding out, are incredibly adaptable. But designing a robot that can pick up all three of those is very difficult. So what people do is they'll say, "Hey, I'm picking T-shirts, and I can just use a simple vacuum lift, and I'm Kindred, or RightHand, you know, I'll use it for picking T-shirts. I have to pick up the kettlebell, I'll do something else. I even had a customer come to me and ask, "Hey, Dwight, are there any robots that can pick up kayaks, canoes, skis, ski poles?" And I said no. You know, we're not there. So, the key is they're really designed to solve specific problems and then, you know, how do I get them all to work together? That's the next challenge.
Ben Ames, Senior News Editor, DC Velocity 07:10
Yeah, so I mean, you mentioned you know, 34 is an enormous number of sort of different varieties of robots. But how complex do you think it'll get in the warehouse? In other words, you know, should we expect if we visit a DC five years from now, instead of seeing like just one type of AMR maybe, is it going to be two or five or six? Probably not all 34 in a single facility?
Dwight Klappich, Research Vice President, Gartner 07:33
No, no. I mean, we track. Primarily six is where most of the interest is. So that's, you know, transport robots, of which there's lots of different kinds of, you know, they just move stuff around. There's collaborative picking, goods-to-person systems, sortation robots, picking robots, what we call engineered robotic systems, you know, or like an AutoStore or something like that, where it's not just one robot, and then there's things like exoskeletons, and there's yard vehicles, and so those are a lot of those 34. But someone had a call with a customer that, you know, they're having probably a lot of injuries with people lifting up truck tires, you know, these big truck tires, tractor tires. Okay, they're looking at exoskeletons. Very, very narrow use case. But in those six, yeah, our research finds that, you know, the majority of large companies will have heterogeneous fleets of robots over the next decade. Now how many? I mean, you look at the industries that the companies are the furthest along, these are some of the key 3PLs., certainly Amazon — everybody talks about Amazon — but automotive. Yeah, yeah. You're probably talking companies having half dozen different robots doing different things. Hey, I'm moving full pallet loads coming off the back of trucks, hey, that'd be one robot. I've got a picking robot, I've got something else. So yeah, our anticipation is that not 100%, you know, but certainly a good solid majority, our research [indicates] about 52% will probably have heterogeneous fleets over the next five years.
Ben Ames, Senior News Editor, DC Velocity 09:16
Really interesting. It sounds like it'll be cool. We'll have to get out from behind our desks and do some more field visits to see that in real life. But how does — you mentioned they have to work together, of course. So, you know, how does the DC control those, you know, four or five or six robots all at once? I saw part of your prediction was that by 2026, about three years from now, that more than half of companies will have deployed — who do deploy those intralogistics robots — will have what you call a "multiagent orchestration platform." What the heck is that?
Dwight Klappich, Research Vice President, Gartner 09:51
It's interesting, because you used the concept of an orchestra. You can almost think of this as being the score and the individual parts and the conductor, you know. That's the role that this takes on. I mean, each of the instruments has its own part, but each of those parts has to fit together into the context of the overall score, and then the conductor really becomes the one that's directing how fast, how slow, you know, when do you come in? When do you stop? And that's what the multiagent orchestration [is]. It's interesting, we kind of coined that term. I didn't think about that before, but I'm probably going to use that now as an example. They — basically what a multiagent orchestration platform does, two primary things. One, it integrates, and it facilitates the integration with that heterogeneous fleet. Now, there are some companies that, you know, are saying that there will be a universal fleet manager that all robot companies adopt. I think that's unrealistic, again, going back to the fact that these are very specialized systems in many cases. You know, so the question is, okay, how do I integrate my ERP or my WMS, or my MES to the robots that I need to talk to? Now, we say "multiagent" because we originally called it multirobot until we realized that some of the things that we have to coordinate are not just robots. So, for example, one of our clients has a mezzanine, and I believe they're using Locus to do kind of collaborative picking on the mezzanine. The mezzanine's a second level, packing's in the first level. Well, somehow I have to get the robot from the second level to the first level. It goes on an elevator, well, it's not like it is a finger to push the button on the elevator, so now they also have to coordinate with the elevator — send a message to the elevator control system, say "Send me an elevator, tell me when you get here," get on the robot, it closes the door. Could be we're seeing robots used instead of power conveyor. "Hey, when I dock with the conveyor, turn the conveyor on when I get there," and then total roll off. So, that's the orchestration platform. So it facilitates the integration between these and makes it very easy and flexible, because we think customers don't want a three-month integration effort when they can get the robot within a couple days. But then it also starts to take on some of that orchestration work: How do I assign work? Who gets what? Now, the robot platform provider — Locus, 6 River, Fetch, Seegrid, Vecna — you know, they're going to control their specific fleet of orchestra, so, this is the trombone section, now, you know, they do their thing, but then the next layer up is going to say, "Okay, you know, hey, we need to coordinate some activities between different things." So it takes on some of that orchestration. Now, it's fairly nascent, but it's growing rapidly. You have vendors like SVT Robotics, you have GreyOrange, with their GreyMatter software. You have, you know, AWS announced some[thing] called RoboRunner, which takes some of the stuff they've learned and doing their stuff, and then the Open Robotics group that created the ROS operating system, is doing kind of a proof of concept, building something like this out. And the other thing we're finding is, it needs to be bidirectional communication. So like the the Open Robotics foundation, you know, they're working with a hospital, well, they needed some mechanism that if a fire alarm went off, it could send a message to all robots, "Get out of the way. The humans need to ..." you know, "Clear the aisle so that the humans can get away." So that's what this multiagent orchestration platform takes takes on. So it's growing rapidly.
Ben Ames, Senior News Editor, DC Velocity 13:55
Yeah. Really interesting. It's going to be cool to see that play out, and it was fun to get a look at what might be coming down the pike here. Really, thank you so much for spending some time with us.
Dwight Klappich, Research Vice President, Gartner 14:06
Well, thanks, man. I appreciate the opportunity.
Ben Ames, Senior News Editor, DC Velocity 14:10
Our guest here today has been Dwight Klappich from Gartner. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 14:15
Thank you, Dwight and Ben. Now let's take a look at some of the other supply chain news from the week, and Victoria, you were in Atlanta this week for the SMC3 Jumpstart event, where you also moderated a panel in addition to covering the show for DC Velocity. What were some of the main themes being discussed at the conference?
Victoria Kickham, Senior Editor, DC Velocity 14:33
Yeah, that's right, I was in Atlanta this week, and it was great. There was a lot going on, quite a bit. Just to explain to our audience first, though, SMC3 Jumpstart is an annual supply chain event that brings together carriers, shippers, logistic service providers, and technology companies in the less-than-truckload, or LTL, freight market. This year, this past week, more than 600 people turned out for the event. The conference planners tell me that's a record, so there was a ton of interest and excitement and quite a few things bubbled to the top. The event is a mix of presentations, educational workshops, and networking, and it really tries to give attendees a look at what's happening in freight and logistics, and LTL especially, and really tries to show the industry what may be ahead, give a look at trends and issues to focus on. Two of the themes this week, to answer your question, were the economy, of course — that's on everyone's mind — and technology. Basically, we're in a weakened freight environment that began last year, and most of the presenters at the conference agreed that these conditions will persist through the first half of this year. They also said the industry will be weighed down by uncertain macroeconomic conditions that may further dampen the U.S. and global economies. One presenter, Bob Costello, who's chief economist for the American Trucking Associations, said at one point that the U.S. economy may indeed be headed toward a recession later this year, but that he expects it to be short and mild. And because freight markets are already down — we've seen and reported here that demand has waned recently, capacity is loosened, and prices are down — he and other panelists said the industry — excuse me — will likely be among the first to recover, so that's the good news. Some business leaders said freight conditions may actually improve in the second half of this year, when inventories are depleted and need to be replenished. But, I should say, many of the economists and business leaders in attendance, said the slower pace of industry conditions really represents a sort of settling back from the rapid growth logistics experienced from about mid-2020 through mid-last year, when the pandemic was in high gear. We talked about that last week on the podcast in reference to a trucking industry outlook report, so that may sound familiar to our listeners. So essentially, conditions are weaker, for sure, but it's not a drastic decline.
David Maloney, Editorial Director, DC Velocity 16:52
Victoria, you also mentioned there was an emphasis in technology at the conference. What were some of the key issues around the tech sector?
Victoria Kickham, Senior Editor, DC Velocity 16:59
Yes, that's right. So, a couple of things stuck out to me. Renee Krug, who is CEO of the supply chain software company TransFlo, and she was a speaker, a featured speaker on the first day of the conference, she pointed out that a slower year for the industry is really a kind of an opportunity to take stock of your business and make plans and investments that can position you well for when things get busier, and of course, technology is a big part of that. She emphasized investing in both back-office automation and customer-facing technologies that can help businesses scale for growth, and she pointed to a number of examples, but a few that stuck out were, actually, recent logistics investments by large retailers: Amazon, Walmart, and Best Buy. She noted that Amazon and Walmart have been testing drone delivery in certain U.S. markets, with with some success, and that Best Buy has invested really heavily in e-commerce capabilities, turning their stores into mini fulfillment centers to meet demand for both delivery and local pickup. That's been happening for a while, and I think most of us who have a Best Buy near us have seen that as well. So, she said trucking and logistics businesses should likewise examine their own operations for ways to improve and prepare for growth, and it could even go beyond technology and include simple steps like examining your business processes to find out, you know, if you're doing things that you don't need to be doing, or if you could find a better way to do certain things in your company. There are really many ways to address this. And she wrapped up essentially by saying that, you know, 2023 will be a quieter year and a chance to get a lot done.
David Maloney, Editorial Director, DC Velocity 18:36
Right. Well, I think it's smart to take advantage of some of the slower periods to test out what will work and would not work when things get more hectic in future to come. Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 18:46
David Maloney, Editorial Director, DC Velocity 18:48
And Ben, you wrote this week about new research into last-mile delivery trends. Can you share what that research revealed?
Ben Ames, Senior News Editor, DC Velocity 18:54
Yeah, glad to. So, this was also about trucking, as Victoria was just talking about, but I was looking at, as you said, last-mile, as opposed to LTL middle mile. So, this was about, you know, we've just made it through the winter peak and to buy all those holiday presents, of course, a lot of us were relying on that last-mile delivery for our e-commerce gifts. So, we saw though, to what lengths retailers have to go to sustain that. It was a report that came from FarEye. They're a logistics tech startup in Chicago. that makes a software-as-a-service–based delivery-management software platform for those kinds of deliveries. So FarEye found that the last-mile delivery process, since 2020, has grown more complex, expensive, inefficient, and really unsustainable. So retailers and logistics providers are feeling the pain of those trends, and to reduce some of the growing costs of last-mile delivery, FarEye's survey found that 57% of retailers have outsourced their delivery networks in the past five years — so, a little more than half. And that works to hold down the cost, but there's a trade off, because 84% of those folks say that their organization needs more control over the delivery network now. So basically, they lose some visibility when they outsource the delivery process.
David Maloney, Editorial Director, DC Velocity 20:24
Yeah, but it must be worth doing if they're going to incur that cost. So did the report find out exactly how expensive last-mile delivery is getting?
Ben Ames, Senior News Editor, DC Velocity 20:33
Well, this report didn't include specific dollar amounts, but it did find that last-mile delivery accounted for 53% of overall shipping costs. So, you know, just on a mileage basis, of course, that's incredibly expensive just for the last mile, as opposed to all the long distance for the for the lane haul routes in between. The reason for those high costs are driven primarily by fuel, of course, but then address location, labor, and first-delivery failure. So, sometimes you got to circle around again. Despite all those costs, you know, there are still challenges with the process, because retailers are pushing to go faster and faster, this sort of sort of Amazon effect that we've all been conditioned to expect our stuff, you know, same day or next day. So today, only 44%, a little under half of retailers, said that all, or almost all, of their deliveries are made on time. But they're pushing to get faster, so 35% of retailers in the survey offer that same- or next-day service now, but 64% aimed offer it by 2027. So that, in other words, will nearly double in the coming four years. But there may be some hope for a solution. Stephane Gagne, who's vice president for product with FarEye, said that instead of speed, retailers should consider improving the reliability of their orders. So Gagne said that they could use artificial intelligence and machine-learning technology to help route orders more accurately and efficiently, and also to ensure that carrier allocation and capacity levels match the demand. Now, of course, that's the product that FarEye offers, so they have an interest in saying that, but it makes sense. I mean, there must be limits to how fast and how cheap last-mile delivery can get, and, you know, this kind of approach might help to stretch those limits.
David Maloney, Editorial Director, DC Velocity 22:29
Yeah, well, I agree. I think if given the choice, most shippers and consumers would probably rather take dependable and reliable over speed, but I guess that depends on the consumer.
Ben Ames, Senior News Editor, DC Velocity 22:40
Yeah, we'll find out, but yeah, that makes sense to me too.
David Maloney, Editorial Director, DC Velocity 22:42
Ben Ames, Senior News Editor, DC Velocity 22:43
David Maloney, Editorial Director, DC Velocity 22:45
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. And check out the podcast Notes section for some direct links on the topics that we discussed today.
And again, our thanks to Dwight Klappich of Gartner for being our guest. We welcome your comments on this topic and our other stories. You could email us at email@example.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded on Fridays.
And speaking of subscribing, check out our sister podcast series. It's called Supply Chain in the Fast Lane. It's coproduced by the Council of Supply Chain Management Professionals and Supply Chain Quarterly. Subscribe wherever you get your podcasts.
And a reminder that Logistics Matters is sponsored by Beckoff. Have the entire digital fulfillment center at your fingertips with automation by Beckoff. It's digital transformation done right. For more information, please visit Beckhoff.com/intralogistics.
We'll be back again next week with another edition of Logistics Matters, and we'll talk to one man who finds supply chain labor in a very unique way. Be sure to join us. Until then, have a great week.
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