The evolution of warehouse management and the future of supply

The dynamic environment of the logistics sector constantly generates new demands on delivery times and the quality of deliveries. In addition, the continuous pressure of the market and customers on the price of the services provided and their scope force companies to innovate established processes. Ensuring sufficient fluidity and reliability of their own supply processes is therefore necessary for companies to be able to react more flexibly to internal and, above all, external influences.

The average number of orders picked manually can range between 60 and 80 picks per hour. When new technologies are deployed in the warehouse, the average number of picks increases to up to 300 picks per hour. In addition to the limitations that manual picking brings with it, surveys also point to the cost of this activity. Manual picking can in some cases represent up to 55% of the total operating costs of a warehouse. Given these circumstances, new technologies such as the Internet of Things (IoT), artificial intelligence (AI), and big data (Big Data) together with Smart Industry systems and solutions are increasingly becoming part of companies' digitalization strategies.

Distribution and transportation companies, as well as manufacturing companies, achieve a significant increase in performance, optimization of operating costs, and at the same time an increase in the quality of their services and products by automating warehouse management. Currently, there is a growing trend in warehouse robotization, which, however, represents only one area of ​​a wide range of automation possibilities.

"Robots are primarily used where routine work is performed. Until now, automation has focused almost exclusively on manual work, but in the near future we can expect the deployment of new technologies that will be oriented towards the automation of activities, regardless of whether it is manual or knowledge-based work," says Peter Bílik, Smart Industry solution designer at ANASOFT.

Robotization in European companies by use (the highest level of robotization for warehouse management systems WMS) (source: Eurostat)

Digital logistics

The digitization and automation of supply and delivery processes usually takes place in stages, i.e. evolutionary. The automation of logistics processes can be gradually scaled thanks to modern Smart Industry solutions and systems that are modular and easily integrated with other business systems and devices.

A distribution or transport company or a company doing business in e-Commerce optimizing internal logistics or warehouse processes can thus directly respond to their current needs or priorities in a specific part of the supply chain. It is the modularity and integrability of Smart Industry systems that gives companies the opportunity to deploy personalized solutions and automate processes that they consider key or critical for their business.

One of the first steps in the digitization of logistics processes is usually the deployment of solutions for data collection and data flow automation. The survey found that the average accuracy of inventory records in retail is 63%.

“When deploying Smart Industry systems, employees can track the movement of material into and out of the warehouse in real time and have immediate access to accurate inventory counts and product turnover. In addition, data flow automation in the case of inventory or warehouse management enables automatic generation of receipts for storage and delivery notes for removal and shipping, as well as automatic depreciation in the company’s ERP system,” explains Peter Bílik.

In addition, correct and accurate data is essential for successful horizontal and vertical integration of logistics processes, which represent the next step in the process of automating supply and material flows.

Survey of technologies in which companies invest the most (63.2% warehouse automation and warehouse management, 54% predictive analytics, 35.5% Internet of Things) (source: EyeForTransport)

Intelligent transformation

It is precisely the complicated access to information, such as records of goods consumption rates, complaints, returns or shelf life, that is among the most common reasons for the digitalization of warehouse processes and warehouse management. As in logistics, warehouse automation is an evolutionary process that begins with the transformation of an uncontrolled warehouse into a controlled warehouse.

In a controlled warehouse, warehouse workers already communicate directly with the controlling Smart Industry system via terminals or mobile devices. All material and goods moving in and out of the warehouse are marked with barcodes or RFID chips to ensure their identifiability. The Smart Industry system thus monitors the flow of material in real time, and all movements are also archived and traceable at any time.

In addition to data collection and analysis of turnover, seasonality or other parameters, the transformation to a managed warehouse also involves standardizing the rules for storing and retrieving goods. Standardizing warehouse procedures allows the Smart Industry system to effectively and optimally manage the filling of warehouse positions as well as prioritize individual tasks and operations for service personnel and warehouse workers.

“When implementing the Smart Industry intelligent picking and dispatch solution with the EMANS solution, we automated the data flow in the distribution company so that they no longer needed two people who laboriously copied at least 600 delivery notes into the accounting software every day. This allowed the company to use its employees for more creative work,” states P. Bílik.

 

Logistics in Industry 4.0 (source: Unity)

A revolution in the warehouse

The use of RFID technologies in warehouses, together with, for example, Pick-to-Light or Pick-to-Voice systems, results in an increase in the quality of picking by up to 67% compared to the traditional method using pen and paper. Also, walking around the warehouse and manually picking goods or orders can account for up to 50% of the picking time of warehouse workers. Such inefficiency can be solved by using the interconnectivity (connectivity) of all objects in the warehouse via the Internet of Things (IoT).

During warehouse operations, goods no longer move according to a static rule, but algorithms with artificial intelligence elements can evaluate the current situation and position of transport equipment and operators, assess the priority of customer orders and necessary warehouse operations, and then dynamically manage the entire process based on them. The relevant algorithms can also incorporate another set of defined criteria when managing processes, such as optimal utilization of warehouse positions, the impact of turnover or seasonality.

All relevant data is evaluated with regard to current conditions and the previous development of the relevant indicators, which results in dynamic management of storage and retrieval as well as supply (inventory management) and warehouse processes (warehouse management).

“Smart Industry systems can increase productivity and quality of picking and at the same time minimize negative factors such as waste by double digits. "In a project to optimize and automate the warehouse management of a retail and distribution company with small and high-volume goods, our EMANS solution managed to increase warehouse performance by 32%, eliminate unproductive warehouse activities, and thus increase the volume of shipped orders by up to 28%, while also reducing incorrectly picked orders by 67%," describes Peter Bílik.

 

The Future of Warehouse Technology 2017 and 2023 (source: MHI Annual Industry Report 2017)

Autonomous Warehouses of the Near Future

Elimination of human intervention in processes represents the highest form of automation of warehouse management. Given the more intensive robotization of warehouses, which is manifested in the more numerous deployment of autonomously guided vehicles (AGV), there will also be an increased deployment of robots for picking processes.

The number and importance of drones in warehouses will also increase. Autonomously guided devices will gradually replace intelligently guided devices (IGV), which herald the next stage of digitalization, when there will be an even closer and more organic connection of information technologies (IT), including artificial intelligence (AI) technologies, with operational technologies (OT).

Fleets of devices and robots will no longer only move autonomously in space, but thanks to multi-agent systems (collective intelligence) and digital twin technology, they will also independently fulfill the requirements for material transportation and cooperate with each other. The Smart Industry system platform will in this case provide the infrastructure for the interaction of individual devices in a distributed system of an autonomous unmanned warehouse.

The interoperability of devices, information systems, data and material, together with the artificial intelligence of modern Smart Industry systems, opens up possibilities for autonomous reconfiguration, i.e. the independent ability to adapt processes to internal and external stimuli.

It is precisely the property of self-organization that will become key for the digital warehouse ecosystem, as it will enable not only the automation of warehouse processes, but their overall autonomization.

Degree of automation in warehouse processes (Source: GS1)

The article was originally published in the magazine Transport a Logistika, issue 6/2019.