Disruption is the new normal – How automation builds business resilience

Disruption is the new normal – How automation builds business resilience

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We are constantly being reminded that we are living through one of the greatest periods of disruption in history. Working and shopping patterns have changed, and supply chain disruptions affecting on-shelf availability and lead times have practically become commonplace throughout the pandemic.  In Southeast Asia, the recent eCommerce boom has seen an influx of 70 million new online shoppers since the pandemic, contributing to a total increase of USD $266 billion in online sales.  As a result, supply chains have been underpinned to cater for a new era of overflowing demand and ongoing disruption.

The fact that these unexpected supply chain interruptions occurred during a period of wider disruption for businesses has underlined that the pandemic isn’t the only unforeseen challenge or crisis impacting supply chains. Those organisations that view the current period of challenging operating conditions as being temporary, are being overly optimistic, if not unrealistic. What is far more likely is that disruptions are the now the norm, not the exception, whether it be from a new variant of a global virus, natural disasters, or geopolitical or economic events.

So, how can companies and their supply chain organisations manage their businesses under such challenging operating conditions? And how can they utilise new technologies to build resilience and agility into their supply chains to meet customer and business demands?

Technology solutions for the new normal

The current pandemic has shown that businesses who have invested in automation are more resilient to unforeseen disruptions. Automation has enabled these businesses to maintain and manage operations during difficult circumstances, and deliver customer orders with limited staff, whilst also facilitating social distancing. Automation has also equipped these businesses with the capacity, flexibility, and responsiveness to handle spikes in order volumes and changes to order profiles, such as an influx of online orders.

Of these pioneering retailers choosing to automate operations, many stated that their highly automated order fulfilment system ideally positioned them to maintain high customer service levels, with rapid, error-free order fulfilment, as online orders spiked at the start of the pandemic. This has allowed these retailers to gain not only a greater market share, but also customer loyalty, providing them with a stronger foundation for future growth. Likewise, other large retailers with both automated distribution centres and manual warehouses in their extensive supply chain network reported significantly lower operational disruptions in their automated DCs compared to their manual warehouses. This allowed them to effectively maintain store replenishment activities and avoid undue stockouts from their automated operations.

These stark experiences have underlined that businesses need to consider automation technology throughout their end-to-end supply chains to ensure they have the right capacity and flexibility to navigate unexpected events and manage periods of disruption as best as possible. Even before the pandemic, grocers and food and beverage manufacturers in Asia were struggling to achieve sustainable and profitable order fulfilment in an industry with notoriously tight profit margins. Now, with unprecedented pressures on global supply chains, this task has been made even more difficult.

Intelligent Software: The Foundation for Resilience and Agility

Logistics software integrated across sites can also provide a holistic, end-to-end view of an entire supply chain. Retailers, as well as manufacturers, can utilise connected data, smart algorithms, and data-driven intelligence and decision support tools to optimise operations and make more effective decisions based on a wide variety of factors including consumer behaviours — such as panic buying — to determine inventory needs, address major peaks in demand, and manage unexpected supply chain interruptions.

Hedging against the unexpected  

Given the ongoing global supply chain issues, many manufacturers and retailers are looking to increase inventory levels as a hedge against future disruption. However, this is leading to entirely new challenges with the shortage of commercial warehouse and industrial space in key fulfilment areas. Even pre-pandemic, warehouse and land space in Southeast Asia was extremely limited. This shortage of readily available facilities is leading many retailers and logistics companies to rethink their approach to commercial warehouse space.

In this environment, businesses are increasingly investing in solutions like Automated Storage and Retrieval Systems for pallets and Multishuttle systems for cartons, cases, and totes to maximise storage capacity in a smaller footprint, while providing them with secure inventory management, improved traceability, and increased productivity.

These space savings allow for the better utilisation of existing facilities beyond warehousing, and some customers have used this newly created space to expand manufacturing capacity or to free up space for other value-adding tasks such as kitting or custom build areas.

Managing staff shortages

Finding and retaining labour is a key issue facing many supply chain operations today. Indeed, the need to attract and retain staff is creating real business pressures due to a shrinking pool to hire from, as well as rising staff costs.

Automated systems can help reduce a business’ reliance on manual labour, while also enhancing health and safety protocols for workers in the warehouse. Innovations such as Automated Guided Vehicles, for example, provide fully automated unit transport between subsystems, as well as automated storage for block stacking and rack storage.

Moreover, Automated Storage and Retrieval systems (AS/RS), such as the Dematic Multishuttle, work to not only expand storage capacity but reduce a reliance on labour. As the storage engines for goods-to-person systems – where product cases or items are delivered automatically to pickers at ergonomically optimised high-rate pick stations – these work to optimise fulfilment operations, and to streamline efficiency levels with accelerated order responsiveness, be it for single item or case picking. With productivity gains of up to 500% over manual systems, goods-to-person systems significantly reduce the reliance on labour, and as stations are physically separated, they also support social distancing protocols for operators.

Likewise, because all these automated systems are separated from employee working areas, workplace accidents are far less likely to occur. Automation enables businesses to continue operations during a period of massive disruption where labour is scarce or worker density limits are enforced, while maintaining employee safety protocols.

Optimising the ‘last mile’ of eCommerce fulfilment

With the ever-increasing growth in online orders and a downturn in business for physical stores, many retailers and even some food producers are now adopting micro-fulfilment solutions to implement online order fulfilment operations close to customers, addressing the challenge of last-mile deliveries.

In markets such as the grocery sector, for example, which has forever been a stronghold for in-store only commerce – the influence of the pandemic saw an unprecedented increase of consumers shopping online for their groceries. Now, after being comfortable with the process and convenience of online grocery shopping, more consumers are likely to keep doing so beyond the pandemic.  With these prevalent changes to consumer shopping habits in the grocery market, it is expected that they will have a long-lasting impact – with many consumers unlikely to change their pattern of behaviour as they are already very in sync with the process of online shopping.  Online retailers recognise the ongoing repeat orders they receive from new customers once they have ordered 4 or 5 times, however, supporting this requires a distribution network that can reliably deliver on-time and in-full.

While these extra online shoppers cause added pressure on supply chains and fulfilment operations, there are innovative technological solutions available to address them. For example, micro-fulfilment solutions comprised of highly compact Multishuttle goods-to-person systems tailored for eCommerce order fulfilment can be installed either in the back of existing store locations, in nearby distribution centres, or even in dedicated online fulfilment ‘dark stores’ to serve nearby consumers. Micro-fulfilment solutions are highly flexible and can serve or complement in-store fulfilment, click-and-collect, and support other stores nearby – making them ideal for hybrid or omnichannel sales.

Automation is the future

Now, more than ever, retail, wholesale, and manufacturing businesses should be evaluating automation technology and software to provide their supply chains with the flexibility to be able to adapt quicker and more proactively to changes in the market, ensuring long-term resilience and agility to any anticipated and unanticipated disruptions – and there’s never been a better time than now to start this transition into future-proof business operations.

By Michael Bradshaw, Director, Southeast Asia, Dematic

For more information on how your business can improve its supply chain resilience, please visit: https://www.dematic.com/en-au

 

 



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