Investigating the next generation of smart warehouses with Alain Kaddoum, general manager, Swisslog Middle East.
Technology is an ever-evolving concept and the fast pace of its change, will ultimately influence the next generation of future warehouses. From drones to 3D printing, social and technology changes will continue to pile pressure on supply chain managers to move goods closer to consumers and develop ‘smart warehouses’ with the flexibility and speed to support local, faster delivery through its multiple channels.
Swisslog’s latest report on the ‘Planning for the warehouse of the future’ provides key insights on the major social and technology trends that will shape the warehouse of the future.
The ageing and urban population to influence how products are stored and distributed
The ageing population is one factor that will have an impact on change consumption and spending behaviour impacting production, logistics, warehousing and retailing.
Moreover, the global middle class is projected to double by 2030 reaching nearly five billion people, resulting in more purchasing power and greater access to information and communication technologies.
Consumers who buy online tend to return items at a higher rate than those who shop in stores. Online buyers expect minimal delivery fees, easy returns, and quick fulfilment thanks to Amazon and other e-commerce giants. What this means for warehouses is that they not only feel pressured to lower their costs and improve delivery, but they must be prepared to accommodate increased returns. Lastly, experts predict that the urban population is expected to pass six billion by 2045, impacting where goods are produced and consumed.
Emerging technologies will play a significant role in shaping the warehouse of the future
By 2030, it is likely that drones will play a major role in the supply chain industry allowing all consumers to receive the same two-hour delivery window.
3D printing will also significantly change the way many products get to market.
The influx of 3D printing will see a radical decrease in distribution and transportation costs, and can help improve manufacturing, distribution, prototyping and event design.
The use Autonomous Guided Vehicles (AGV) is also predicted to grow significantly in the next ten years.
As technology progresses, advances in sensors and electronics will allow AGV to move faster, even when interacting with people.
Mobile robotics will reduce the cost of unskilled labour in warehousing operations, while businesses can gain more value through up-skilling their workforce in management roles. As warehouses enter the robotics revolution, warehouse managers can expect to experience greater accuracy, and faster pickand-load abilities. Industrial IoT networks will soon also become an essential component of efficient warehouse management as they provide the connectivity and data that the smart warehouse will depend on.
Big data programmes are already shaping everything from marketing to forecasting, they will also drive key advances in logistics, such as the predictive shipping model and will enable machine learning as the integration of real-time and historical data will allow machines to continually improve their operation based on past actions.
The new urban distribution centres of 2030
The surge in online shopping is making it more and more important for warehouse facilities to be located in closer proximately to large cities.
The urban distribution centres (DCs) of 2030 will need to hold inventory and be configured to support same-day delivery or customer pickup through some combination of autonomous vehicles, robotic picking and loading, drones and mobile pickup points.
Big data and smart, selflearning analytics will predict what consumers will be ordering to minimise inventory, and that will create additional product movements.
It is likely that technology advances, such as self-driving trucks and robotic loading and unloading systems, will minimise the costs of those movements.
BY 2030, IT IS LIKELY THAT DRONES WILL PLAY A MAJOR ROLE IN THE SUPPLY CHAIN INDUSTRY ALLOWING ALL CONSUMERS TO RECEIVE THE SAME TWO-HOUR DELIVERY WINDOW.” ALAIN KADDOUM, GENERAL MANAGER, SWISSLOG MIDDLE EAST
The new urban DC will need to support customer pickup, and a network of mobile pick-up points.
Mobile pickup points would also need to be filled quickly with multiple parcels at the community warehouse and then driven to a spot even closer to the consumer (e.g., shopping mall parking lot) where consumers would pick up their parcels.
The need for increased automation in the warehouse
The warehouse automation market in the Middle East region was reported at USD$0.5 billion in 2018 and is set to grow on the back of strong macro and industry growth drivers to USD$1.6 billion by 2025, at a CAGR of 17.5%.
Another report by DHL indicated that 80% of warehouses in the region are still manually operated with no supporting automation at all.
By integrating the automation elements for pivotal tasks such as receiving, material movement, sorting, picking, merging, conveying, packing and shipping the goods a company reduces the chance of human error, lowers the risk of injury, optimises the output, reduces the overhead, adds flexibility to the hours of operation, and allows them to be more accurate in assessing their workforce requirement. Distributing warehouse capacity across multiple small centres within a city that directly interacts with consumers does introduce the challenge of increased volatility on DC demand.
At the same time, the aging population, labour shortages and new labour regulations will all require a higher level of automation inside these DCs.
Supply chain managers are already dealing with a myriad of technology and market changes as they implement modular, automated solutions to increase productivity and throughput in their warehouses.
However, the changes occurring in society, with more disposable income and higher consumer expectations, may stretch existing distribution networks way beyond their current ability to adapt.
The solutions emerging today in terms of Autonomous Guided Vehicles, automated picking and intelligent, modular software provide the speed and flexibility to support these core capabilities and will continue to evolve to meet the demands of the future warehouse.