March 21, 2013      

waiting for delivery

Remember waiting for stuff? Not any longer, not by a long shot.

Today, we either don?t or won?t wait for anything, and whosoever can?t deliver when we want things, which is immediately or sooner, we vote into oblivion by clicking to someone else online who can.

Consumers have come to expect free delivery or paying little for same-day delivery, while the likes of Amazon, Walmart, Google, eBay, and USPS have recently ramped up their efforts to provide ever more of this ?last-mile? instant, customer gratification.

Adding to the logistics frenzy, several big box retailers, says logistics analyst Adrian Gonzalez, “began reinventing themselves by embracing omni-channel commerce, which aims to deliver a seamless consumer shopping experience through all available channels ? i.e., mobile devices, personal computers, bricks-and-mortar stores, catalogs, and so forth.”

Couple that with head-spinning discounting from Walmart and its low-price brethren Carrefour and Tesco, who are also pushing the envelope with omni-channel retailing, and it easy to see why automation is headed into a brave new world where speed and instant inventory availability are all that matter.

Robots, already an emerging fixture in this frenetic landscape, are now, according to Automation World, ?gaining traction against traditional automated-guided-vehicle (AGV) and fixed-conveyor solutions.? Additionally, robots have also now become ?true options for small- and medium-sized businesses with limited automation skills and budgets.?

Such a scenario seems primed for robot domination, but what about human workers?

De-populating warehouses

When it comes to the longevity of humans handling materials in warehouses and distribution centers (DCs), there?s mixed reaction. What is clear is that the trend is decidedly moving away from human workers.

Bruce Stubbs, director of marketing from Intermec, sees employee turnover and difficulty recruiting as huge issues, thereby opening the door to worker alternatives that can plug gaps in automation needs.

warehouse_worker

Kelly Reed, vice president of material handling integration at Tompkins International, says a lot of ?the interest in automation is still being driven by a desire for cost savings, primarily by reducing the size of the distribution center workforce and reducing repetitive strain and other workplace injuries among those workers that remain.?

Others in the industry like Intelligrated vice president Greg Cronin point out that ?Baby boomers are retiring, and many of the younger generation aren?t interested in manual labor jobs. Many companies are willing to make capital expenditures today that they weren?t willing to make before to try and offset the labor situation.?

Vice president, Michael Kotecki from Dematic agrees that removing labor from the distribution center is an ongoing quest. Whereas supply chain consultant Kris Bjorson of Jones Lange LaSalle is more blunt, saying that no one can just keep ?throwing labor? at automation needs. He feels that retailers are quickly reaching a tipping point whereby in order to make a profit in e-commerce and from same-day delivery that they?ll have to ?flip the switch? sooner than later for robot-powered automation.

Although robots are expensive, they are plentiful and available for work; they thrive on repetitive jobs; they never strain themselves or suffer workplace injuries; they can work tirelessly 24/7 for 365 days a year?and can even work in the dark. Their cost to operate, amortized over five years or so, is on par with wages paid to workers in China. And they don?t require medical coverage or time off. That?s hard to beat! In fact, it can?t be beaten.

Talent needed, not brute labor

The real people shortage in warehouses, according to supply chain analyst, Lora Cecere, is not brute labor but talent. There is a shortage of and growing need for logistics technicians; brain power not brawn is what?s trending upwards for humans in warehouse and DC environments.

logistics technician

Consensus opinion, logic and the reality of the workplace seem clear: supply-chain logistics will meet the onslaught of e-commerce, Walmart-style low pricing and omni-channel retailing with brainpower and machines?only. That?s the future and it?s coming fast.

It?s a future with which Sucharita Mulpuru, vice president & principal analyst at Forrester Research, is all too familiar. She?s Forrester?s point person serving e-business & channel strategy.

Commenting on retail employment in Forbes, she sees e-commerce as a strong jobs creator. ?For the first time, we have estimated the total employment in the US that results from the online retail sector. Our estimate is that over 400,000 individuals are employed in some web retailing function, of which more than half are salaried professionals (i.e., all non-fulfillment and call center employees).? Notice the exclusion of non-fulfillment and call center employees.

?Furthermore,? she says, ?many of these salaried positions have promising long-term career growth trajectories. Given that there are probably about 750,000 such salaried jobs overall in retail (my estimate, approximately 10% of the 7.3M people employed in retail overall), the fact that the eCommerce sector has nearly 200,000 of them is a remarkable testament to the employment impact of this sector.?

The coming surge

With every online retail purchase clicked into existence (Forrester forecast for 2013: $262B, 13% over 2012; Europe, ?128B), we take more and more packages, cases and pallets out of the hands of humans and place their fulfillment into the care of machines.

So, if human labor in warehouses and DCs is having a tough go of it now in 2013, what?s going to happen when US online retail sales reach $370B by 2017; ?191B in Europe (Forrester)? That?s $190B total increase (U.S. and Europe) in four years.

More and more, it seems that Kris Bjorson?s advice of just ?flip the switch? is the most appropriate course of action.