MB Insights: The Era of Efficiency: How is Automation Reshaping Supply Chains?

From a global pandemic to rising geopolitical tensions, the supply chain industry has faced numerous challenges, and as we edge further into 2023, the sector finds itself at a crossroads.

The need for speed, strategy, and resilience has rapidly fueled innovation, and more businesses are leveraging the latest in automation technology to make faster, smarter decisions with more accuracy than ever before.

But what exactly is Supply Chain automation? And where is it leading us?

MacGregor Black explores the latest advancements in supply chain automation, and which key technologies are reshaping the industry’s future.

What is Automation?

Over the years, the main goal of the supply chain industry has remained unchanged. To deliver products to the right place, at the right time. Yet, to thrive in today’s competitive economy, a business must ensure constant availability, rapid delivery time, and the mailability to overcome unexpected changes.

This is where automation steps in.

Automation describes the use of technology to complete tasks that would traditionally require physical human interaction. Processes that would usually cost a gross amount of time, money, and labor can now be completed quickly and effectively using a combination of artificial intelligence and advanced robotics.

From Human Hands to Robotic Arms

Evolving from their first appearance in sci-fi movies into today’s supply chains, the use of robotics in the warehouse has become increasingly popular in recent years. Businesses in all corners of the world are transforming the way they manage their supply chains by investing in advanced technologies such as autonomous mobile robots, collaborative robots and even drones, in the pursuit of efficiency.

Autonomous Mobile Robots (AMR)

Autonomous mobile robots (AMR) are self-guided machines that, using a combination of sensors and algorithms, navigate safely around the warehouse moving goods from one place to another, locate and retrieve items and even pick, pack, and ship products at ultra speed. As the demand for faster and more efficient supply chain processes grows, AMRs are becoming an increasingly attractive solution for businesses looking to scale up faster, increase their operational efficiency, and reduce labor costs in this post-pandemic economy (as after all, robots can’t catch a virus…).

According to this year’s Global Autonomous Mobile Robots Market Report, in 2022, the market for autonomous mobile robots totaled at $3.14 million US dollars. A figure that is predicted to rise as high as $10.97 million US dollars by 2030. By taking over potentially dangerous jobs from humans, AMRs allow for cheaper labor costs, greater workforce adaptability, improved safety standards, and reduced risks. Nestle, DHL and Walmart are among the many high-profile brands that are already investing in AMR’s, with all three companies having rolled out driverless forklifts across their warehouses in 2022.

However, while progress is being made, “there are still a number of natural factors at play,” States Mark Lancaster, MacGregor Black’s Supply Chain & Logistics specialist.

“Whilst AMRs are designed to operate autonomously, they do still pose a risk to human workers if not properly programmed or maintained. As well as investing in skilled automation specialists to safely maintain the equipment, employers may also need to consider re-training existing workers on how to interact with AMRs in order to avoid accidents and injuries.”

Collaborative Robots

Unlike AMRs, Collaborative Robots (also referred to as Cobots) work along-side humans, rather than replacing them. Designed to be safe, simple to use and adaptable to varied processes, Cobots assist humans in performing repetitive or dangerous tasks to speed up production and avoid potential risks. UK retailer, Curry’s recently revealed its plans to invest £250,000 in Cobots at its facility in Newark, which will fund a fleet of robotic exoskeletons designed to give employees at the retailer’s logistics partner, GXO, relief from at least ten tones of weight throughout a typical working shift.

Another example of a brand investing in Cobots is the multinational information technology company, HP. In 2017, the Silicon Valley based brand opened a robotics manufacturing facility in Singapore; the country ranked second in the world for the number of robots deployed for every 10,000 employees. The facility utilises intelligent robotic arms that precisely emulate a human hand’s intricate movements in order to make a core component in HP’s commercial printers. The arm’s dexterity allows it to take on complex tasks, with acute precision, for 24 hours a day. HP said, since installing its robotics manufacturing lines in Singapore, production costs have dropped by 20%. A quite staggering saving in a world currently grappling with the lingering effects of the pandemic, high inflation, and geopolitical tensions.

However, replicating HP’s harmonious relationship with robotics isn’t quite as simple as it sounds. A successful shift into automation requires an immense, up-front capital investment, not only in technology but in the skills of the workforce. At HP, they have invested heavily in upskilling their employees, who verify parts rejected by the robots on the manufacturing line to help teach the machine and perfect the algorithm. Singapore itself has also long identified advanced manufacturing as a priority, with the country even introducing incentives such as tax breaks for highly automated factories, research partnerships with universities and subsided programmes aimed at retraining and upskilling workers.

Drones

According to an analysis of U.S. Census Bureau data, the average warehouse worker wastes nearly seven weeks per year in unnecessary motion, accounting for more than $4.3 billion US dollars in labor. A statistic that many businesses are now able to disregard following the introduction of intelligent autonomous drones into their supply chain.

Without the need for ladders or scaffolding, and in turn without the resulting risks, drones are used to track, transport and audit goods, with the data being stored digitally on a computer-based software programme. Drones are mainly used to help with inventory management and can be found flying around the warehouse scanning bar codes on products, auditing inventory levels, and comparing the data it collects with the data stored digitally. Swedish retail giant, IKEA is among the latest brands exploring technological solutions, revealing it has expanded its autonomous fleet of drones to 100 across 16 locations in Belgium, Croatia, Slovenia, Germany, Italy, the Netherlands, and Switzerland.

Developed in partnership with Zurich-based startup, Verity, IKEA’s drones are deployed during non-operational hours, working to ensure stock levels are accurate, and offering real-time analytics. Introducing drones and other autonomous technologies in the warehouse may seem nerving for some, but “Introducing drones and other advanced tools — for example, robots for picking up goods — is a genuine win-win for everybody.” States, Tolga Öncu of Dutch IKEA holding company INGKA.

“It improves our co-workers’ well-being, lowers operational costs and allows us to become more affordable and convenient for our customers.” 

Artificial Intelligence (AI)

Typical supply chain management is labor intensive, time consuming and prone to human error, which is why many businesses are utilising artificial intelligence in their supply chains.

Artificial intelligence is used in supply chains to analyse data, track the flow of goods, and centralise information sharing with suppliers, manufacturers, distributors, and retailers. The main goal being to streamline the entire end-to-end supply chain process and routinely look for ways to improve efficiency.

MacGregor Black’s Engineering & Operations specialist, Rob Blackburn explains that “AI tightly links together the business value chain, from manufacturing to the end consumer, and accurately forecasts customer demands to produce real-time analytics on a company’s entire supply chain performance.”

“The AI detects data patterns and recommends improvements such as, shorter walking times and smarter inventory positioning. Over time, the AI will even learn from its environment and perfect its own algorithm to ensure the warehouse is performing to maximum efficiency.”

One of the most beneficial features of AI is its ability to trigger automated responses to pre-defined scenarios. By communicating with the various internal data systems, AMRs and Cobots deployed at the warehouse, the AI can automatically respond to situations like a depletion in stock, a rise in market prices or a shift in consumer demand. For example, should the business run out of stock, their AI can automatically order more. Or should the market value of a product or raw material change, the AI can produce a detailed report advising the business on future procurement strategies.

This level of data-driven supply chain management reduces costs, mitigates risks, improves quality control, increases operational efficiency, and allows businesses to make informed analytical decisions, which in turn, improves the experience for the end customer.

It’s clear to see that automation has the potential to revolutionise the way warehouses operate. The latest developments in supply chain technology are creating exciting opportunities for businesses all over the world, which has raised a question in many of our minds, where does that leave humans? According to a report led by Oxford Economics, if the current rate of automation continues, 11.20 million manufacturing jobs will be lost to automation by 2030. Undeniably, certain occupations will become extinct in the battle between automation and tradition, however humans haven’t been totally eliminated from the race just yet. A report by the BBC suggested that the rise in automation will also boost the economy, predicting that 7.2 million specialist jobs will be created by 2037.

Automation is unarguably transforming the way businesses manage their supply chains. And as these technologies continue to evolve, the companies that will thrive will be those that are embracing the change. By taking full advantage of artificial intelligence and advanced robotics like drones, Cobots and AMRs, employers are able to maximise efficiency, improve safety and cut overall costs. However, automation technology requires immense planning and consideration, and if we’ve learned anything from sci-fi movie culture, this isn’t always the case…

If you’d like to speak with our dedicated team of Engineering & Supply Chain consultants, get in touch today via hello@macgregorblack.com or via +44 (0)191 691 1949.