Augmentation versus Automation: Where and why systems are used in warehouse fulfilment operations

Lets start first by defining the terms I have used here: when referring to augmentation, this should be interpreted as the use of technology to assist human workers; conversely, automation is intended to be understood as measures taken to replace the labour force.

To some extent, the division between augmented and automated warehouse picking systems is a false dichotomy, as human input is still a requirement of most systems.

However, as I will show you, this is changing.

Firstly though, I shall set out, in the broadest terms, the reasons for utilizing such systems, and for choosing one over the other. Both augmentation and automation solutions are deployed to increase the productivity, accuracy and reliability of fulfilment operations. However, the effectiveness of each option is conditioned by a number of factors relating to specific fulfilment requirements.

Nevertheless, to the point at which an augmented workforce and an automated system are comparable, there are four chief advantages to siding with the former:

  • Relatively inexpensive
  • Quick to set up
  • System failure does not necessitate a halt to operations
  • Flexible.

Conversely, the use of automation benefits LSP’s in the following ways:

  • Significant long term savings in labour costs
  • Reduction in human error
  • Greater utilization of warehouse space
  • Economies of scale.

Given these differing advantages, it is unsurprising that both methods are used, sometimes simultaneously. In essence, the three most important variables in choosing which path to go down are the ease of handling (size, shape etc), the quantity of products picked at any one time, and the frequency of picking.

Where product quantities are low but frequency of picking is high, goods-to-man picking systems, such as Swisslog’s AutoStore, are a preferred measure. Such systems do not replace human workers entirely, but eliminate the need for pick walking, and consequently derive substantial productivity gains.

Where products are of more awkward size and shape, or picked in larger quantities, companies often opt to deploy workers with scanning systems to conduct picking operations. In such scenarios, the use of automated systems can be inappropriate due to their lack of flexibility in handling large or diverse goods. However, human workers do not have this problem, and can be given technological aids to improve their performance, such as voice or vision interaction systems. For example, DHL Supply Chain conducted a pilot programme in order to test the latter, through which a productivity gain of 25% was realised.

As we can see then, there are merits for using each system in different situations. However, the continual advancement of both software and hardware technology indicates that the fulfilment process appears to be heading more and more towards automation as a solution.

Whilst the start-up cost and lead time for the implementation of automated picking systems are unlikely to change significantly, other disadvantages of the approach, such as flexibility and the high cost of system failure, are being steadily eroded by technology developers.

For example, Amazon’s Kiva fulfilment solution is unlikely to cause significant problems in the event of mechanical or system failure, as it uses multiple, independent robots, and will therefore not bring the picking process to a halt if an individual robot stops working.

Moreover, online supermarket Ocado recently unveiled a patent for a system it may one day implement in its customer fulfillment centres, which has been designed to cope with picking and distributing items from multiple product lines (this is elaborated further on the Ocado provider page on Ti’s Global Supply Chain Intelligence Portal).

Though market growth is not immediately obvious due to the private nature of many of the supplier companies involved, the demand for warehouse automation is increasing, and is being chiefly driven by the growth of e-commerce, where competition for sales is forcing LSP’s to become ever more efficient in order to keep abreast of their rivals. The UK groceries sector, in which Ocado competes, is therefore a pertinent example of this, particularly as sales growth from other channels has recently proven difficult.

Ultimately, the current system choices available to LSP’s show a clear set of circumstances in which either automation or augmentation presents the best option. However, whilst there are currently many advantages to the augmentation approach that cannot be matched by fully automated systems, it requires more space, is more time-intensive, and does not benefit from the economies of scale that can be achieved in automated systems. Moreover, the market pull of e-commerce, combined with increasing competitive pressures, is increasingly driving the adoption of automated systems.

Under such conditions, it may be that the larger LSP’s will benefit disproportionately from new automated picking systems, given the significant financial investment required to purchase and implement them, not to mention the role of economies of scale in determining efficiency.

Regardless, it seems inevitable that the coming years will bring an ever increasing adoption of automated systems as fulfillment demands increase, with the importance of system manufacturers continuing to grow.

Such companies will exert an important influence on the e-commerce and contract logistics markets, with supply chain innovation more imperative than ever. To find out more, download the 2014 Global Contract Logistics report from the Ti website, or email Michael Clover at mclover@transportintelligence.com to place an order.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s