Category: Swisslog

Machines are increasingly taking over tasks that humans have performed for decades. From Luddites in the 1800s to modern day “digital refuseniks”, some have always resisted change, and yet today’s robots are more capable than ever. So will workers rejoice at being unshackled from repetitive and dangerous tasks, or should we brace ourselves for high-performing smart warehouses becoming deserted dark logistics facilities?

It’s a common story, told throughout our modern history, where innovation is challenged by tales of fear and dread. Perhaps the outcome is never quite so stark. In many areas, robots make life easier; they are guiding vehicles autonomously, they function as underwater researchers or assist in surgeries that require precise hand movements. Industry and logistics also offer many possible applications for robots, a development driven primarily by the tremendous progress achieved in digital networking, control and sensor technologies, and generally lower integration costs.

Despite the fact that advances in technology are also accountable for healthier, happier and longer lives, and that often they are primarily there to help humans, rather than replace them, for many, their excitement is tempered by the potential impact on future employment. However, findings from recent studies in Switzerland and the US indicate a more promising outlook.

Swisslog is a world leading automation specialist for robotic and data-driven intralogistics solutions and is at the forefront of the new frontier, dubbed Industry 4.0.

It believes logistics managers should consider the advantages of automation and the opportunities it brings to the table. “Robotics and automation clearly offer more opportunities than risks, but only if we embrace them as drivers of future growth,” states Dr. Christian Baur, COO of the Swisslog Group.

Robots collaborating with human operators

While the wider belief is that warehouse automation means removing human interaction, Swisslog’s Automated Item Pick solution is based on a shared picking principle: The robot picks the items that it is able to pick – which can be up to 95% of the customer’s product range – and a worker finishes the order.

According to Kirt Laeske, Product Manager for Robotics at Swisslog, there are definitely signs that the work environment of logistics centers are changing. “Today, robots no longer need to work in isolated safety areas. They perform their tasks side by side with humans, and are already able to take over the simple and repetitive tasks of unskilled workers during order peaks and personnel bottlenecks.”

Laeske believes that there is no reason to fear that robots will replace the work of humans in logistics centers. “Machines are better than people at performing repetitive and uniform tasks, but they lack the elementary cognitive skills required for many logistics activities.”

In its pursuit of optimization along the value creation chain, Swisslog sees little benefit in deploying robots as stand-alone solutions, but rather to carefully combine the skills of human beings and machines.

Employment growth through robotics and automation

It is important to openly discuss the opportunities that come with advancement in automation, says the company, while equally assessing the wider impact on staffing, corporate responsibilities and the wider public perception.

“Industry 4.0, robotics and automation pave the way for greater process efficiency in logistics,” stresses Dr. Christian Baur. “Machines are ready to work 24/7 and support considerable volume increases and improved utilization in spite of the persistent trend toward smaller order sizes. These effects ultimately lead to increased delivery speed, improved delivery reliability, greater flexibility and higher customer satisfaction,” states Baur. “All these things bring about greater efficiency in logistics, driving the creation of new roles and alternative jobs such as in systems programming and support.”

Harvard economist James Bessen has recently shown in a working paper that merely one of the 270 detailed occupations listed in the 1950 US Census has since been abolished at the hands of automation. The only occupation listed that has taken a hit from the rise in automation in the past sixty years is elevator operator – hardly an indication of a technological uprising.

A recent study of the Swiss employment market performed by the Deloitte auditing and consultancy firm came to a similar conclusion. Although automation did replace certain jobs over the last 25 years, overall it boosted demand for labour. “Work will not disappear,” stated the study. “On the contrary, technological progress in Switzerland is estimated to generate approximately 270,000 new net jobs by 2025.”

The human touch

So, will there only be two types of human roles in the future, as some believe, either telling a robot what to do, or doing what one tells you to do?

“The truth is that progress always aims to reduce the cost, simplify, speed up and improve the efficiency of complex or repetitive operations,” concludes Dr Baur. “Yet, so many of society’s roles require the human touch. Aircraft can land themselves, algorithms can diagnose disease, and software can provide legal advice, but we still see the value in pilots, doctors and lawyers. We are not ready to give up humanity just yet, but we are able to release them from some of the more onerous tasks.”

The experts at Deloitte agree, citing the complementary effects of automation versus what it calls ‘pure substitution effects’. Rather than simply put people out of work, these (human) experts believe that the current technological upheaval will shift jobs within and between sectors, simultaneously generating risks and opportunities for employees.

“This distinction is important because it implies very different economic outcomes,” James Bessen wrote in a Vox column last year. “If a job is completely automated, then automation necessarily reduces employment. But if a job is only partially automated, employment might actually increase.”

Regardless of what the expert economists think, future-proof professions, for today at least, include all those in which creativity, adaptability and interaction with people or machines play a critical role.

Should physical retailers utilise their store network as mini distribution centres as they seek to compete with the success of e-commerce players? To help you form your own opinion, here are the advantages and disadvantages of the ship-from-store technique, which has become a popular method with Australian retailers.

With e-commerce leading the way in the retail sector, high street retailers are faced with the challenge of finding new ways to attract customers to an in-store experience. One of the many ways retailers are fighting back against pure-online retailers is by leveraging their store network. Equipped with more than just warehouses, physical retailers have the opportunity to use their stores to assist in the delivery of goods to their customers.

An approach that is now firmly entrenched in the shoppers’ psyche is click-and-collect; customers buy products online before collecting from a local store, which increases in-store traffic and allows for cross-selling opportunities. But some retailers such as in Australia have the infrastructure to offer both a click-and-collect service and a ship-from-store method for online orders, allowing them to make the most out of their store network and take the pressure off distribution centres.

There are important arguments for and against this tactic which should be taken into account before making the decision to use your stores as mini DCs.

The advantages of the ship-from-store concept

This is especially important in Australia, where its huge land mass means deliveries have further to travel than other countries.

2.       Seamless omni-channel experience

Shipping from your own stores, instead of a distribution centre, gives the customers a more streamlined omni-channel experience, with the ability of switching the method of delivery on the order after it has been made.

Many people use the click-and-collect option due to its convenience when we have another reason to visit the location of the store, but if the customer’s plans change, collecting from store can become an inconvenience. If the store utilises the ship-from-store method, customers could have the option to amend their order and request delivery instead.

3.       Reduced logistics cost

Many online retailers have put themselves out of pocket by only charging a minimal amount, if anything, for delivery and ultimately failing to provide a good service. If physical retailers choose to deliver their online orders from stores, logistics costs can be reduced due to each store only serving customers in nearby locations.

Disadvantages of the ship-from-store concept

1.       Store staff are distracted from selling

If a ship-from-store concept is adopted, employees working in stores have less time to take on their sales responsibilities, thanks to extra tasks such as inventory handling, packing and shipping.

Putting extra pressure on sales staff brings the possibility of jeopardizing in-store customer service and as a result extra costs may be incurred to ensure there is enough staff on the shop-floor tending to in-store customers’ needs.

2.       Retail store space is expensive

Using your store network as distribution centres could be costly with expensive rental space sacrificed for stocking products rather than displaying them.

Retail space allocated to ship-from-store could also cost 5 to 10 times as much ($50 to $100) as the $10 a square foot or less for fulfilment centre space in non-prime locations. [source: here]

3.       Limited SKU available

Some stores may only have a certain range of products available, hence some of their online shoppers may need to accept to exchange for similar products or not buying what they wanted.

In order to avoid out-of-stock and a seamless customer experience, many retailers are choosing to select a hub-store option for their online orders.

Hub-stores: the compromise
The hub-store concept is one that provides a specific store to fulfil online orders, but is still open to the public unlike distribution centres. The hub-store would stock certain quantities of most, if not all SKUs and can be used to replenish normal stores. Using this approach as opposed to utilising all stores for fulfilling online orders can alleviate omni-channel pressures on the store and the DC.

This method has the added benefit of most SKUs being available to buy at one time, rather than a percentage of stock being in a store making online shoppers unhappy.

The verdict
While click-and-collect and ship-from-store initiatives are a means for retailers to expand their omni-channel services using their existing store network, it’s something the pure e-commerce players cannot replicate easily. Similarly, e-commerce retailers are opting for smaller urban warehouses close to city centres to allow for faster delivery to their customers.

With the introduction of hub-stores for omni-channel retailers, a store that is considered ‘optimal’ is selected to handle all online orders to provide consistent customer service.

Regardless of the chosen distribution channel, the availability of SKU for retail and online operations, including real-time inventory management systems, remains the key to excellent customer service.

If omni-channel retailers chose to fulfil their online orders from a hub-store, and e-commerce players improved their delivery times by opening smaller urban warehouses, there would still be a need for a large central distribution centre to replenish these units. These central distribution centres would undoubtedly benefit from the use of warehouse automation to operate swiftly and accurately enough to meet new demand.

The amount of data generated by our tech-savvy world has exploded in recent years. Digital video (300 hours of which are uploaded to YouTube every minute), audio (in 2013, more than 4.5 billion hours of music were streamed via Spotify) and photographic data (over 670 million public photos were uploaded to Flickr in 2014) is now easily accessible to anyone with a smartphone, stored automatically in a cloud platform at the touch of a button.

In 2010, Google CEO, Eric Schmidt suggested the amount of data created every two days is about the same as was made “from the dawn of man to 2003” and in data storage terms, 2010 was a long time ago.

Since then, the technology has advanced even further to allow ever greater amounts of digital storage, with helium filled hard disk drives now available with 10TB capacity, enough for 170,000 hours of music or 3.2 million high resolution images. Whilst ‘user generated content’ occupies the thoughts of Google, Facebook and Twitter, others have questioned how best to use the information gathered and whether building an advanced analytics capability to take advantage of the data is really worth the investment.

A 2014 study by management consulting firm Bain & Company found that early adopters of Big Data analytics have gained a significant lead over the rest of the corporate world. Examining more than 400 large companies, they found that those with the most advanced analytics capabilities outperform competitors by wide margins. According to the study, those leaders are five times as likely to make decisions faster than market peers and three times as likely to execute decisions as intended.

Making use of that vital business data however, remains elusive for many. Finding ways to make use of the phenomenal amount of data at our fingertips is now the Holy Grail for many enterprises. The more we can find relationships and understand our systems, the more we are able to find and understand patterns. We can then use this learning to find optimizations and improvements, that even a few years ago, were considered unknowable.

The Five Day Forecast

Take the weather. Not so long ago, weather forecasts were considered extremely unreliable. Today, weather services have access to enormous volumes of data and statistical models that allow them to produce much more accurate forecasts, even five days ahead.

Netflix uses data models to allocate its own resources and adjust pricing. Supermarkets use loyalty data to predict shopping patterns – even predicting a pregnancy in one famous case.

Such big data solution approaches can now be successfully applied to warehouse and distribution logistics and their supply chain concepts. State-of-the-art logistics systems, with their sensors and actuators, as well as their warehouse management and control systems, produce several megabytes of historical data every day, just like weather stations.

By using Big Data, for example, we can ensure our e-commerce systems offer extremely high availability during extremely high demand, our prior knowledge and understanding of the behaviour of the system and machines are critical to achieve this.

Predicting The Future

Swisslog’s Condition Monitoring service already identifies system bottlenecks from which potential optimization measures can be derived. Not only is it possible to continuously monitor the condition of all parts and components of a logistics system, but immediate notification can be made when a potentially critical condition is developing.

The ability to predict errors, long before they actually occur, is the next step that will soon be implemented. Since not all components of an intralogistics system are subject to the same stresses, it will also be possible to detect and replace at-risk components early on. The ultimate goal being, to create a data-based life cycle management system for products that gives a complete picture of the future of any automation system.

So today, there’s no longer an excuse, thanks to advanced storage capacities, efficient software and intelligent system designs, not to use data, however big, to the benefit of your intralogistics operation.

A form of extreme discounting, flash sales originated in France and are now spreading around the world. The phenomenon tells us a lot about what brands do to manage their stock, whilst keeping their brand value high and maximise income.

In 2001, Ilan Benhaïm co-founded Vente-privee.com (‘Private Sale’) with the idea of providing brands with a new way of selling their overstock. The site soon took off, creating quick temporary sales for top brands.
In the retail environment it is common practice to sell 40% of what you produce at full price and 50% during a promotion period. The last 10% was then disposed of. Now it goes to the flash sale. The overstock, which can sometimes reach 15%, is necessary in order to produce enough to fulfil orders without incurring excessive logistics costs for multiple shipments.

“There was a major shift at the end of the 80s,” says Ilan. “Before, brands would have had a factory locally, so orders and the manufacturing of products was a lot quicker. Now everything is produced in Asia so it can take six to eight weeks for delivery of the product.”

“Companies have to structurally order more than they plan to sell, they overstock. Realistically speaking there will be five to 10 percent of product leftover in the warehouse that has not sold. If brands don’t sell these products, then the next year they are losing money.”
Crucially, the flash sale ‘members club’ hides price points, promotions and selling history behind passwords, meaning brands can continue trading at their premium levels without fear of being undercut by their own products.

The flash sale sites also believe it is essential to keep brands locked away from the company’s own regular e-commerce websites, otherwise visitors will never pay full price: “it is not the brands job to sell at discounted price”, they say. This happily also gives the flash sale sites the extra ‘width’ that they believe consumers want and the opportunity to offer vast numbers of items.

“We’ve collected together a portfolio of more than 2,500 designer brands,” says Vente-Privee’s website, “to give heart-fluttering discounts of up to 70%. We love fashion and adore anything that’s stylish: from homeware to sports equipment, cars to holidays. C’est fabuleux!”

Flash sale companies don’t physically own the inventory. They send out emails to their members on behalf of the brand, who receive it and decide whether to make a purchase. The flash sale site then goes back to the brand and places the order, the brand delivers the stock to one of their distribution centres and then dispatch to whichever place or country.

“90% of products the flash sale companies do not buy, “ sales Ilan “It could be from an LA warehouse, Florida, or the UK. Hence there is a long window for delivery.”

Typically, only 8% of visitors make a purchase, but the numbers are vast, and account for amazing success of Vente-Privee as well as it’s emulators, Cocosa.com (bought by Harrods mogul Mohamed Al Fayed), achica.com (co-founded by ASOS founder Quentin Griffiths) and the sister site of designer website Net-a-Porter.com, theoutnet.com.

Outside the e-commerce industry, most would barely know or recognize the challenge of  consolidating orders placed on modern retail businesses.

In a facility that features discrete order picking (a shopping cart principle where one pick run equals one order), the consolidation of the order happens by itself. Likewise, an automated goods to person picking system can sequence the correct picking as it happens.

But in e-commerce facilities that fulfil orders in every thinkable category, such as the likes of Amazon, Otto, and Walmart, even an automated solution has to be broken up into manageable modules due to sheer size.

Find out more about two possible ways companies deal with the issue in this fascinating Swisslog blog…

Few high-bay facilities are as impressive as the new distribution center operated by Alnatura Produktions- und Handels GmbH in Lorsch, Germany.

It rises 17.5 meters into the sky and, this is the most extraordinary part, it is made entirely of wood.

The high-capacity high-bay warehouse is the only one of its kind anywhere in the world, Alnatura points out with some pride, and an external façade that is also made of wood will soon be added to the ecological concept. The goal of the construction project is to build a cutting-edge extension onto an existing organic food distribution center.

“What’s extraordinary is that the project is in keeping with Alnatura’s principles, which are based on systematic sustainability and environmental protection,” comments Dr. Volker Jungbluth, Managing Director of Swisslog Germany. “The organic food retailer can still rely on modern technology,” he adds, “since the warehouse will soon be automated.”

Fesco, the logistics arm of fashion brand fossil, is tasked with developing maximum efficiency in a rapidly changing industry. Managing director, Josef Otter, explains how Swisslog helps them to remain a consumer favourite.

How does Swisslog help your business?

With a wealth of new ideas, Fossil is opening up new business segments in the market as well as experiencing unusually strong growth in the traditional watch market. Logistics is therefore constantly undergoing a process of change and optimization. Thanks to many years of collaboration, Swisslog understands our business and can support us with innovative ideas to expand our supply chain.

What impressed you about Swisslog’s proposal?

The shuttle warehouse gives us a number of advantages, including scalability, reliability, faster order processing times and compact storage. The shuttle from Swisslog is a balanced compromise between system weight, transport weight and size, so it is excellent for our purposes.

How important are online sales versus brick-and-mortar sales in your business?

Without a doubt, the rapid changes in our society have had an impact on consumer buying behavior. Convenient online purchases that save a trip into town will continue to gain greater market share. Social media tools contribute more and more to brand building and give customers 24/7/365 access to the merchant. Fossil’s younger consumer segment expects professional offerings, including excellent logistics. Over the next few years we will see an even greater shift to this sales channel, and Fossil is very well prepared.

What were the key objectives or main challenges in your logistics operation?

Our logistics center ships to approx. 30,000 individual retailers throughout Europe as well as to partners in the entire EMEA region. Like all other lifestyle brands, we are witnessing a trend toward smaller order quantities that customers want in a shorter time frame. In recent years, our company has seen very strong growth in sales through our own Fossil stores and our website. In addition, we have optimized our partnerships with retail chains and implemented win-win solutions (stronger IT communication and cross-docking in the central customer warehouse). Even though the growth in these business segments is exciting, collaboration with retailers will remain extremely important over the long term.

Were you already a user of automation systems or did you need convincing?

No. Together with Swisslog we installed a Pick-by-Light system in the middle of the last decade. This very quickly proved itself in day-to-day operations and we received very positive feedback from our employees. Since 2008 Fossil has been working at varying levels of intensity with Swisslog on the benefits of using a shuttle system. Unfortunately, the global financial crisis delayed the decision to invest somewhat, but it is clear this project will be another milestone in expanding our intralogistics.

What are your goals for the business in the next 3 to 5 years? Forecasts are harder to make than ever in this economic climate, but Fossil is a strong brand. Thanks to the the number of fashion brands in its portfolio, Fossil has many opportunities to expand its business. We expect to, and will continue to, grow in the double-digit range.

How do you see your future operations changing in future?

Customer orientation, speed, and precision combined with inventory and cost optimization are the logistical challenges we will be facing more than ever over the coming years. That is where our focus will be. The possibilities presented by technology are virtually limitless, so using good IT solutions even more intensively than in the past will be absolutely essential for top-notch logistics. To keep on top of market developments and assess changes accurately, on-going co-operation with a global partner involved in many other business segments is extremely helpful.

Do you see any challenges within the e-commerce business?

We expect sales through this channel will continue to increase; integration through social networks and other media (e.g. television) will continue to grow. That will boost impulse buying over the web even more. Availability and speed of delivery will remain extremely important purchasing criteria. Services such as personalized orders, custom packaging, etc. will likewise continue to expand.

China has long been seen as the world’s leading manufacturing base, but how well is it embracing e-commerce?

The latest figures reveal some interesting trends. A report in China Logistics Equipment magazine listed four key points:

1. Booming Transactions: Transactions volume in 2012 reached 9.5 trillion RMB (over 1 billion Euro) and is expected to be 27.5 trillion RMB in 2015. It is thought the annual increase over the next 5 years will be around 35%.

2. Online purchases soar: In 2012, the total number of Chinese online purchases reached 280 million. Online shopping transaction volume (B2C and C2C) reached 1.15 trillion RMB in 2012.