People
Steve Scales, Jr.
Partner & Managing Director
New York
If you want to understand how the global economy of tomorrow will be different from today, just step inside a warehouse.
Distribution centers are a key driver of a global trend towards automation, powered by AI and robotics, that is having a profound impact on labour markets. The World Economic Forum estimates that by 2025, 85 million jobs will be displaced by automation across 26 countries, while 97 million new jobs will be created.
While there are limitless applications for automation, warehouses are leading the way, with robots rapidly replacing manual labour for repetitive and heavy lifting tasks. According to research from earlier this year, the Automated Guided Vehicles (AGV) and Autonomous Mobile Robots (AMR) market is expected to reach $13.2 billion by 2026, with a growth rate of around 35%.
The Wall Street Journal recently highlighted this accelerating trend in an article stressing the importance of automation to support growing e-commerce demand.
A range of factors are driving this trend:
- Upfront investment costs are falling
With the growth of robotics solutions, there is no longer a need for businesses to make large capital investments in fixed infrastructure. Robots can be designed to fit into existing spaces and alongside existing operations. Consequently, businesses can introduce robotics solutions that cater to current volume demands, knowing they can easily scale up later or adjust to seasonal shifts in demand or promotion-led spikes in volumes. Tompkins Robotics’ tSort suite and GreyOrange’s GreyMatter Fulfillment Operating System are examples of the growing trend towards modular solutions that can respond nimbly to business’ evolving needs.
Cloud-based software deployment is also significantly reducing upfront technology costs, allowing businesses to deploy automated solutions more quickly. The growth of robotics-as-a-service (RAAS) has significantly lowered some of the traditional barriers to entry for small to medium-sized shippers.
- Suppliers are proliferating
Businesses now have a much wider range of suppliers to choose from – not only robot manufacturers, but also software providers and integrators. This means more competitive pricing, which is helping to remove another barrier to adoption.
The robotics sector has also seen an explosion in partnerships in recent years. Many of these partnerships are between suppliers of robots and suppliers of robot accessories – such as gripping or manipulating tools. But there has also been an increase in partnerships between robotics developers and integrators – companies who help put automation plans into production within a warehouse.
While this network of partnerships is increasing choice for businesses, it is critical they identify vendor-agnostic partners who can help them work through the noise and develop the right solution for their specific needs.
- Industry success stories are giving companies the confidence to invest
Investing in robotics solutions for fulfilment no longer requires a leap into the unknown. There are plenty of industry case studies to call upon, meaning buyers today aren’t guinea pigs. According to the latest MHI Industry Report, nearly half (49%) of companies are increasing investment spend in supply chain innovation, much of it attributed to automation solutions and robotics. The same survey found more than three-quarters (76%) of companies expect to have adopted robotics and automation within the next 3-5 years, if they haven’t already.
Pilot projects show path for further innovation
Robotics solutions have come a long way, particularly in unit and case handling operations. While robots have long been able to acquire items from conveyors and shelving, the most sophisticated modern versions are using AI and vision software to identify and pick items from mixed containers, with many pilots of this technology ongoing.
Another key trend has been the rise of Cobots – collaborative robots that work alongside the human labor force. An example is 6 River Systems’ Chuck, which uses machine learning and artificial intelligence to guide employees through workstations to minimize walking and improve efficiency.
Businesses now have access to solutions that can support almost every conceivable productive function in a distribution center. And because many of the component parts of these robotics solutions, such as sensors and cameras, are common across multiple suppliers and industries, economies of scale are significant.
While there is understandably great interest in the opportunities for physical automation within distribution centers, retailers should not overlook the additional opportunities that can come from automating business processes. In future posts, we will discuss how process automation can complement physical automation to deliver even greater efficiency and innovation.