Any way you analyze it, 2020 will go down as a watershed year for the material handling industry. From the effects of COVID-19 on the workplace to the unprecedented (and continuing) jump in e-commerce, with the start of the new year, the material handling industry is deep into its new way of doing business, especially in warehouse execution systems or WES.
But while these changes may have been accelerated by the events of the past 12 months, they were already happening throughout the industry, says Diego Pantoja-Navarjas, vice president of WMS Cloud Development for Oracle.
“The changes happening started well before 2020,” he explains. “Right now, it’s a matter of helping companies realize if they have the right infrastructure in place and the right resources. For example, the traditional supply chain models, which were often a mixture of digital and physical locations, may no longer be optimal for how the world is progressing.”
With that progress moving at what seems like lightning speed, there remain numerous areas where real changes are occurring in WMS:
COVID-19 results in new optimizations
The past year has required warehouse operators to rethink how work gets done, particularly when it comes to protecting worker safety and wellness. Employees are now being issued social-distancing wearables that indicate whether or not social distancing space has been breached. This Internet of Things (IoT) based technology, provided through a bracelet, attached sensor or even certain smartwatch brands, alerts wearers if the social distancing space is breeched.
But some companies are taking that IoT capability one step further and integrating it into their Warehouse Execution System or WES functions.
“Keeping that safe distance has meant a hit to productivity, says Dan Gilmore, Softeon’s chief marketing officer. “It’s so difficult to keep people apart in the workplace.”
Softeon has taken a different approach to workplace social distancing by focusing on task management through a combination of complex WES algorithms, IoT technology and machine learning.
He gives an example like this: Worker A is in an aisle that Worker B is required to enter to pick a SKU. But the system knows that that SKU is in multiple locations throughout the warehouse. Instead of sending Worker B to the first aisle, the WMS directs him to an alternate location where the aisle is clear. The picking continues without contact and the order is fulfilled.
The sweet spot for WMS optimization is to calculate those options with the least hit to productivity.
“It’s a very sophisticated system,” says Gilmore. “IoT shows you exactly where every employee is at any given time, so that information can be fed in real time into the calculations.”
He also notes that there’s increasing interest in the continued integration of robotics.
“Robots and machines don’t get sick,” he says simply.
While larger scale operations have tended to integrate this functionality due to their size, he says there’s a growing interest in automation for mid-level operations.
“What we’re seeing is scaling – companies are trying it, seeing how it can be integrated into their operations and then scaling up when it is successful,” he says.
Change in demand, change in environment
While the industry fully projected positive growth in the e-commerce sector, the wild robustness it has in 2020 was unprecedented.
“Growth was projected in the 14- to 16-percent range,” says Gilmore. “But then we had Q2 at 44.5 percent, Q3 at 36.7 percent. Companies had a hard time keeping up.”
“E-commerce was the dominant channel during the past year,” says Pantoja-Navarjas. “Yes, we had expected it to increase but not to the levels it did. In some geographic areas, it was 60, 70, even 100 percent.”
That has caused some companies to rethink and re-evaluate their distribution channels, and how they manage hybrid digital/physical environments. Those companies that also made a proactive investment in technology and cloud-based WES that can manage operations throughout an entire warehousing environment tended to fare better in making the needed adjustments to serve their customers.
“These companies did their homework way before the pandemic,” says Pantoja-Navarjas. “They pushed the envelope a little, in that they realized their existing 30- to 40-year-old platforms needed to be re-evaluated. This past year just intensified the movement to the cloud.”
New ways of optimizing existing operations are also occurring. Gilmore says that his company has been working with clients to optimize put walls, especially omni-channel operators.
“You start by using technology to figure out the number of orders with the least amount of SKUs to fill that put wall,” he says. “But then you build on it through machine learning, to make the adjustments to make it even more efficient. How can we turn over those cubbies faster? More efficiently? How can we pick them so that we can refill them as we move? How can we optimize fixed capacity by using technology in how we fill those orders?”
He says that WES technology can identify not just what SKUs to pick, but also when. If there’s a three-item order, and one of the items is far away on a mezzanine, timing becomes a factor.
“Our platform technology tells you when that mezzanine line item should be picked in relation to the other two SKUs, so that the order isn’t held up, but that all items arrive at the same time and the order is fulfilled,” he says. “Clients use our WES technology to meter the flow of goods throughout their entire operation: all processes operate on their own clock speeds, but the key is to accommodate them and adjust to keep things moving efficiently.”
The Evolution of Supply Chain
There’s actually a running joke inside Oracle about how 2020 affected perceptions of the industry: This was the year that your grandmother finally understood how it works. Never before have so many people, businesses and industries have been at its mercy, and the clear advantages of well-functioning WES, from profitability to throughput to fulfillment, have never been more obvious.
“What we are seeing is a shift from companies just trying to survive 2020 to a different mindset this year,” says Pantoja-Navarjas. “Those companies that made it are asking themselves how can they make their operations better. They’re going to have to invest in technology, in resources, in optimizing their processes.”
Trends to watch in 2021
From AI and machine learning applications to IoT technologies, warehouse execution systems continue to improve. But both Softeon’s Dan Gilmore and Oracle’s Diego Pantoja-Navarjas predict the following trends to watch for the upcoming year:
- The migration of people away from big cities thanks to proof that “work-from-home” is possible: “We’re seeing people starting to move away from big cities, and with that come new demands on supply chains and their elasticity,” says Pantoja-Navarjas. “Companies are going to be focused on where the demand is going – consumers are going to demand products at the same speed that they are accustomed to.”
- Companies abandoning retail in favor of direct-to-consumer fulfillment: “It’s the only real path for a lot of these companies,” says Gilmore, who says that Nike is a prime example of this shift as it switched from thousands of retail points to only a few dozen as it emphasizes a DTC model now.
- A continued emphasis on security as more companies shift to cloud-based WES: “It’s a key initiative as this migration continues,” says Pantoja-Navarjas. “I think we’ll continue to see companies emphasizing data encryption defenses and working with the right experts in cybersecurity.”
- Opportunities to fill the gaps and strengthen the supply chain industry: “There’s been a movement throughout the entire ecosystem toward strategic partnerships, in infrastructure, in working with vendors, and in sharing information through business applications,” says Pantoja-Navarjas. “I think we’ll see new entrepreneurs coming up with more applications.”
Laurie Arendt is an award-winning business writer based in Wisconsin. Her writing regularly appears in national trade publications in a variety of industries. To contact Laurie email editorial@MHNetwork.com.