Insights 2020: Developments on Our Industry’s Horizon
Tuesday, December 31, 2019
Six WERC members offer their thoughts on the trends in and opportunities for the field in the next 12 months.
It’s a new year — indeed, a new decade — and a fresh opportunity to regroup and look ahead at what’s (likely) to come in warehousing, distribution and transportation in 2020. What will the top issues, priorities and challenges be for DC leaders over the next 12 months? Which areas of operational improvement will attract the most focus? And, which technologies will get the biggest spend — and have the biggest impact — on day-to-day productivity?
To get some realistic insights from the front lines, WERC asked six members to answer those questions and share their expertise. They include: Jeremy Banta, professor of supply chain management at Columbus State Community College; Dan Beard, senior director of distribution for NexTerra Wine Company; Brad Long, brand marketing manager for Yale Materials Handling; David Singer, senior VP at Thomas, Large & Singer; Chaneta Sullivan, director of safety, quality and compliance at Chick-fil-A Supply; and Aaron Wilker, managing partner at C2 Logistix.
Top Issues in 2020
Labor, specifically the shortage of it, will continue to be a major issue for warehouses and DCs in 2020, says Beard. “Salary comparisons, and adjustments where necessary, will be key to hiring and retaining strong workforces,” he notes, adding that he expects operations to also put an increased emphasis on improving and strengthening culture as another step toward mitigating that challenge.
The same holds true for Canada, says Singer, who notes that in his local Ontario market, unemployment is at its lowest rate in more than 40 years.
“Not only will that continue to drive wages higher, employee churn will still be an issue. That will make it even more imperative that warehouses and DCs find ways to increase efficiency — particularly as they add services that drive greater value for their clients, like co-packing, labeling, kitting, and direct-to-consumer deliveries,” he explains. “I expect that, as an employee retention strategy, operations will link workers to efficiency. We’ll see expanded tracking of labor and incentivizing higher performance with rewards based on key performance indicators (KPIs) that employees are accountable for meeting.”
Improving culture as a workforce strategy is something Banta also expects to see more of in 2020. “I’ve seen a couple of facilities in central Ohio that dedicated a corner of their warehouse to a basketball court, ping pong tables, even set up a gym for their employees,” he notes, observing that those amenities are no longer limited to Silicon Valley tech startups.
“Of course, you can offer all this neat stuff, but if you don’t make people feel like it’s okay to use it, then it’s useless,” he adds. “If, by 2020, companies haven’t realized that corporate culture is an issue, then shame on them. It’s got to come from the top-down.”
Long agrees. “The labor shortage and turnover rates pressure operations to re-examine their strategic workforce planning, with a keen interest in technologies like robotics and connected Internet of Things (IoT) solutions, as well as hiring and retention activities. The focus is to make the most effective use of labor resources that are available.”
Further compounding labor challenges are customers’ fulfillment expectations, adds Long.
“On average, 69% of customers will not shop with a company again if their delivery is late. With stakes this high, speed, agility and quality are imperative to get customers their orders correctly and quickly,” he explains, noting that SKU proliferation will also continue into 2020, as the number of distinct items companies produce, and consumers demand, continues to rise.
“Businesses must respond by adjusting their facility layouts and optimizing their workflows to accommodate,” predicts Long.
The continued lack of Class A driver availability will again be prompting sleepless nights among supply chain managers, says Wilker. “It was a hot topic at the 2019 WERC Annual Conference, and I’m sorry to report that nobody had a solution that was guaranteed to get drivers. I’ve even been trying to get my 25-year-old son, who didn’t like college, to go get his Class A — he could be making six figures within two years!”
Technology Investments in 2020
DC leaders will continue to invest in the systems that deliver improvements in safety, productivity and efficiency, says Beard, noting an increase in supplier partnerships that enable users of key management softwares to leverage Cloud and mobile platforms. “Advancements in mobile technologies for the warehousing, distribution, and transportation sectors have grown significantly in the last few years, and I believe we’ll see wider adoption of iOS and Android based applications for warehouse management in 2020.”
Wilker is also anticipating that more operations will shift from site-hosted to Cloud-hosted softwares, including enterprise resource planning (ERP), warehouse management systems (WMS), and transportation management systems (TMS). “For companies with a sales force that absolutely depends on accurate inventory, the ability to share real-time updates via Cloud-based software is a game changer.”
Automated systems will also be increasingly implemented in 2020 — but selectively. That is, in the areas where they increase productivity and support the bottom line, notes Wilker. Companies that may have hesitated to invest before now are finally seeing quantifiable successes from early adopters, which makes the capital investment more appealing.
“I’ve been seeing a lot more interest in automatic guided vehicles (AGVs) and autonomous mobile robots (AMRs) to interface with conveyors and move pallets or products as a supplement to the manual labor force,” he explains. “Likewise, systems that increase accuracy and minimize labor touches for inventory picking and putaway — such as automated storage and retrieval systems (ASRS) and augmented reality visual headsets — will likely see more installations as well.”
Both Singer and Long concur, noting that robotic lift trucks used for any task that involves picking up, transporting and dropping off pallets have been getting a lot of recent attention.
“They improve efficiency by optimizing workflow, offering greater dependability and enhancing labor productivity,” says Long. “When used as part of an operations’ strategic workforce planning, robotic lift trucks can augment available labor resources, fostering ‘cobotics’ with humans working alongside robots. This leverages the strengths of both to make repetitive tasks and more complex, value-added functions more efficient.”
Automation implementations definitely offer DCs increased productivity with less labor pressure, but Sullivan cautions that companies need to remain focused on ensuring a safe environment for those employees that continue to work in the facility.
“Obviously OSHA citations and inspections are on everyone’s radar, but recent OSHA Communications continue to show a high focus and citation rate for workplace accidents and injuries involving machinery, machine guarding, lockout/tagout, fall protection, and more” she says. “The resulting fines have been huge, in the hundreds of thousands of dollars, and could cripple a company if the injury is significant enough.”
She attributes some of that uptick to the trending increases in automation installations over the past few years. “My concern is that companies aren’t necessarily focusing as much as they should be on putting the proper protection around this equipment, like machine guarding, as well as on the importance of training. Both should be a big part of a company’s culture,” continues Sullivan.
“Adding efficiencies to warehousing can be very beneficial, but any labor and/or financial benefit will be insignificant if we forget to train our people the right way and ensure they enjoy the ability to go home the same way they came to work,” she adds. “Brand reputation and having a true culture of care trumps everything.”
As part of the food supply chain, Sullivan also expects to see increased use of technology in the food tracking and traceability arena in 2020. Doing so further expands visibility into the entire food supply chain from end-to-end, an imperative factor to protecting consumer trust.
“In a highly regulated environment, any technology that can be used to track product source, condition, and safety — particularly its time and temperature from end-to-end — is key,” she explains. “We are currently exploring technology which will provide enhanced visibility and dashboard capabilities to ensure we maintain the highest standard of care and quality for our supply chain and the food we ship every day.”
Having that real-time visibility, she continues, enables rerouting of a problem shipment before it arrives at its destination, as well as affords the opportunity to correct the issue safely and appropriately.
Customers will also continue to expect greater visibility into live, actionable, real-time data in 2020, adds Singer. “Operations recognize the need for improved data services and reporting functions, particularly as retailer supply chain requirements and penalties grow in scope and complexity,” he explains. “I think we’ll see more companies meeting their customers’ expectations for the ‘app’-like accessibility to information on demand, which has become so prevalent in our day-to-day lifestyles and culture.”
Emerging Technologies to Watch
Lots of technologies have been hyped for their potential to benefit supply chains, but are any of them at the point of practical application (or rapidly approaching it)?
Wilker points to Blockchain as an emerging supply chain technology that companies which heavily import or export products should devote more attention to in 2020. The tracking benefits of Blockchain will be a big efficiency booster, he notes.
“It also makes ownership instantaneous. When a shipment is loaded onto a ship, the documentation is automatically updated. The same happens when the load transfers to intermodal and so on,” explains Wilker. “Every time ownership of, or responsibility for, a shipment changes hands, Blockchain tracks it and payment can also be transferred immediately. Everybody wants to get paid faster; Blockchain enables that.”
As the importance of transparency and sustainability continue to grow among consumers, operations will start to look at alternative power sources for their motive fleets, says Long.
“Lithium-ion batteries, for example, offer superior performance and require zero maintenance in order to charge — just plug in whenever the opportunity presents itself,” he explains. “They also last longer than traditional electrification options. Over a 5-year period, a single lithium-ion battery pack would allow operations to avoid replacing four lead acid battery packs. This reduces recycling waste and saves money.”
Long also notes that hydrogen fuel cells — once considered cost prohibitive — are becoming more affordable, making them a legitimate option to improve operational performance. “They produce no harmful emissions, only water and heat, and can be refueled in as quick as three minutes. This enables a significant reduction in greenhouse gases, while enabling operations to maximize productivity, with minimal downtime for refueling,” he notes.
Beyond 2020: What’s Next
As for what comes after 2020, Banta encourages companies to start thinking longer term about two transportation modes: commercial space travel and Hyperloop.
“Those two things are heating up fast,” he says. “Are either going to happen in the next two to three years? No. However, what happens if a commercial space program approaches your company about using your product in zero gravity?”
Hyperloop, a transportation method that moves passengers or freight in pods at extremely high speeds through a sealed tube system at significantly reduced travel times, also has the potential to impact supply chains, Banta continues.
“There’s been more change in our industry in the last five years than in the previous 30. Changes that used to take decades to happen now occur in months,” he concludes. “If you aren’t staying educated on trends and emerging technologies and how businesses are adapting, you could find yourself too far behind and unable to recover.”
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