By Colm Slattery & Brian Condell
While companies like Amazon are leading the way in logistics automation through the acquisition of Kiva and other ecosystem players, the reality is that the logistics and retail supply chain relies on a heavily unautomated infrastructure costing the industry hundreds of billions of revenue losses per year and which will take decades of investment to fully automate. Couple that with the fact that eCommerce demand is growing at >20% CAGR and consumers are requesting same-day deliveries highlighting the problems that the logistics industry faces going forward.
Where Are the Main Areas to Consolidate Operational Efficiencies?
The primary area and major pain point start with the retailer. The inability to reliability track inventory in real-time causes retailers to either overstock or understock products, a phenomenon known as inventory distortion. This results in the global retail market losing hundreds of billions yearly, either via forced discounting or a lack of products to sell when the consumer needs them.
The next challenge, once you know what, where, and when you need your inventory is how to get it there. Real-time end-end inventory tracking not only improves product scheduling, but also allows you to improve other supply chain inefficiencies by optimizing container loads improving fleet operations and sustainability, helping with incorrect product loading, and reducing opportunistic theft.
The final consideration is around operational efficiencies for warehouse product storage and movement costs. It’s very common that warehouse space utilization averages only 80-85% capacity. While the major players own their own warehouse space, small-medium manufacturers and retailers rent space. According to Bloomberg, the cost of renting US warehousing per foot rose from $5.2 in 2021 to $7 currently, a 34% increase!
So, What’s Coming Next…?
In order to meet the demands of a resilient and robust supply chain of the future, there will be significant capital investment in all areas of warehouse, logistics, and retail automation. A recent survey by Zebra Technologies around warehouse operators (Figure 1 below) shows they expect warehouse automation alone will transform from ~20% today to <90% in 5 years. The automation transformation will focus on the main areas of autonomous mobile robots, highly automated scanning, and dimensioning systems for both handheld devices and conveyor systems, high-speed machine and computer vision, and real-time asset tracking of products. Of course, operations managers will always give caution to Capex investment versus ROI, and while the investment into automation will be very significant the total solution cost and value need to be fully understood at the system level to get market investment.
Figure 1. Investments in warehouse operations
Where Does ADI Play?
To enable the automation transformation, the market needs high precision, high-speed measurement, and control technologies. ADI's breath of technologies from sensing, precision, power management, and connectivity; combined with deep systems understanding allows us to partner and support all our customers with a more than product-based approach. We aim to understand the market needs both today and, in the future, and create technologies and solutions which will add value and be disruptive in the market.
Examples of such technology needs are:
High-performance RF asset tracking technologies to increase the range of where assets can be tracked and reduce overall capex costs.
State-of-the-art battery management with the fastest charge, precision battery State of Health (SOH) and fuel gauge management, and secure battery authentication.
Faster machine vision scanning and dimensioning systems both handheld and fixed.
This series of blogs will talk through some of the end application use cases in more detail, highlighting end market needs and where ADI’s technology is helping the logistics and retail automation transformation. The first set of blogs in this series will focus on a deeper dive into the handheld data capture scanning application use case.
See the next blog here.