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Warehouse Automation… When does it make sense for your business?

There appears to be an ever-increasing flow of news articles or social media announcements for new automation projects here in Australia. The pressure to join in this race often appears overwhelming.
Warehouse Automation When does it make sense for your business

Industry leaders such as Amazon, Coles and Woolworths are investing breathtaking amounts of capital in redeveloping their supply chains to take advantage of this rapidly evolving technology. The scale of their operations, and landscape in which they compete leaves them little choice but to seek the benefits and efficiencies of automation.  These businesses however, have the significant capital resources necessary to take these risks and the resilience and scale to overcome challenges when they arise.

But what do you do if you are not one of these businesses? How do you decide when to make the leap? 

Just because everyone else seems to be going down this path, it doesn’t automatically mean that it’s the right thing for you.

There are many important technical questions that will define a solution and guide you on the journey, but in my experience, there are two key questions to understand first, before you go ahead:

What are you trying to achieve?

Automation can solve many problems; we can reduce manual handling risk, increase productivity, reduce errors or breakage, we can maximise operational throughput, we can reduce workforce or warehouse footprint.  But it’s rare that we can do of all these things. A focus on one may be at the cost of another. Having a clear focus on what you are trying to achieve through automation, any why this is important to you, will greatly improve the chance of success.

Are you committed to this change?

Automation in my view, is as much of a philosophical decision as a commercial one, no matter how good the business case looks. The investment, the risks and the disruption cannot be underestimated. There will be many challenges and decision points along the way that will provide an easy way out. Being committed to seeing it through requires resilience and a belief that this is the right direction for the business.

Answering the first question is key to informing the second.

So how do you answer the question “what are you trying to achieve?”

It comes from a clear understanding of your business and critically, the future risks and constraints. While there may be clear objectives, such as increased productivity for certain operations, order picking for example, this cannot be looked at in isolation. These changes may impact purchasing, warehouse footprint, supply chain specifications, etc.

The questions that should be asked are:

  • What are your commercial levers?

Where are the costs or risks that could be reduced through automation? It is important to consider both the current and future states, and to accurately measure or forecast these. I will often spend more time working with clients to answer this question than developing solutions. Quantified values provide the benchmark to assess business cases and provide the confidence to commit to change.

  •  What are the operational drivers?

Are parts of the business constrained by current practices? Again, understanding and measuring the ‘road blocks’ is key to being able to measure the benefit of change. If you are unsure of the problem you are solving, then it is difficult to isolate the benefits gained from a change to the way the business operates. The approach I recommend is a modelled one that provides credible and robust metrics against which proposed solutions can be measured.

  • What critical decision points are on the horizon?

Often forced business change can provide an opportunity or catalyst for automation. Is relocation likely? Are you space constrained? Is legislation changing or are there new markets to service? Or is it as simple as getting left behind in an increasingly changing market? Each of these will affect the timing and scale of any decision. No one has a crystal ball in business, and this can be a difficult question to answer, but the risks of not doing this correctly are significant. I have seen many examples of businesses going through the pain of change only to find that they must do it all again as the solution was neither big enough or flexible enough or that they had underestimated the benefits and opportunities that would flow from the change.

Exploring these ideas can be challenging but also rewarding as the depth of knowledge gained will be fundamental in setting the direction of future change.  These can, however, be difficult questions to answer internally as they often challenge the status quo and require different levels of thinking and leadership support.

For me though, this is where the fun starts and I hope to be able to share some of these experiences and insights in future posts.