Many organisations are thinking about investing in automation, robotics or other advanced technology to address issues such as increasing labour costs and reduced labour availability; higher inventory levels or insufficient warehouse space; or reduced delivery lead times demanded by customers. How does an organisation make decisions on what changes it should make and in what order? Recently, I received a link to the DHL Trend Radar version 6 from DHL.
This highlights 40 separate “trends” that are predicted to impact logistics either in the next five years or in the next 5 to 10 years under two main headings: “Social and business Trends” and “Technology trends”, differentiating by expected impact (from “low” to “high”). It is a fascinating and valuable study, especially because trends can be seen to increase and decrease in importance, and to change their expected levels of impact over time by comparing with previous versions of the study.
However, it is worth noting that there are many trends described in Version 6 that have been around a long time but still haven’t delivered on their expected level of impact. For example, “Blockchain” and “Drones” still sit stubbornly in the “5-10” year timeframe despite being concepts that have been around for several years (drones, in particular, being a technology that is already commonplace in everyday life). Similarly, “Outdoor autonomous vehicles” are seen as potentially high impact in the study, with trials of such technology (whether for personal transportation, for package delivery or for goods vehicles) receiving plenty of publicity, yet they are also still not expected to bear fruit for 5-10 years. At the same time, some other trends are already starting to demonstrate strong impacts – robotics, both fixed and moveable, are high impact and certainly realisable in the next 5 years – in many cases, they are already deployed and delivering tangible benefits. The issue for organisations looking at this study is trying to decide where to place your bets, as a mistimed investment in technology that does not deliver the expected benefits in the predicted time frame may damage competitiveness, reduce credibility and lessen appetite for further investments.
There are two key actions that any organisation can take to improve its chances of successful investments: firstly, to understand what is changing in its marketplace; and secondly to understand where it is spending its logistics budget today. An organisation facing competitive threats from new entrants in its market with more efficient operations needs to focus on reviewing its own operational efficiency. To be successful in doing this, it first needs to understand in detail where it is spending money today. For example, if you spend 60% of your labour budget in order assembly (a common situation in direct-to-consumer sales), this is the place to focus. Similarly, if you cannot keep all your stock together in one location, then storage efficiency may be the key. Alternatively, if returns processing is increasing in volume and taking more resource than previously, then that may be the place to focus your effort.
Once the organisation understands where it is inefficient or uncompetitive, the next step must be to review the operational processes in that area. It is an oft-quoted adage that you shouldn’t automate a bad process, but moreover, it may be possible to generate significant efficiencies without any automation investment. Using analysis by continuous improvement tools to identify wasted effort in current processes, such as unnecessary walking to pick up documents or to print labels, or failing to re-organise the picking activity regularly to ensure items picked most often are closest to the loading bay, or not ensuring that frequently used stock is in the optimum locations, are all changes that can drive cost savings and efficiency benefits at little or no cost. Identifying the things that can be changed without significant investment means that when the time comes to invest, the organisation is clearer about what can be done – and why!