Micro-fulfilment will redefine retail logistics

News Technology

James Smith, Managing Director at Autostore System, UK and Ireland, spoke to The Logistics Point about the lessons companies learnt during the last year and what it will take for the supply chain to transform. James will deliver the keynote session at the micro-fulfilment conference, organised by The Logistics Point, on 9th March.

2020 was transformational but was it a good or a bad transformation?

There is good and bad. The bad is that the global pandemic encouraged a huge shift that people had to make. For a lot of people, even if they had been ordering online previously, ecommerce has become more prevalent.

This is also true for the number of people who have never before ordered online and now are. This has exposed some real challenges within the existing supply chains that the logistics industry uses today. Typically distribution of goods, specifically in the UK, is very centralised and relies on huge distribution centres and warehouses to send bulk to traditional retail stores that break them down into items.

This huge shift to ecommerce in 2020 means that those logistics centres that are organised in that way simply don’t work anymore. That is the really bad thing about the situation. Retail has suddenly been hit with this massive shift and many are talking about what happened in five months was expected to happen within five years. It has really been a dramatic shift.

It has enabled a lot of businesses that had already invested in ecommerce to grow. It has also enabled and accelerated a lot of growth plans around incorporating automation within the retail and logistics sector. Plans that were potentially five years into the future are suddenly being developed within a year.

Has logistics resolved its capacity problems and smoothen out distribution?

The demand that the whole retail and supply chain sector was presented with in 2020 had never been experienced before and nobody had ever predicted such a demand for even the most fundamental things like toilet paper. A lot of criticism has been towards the grocers for not having sufficient stock available but nobody in the supply chain was ready for that huge peak in demand. Also, all of a sudden and overnight, people wanted home deliveries and Click & Collect services.

That meant that consumers and retailers were faced with low slot availability meaning that it was a week before they could get a delivery and in the worst cases five to six weeks before a delivery could be done. 

“Many people expect that within ten years a huge amount of the manual jobs that exist today would be replaced by an automated process that is probably going to be robotics of some description.”

What has changed is that the supply chain industry has adapted really quickly to ensure that if there are sudden peaks again they can manage it better. Equally, in March 2020 consumers went into overdrive thinking that essentials would be unavailable which caused this massive demand that the retailers couldn’t actually match. 

We are seeing that this time people are reacting more normally. They lived through March last year and realised that bulk buying of toilet rolls was probably not necessary. Because people are behaving more naturally the supply chain is not under as much pressure than it was before.

Would micro-fulfillment centres be part of the adaptation of supply chains?

Micro-fulfillment is all about bringing automation within the retail space. During the pandemic the supply chain has realised two things. One, they have been increasingly challenged with the availability of their own staff to work in a social distanced environment.

“Although we can bring automation and robots within a company, all of that requires people to actually maintain it. ”

Quite often today’s warehouses are just not designed for this. If you look at retail stores you would see people pushing trolleys to fulfill ecommerce orders. This is again creating a huge volume of people in the supermarket. More and more companies are looking at how they can automate these processes and get different technologies like robotics into our retail spaces. Retailers are really looking at how they can better utilise their people and by doing that how they can create a more socially distanced environment for shoppers.

How is the warehouse of the future going to look like then?

Many people expect that within ten years a huge amount of the manual jobs that exist today would be replaced by an automated process that is probably going to be robotics of some description. There is no doubt that the warehouse of the future will see much more robotics. 

For Autostore the answer to this is not to flatten everything and start from scratch. As a solution provider we are able to totally redefine existing space. Not only redefine it but repurpose it and increase its efficiency and the amount  of inventory we can store in that existing warehouse. We can increase the amount of volume that is going in and out of the warehouse potentially with fewer people.

What will happen to those people who have no knowledge of robotics and robots?

It is a question we hear all the time. Of course there will be some job changes that are going to happen but already in logistics and supply chain we have a real challenge with not having enough people available. Gone are the days when we can rely on agencies to provide people for peak periods like Christmas or Black Friday.

Secondly, although we can bring automation and robots within a company, all of that requires people to actually maintain it. Autostore robots require periodic maintenance and inspection. 

We as a business invest a lot in people and we are looking at adding up to 30% more people to our company this year alone. These are much better jobs that we are creating and it is being driven by the actual growth of automation within the warehouse sector.✷

What is the impact of Brexit on retail and plans for automation and how Autostore can help companies reach their goals? You can watch the full interview with James Smith on our YouTube channel now!

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