Robotics in the Supply Chain

Very few industries illustrate the evolving relationship between “man and machine” as well as logistics. The industry is being buffeted by several major trends that are bringing robotics and associates closer together. Low unemployment is creating intense competition for warehouse workers at a time when demand for labor is increasing significantly. Manual processes are still the norm in many areas of the supply chain, and there are perceived inefficiencies in segments such as last-mile delivery or utilization of transport capacity. E-commerce is introducing profound changes – from smaller batch sizes across a much broader range of SKUs to the need to reengineer fulfillment networks to position inventory closer to the end customer and pick it faster to meet the one-day shipping promise. All of these trends, combined with the ongoing competitive pressure to reduce costs and increase productivity, create a compelling business case for increased automation and deployment of robotics.

At the same time, in 2020, we will not see a mass transition to fully automated warehouses. That’s an important point to highlight because there are many misconceptions when it comes to the short-term potential of robotics in our industry. Logistics operations are incredibly complex, and even the most advanced robotic solutions on the market are still not fully capable of sorting through scattered items of varying weight, size, and orientation in most companies’ warehouses at a sufficient rate of accuracy and reliability. 

There is still an unsatisfactory trade-off with respect to operating vs. capital costs. In essence, increased capital investment in robotics for warehousing operations, for example, leads to higher productivity, but at a diminishing rate. In addition, many companies do not yet have the foundations in place – either in terms of their warehouse management systems, the scale of their warehousing infrastructure, the stability of their processes, or even their organizational set-up and culture – to apply robotics at scale across their supply chain operations. There is still an important role to be played by human beings.

So what can we expect in 2020? We will certainly see an accelerated uptake of robotics in logistics operations. We see significant improvements in robot capabilities for different logistics tasks, while the cost of those technologies is continuing to come down at a rapid pace. There is a significant opportunity to apply technological solutions to support and enhance productivity, for example, in labor-intensive functions such as fulfillment. Collaborative robotics, in particular, can be incorporated into existing operations without costly investment or major disruptive change. In this area, swarming approaches have proven to be particularly effective in increasing productivity and decreasing cycle time. Through our accelerated digitization program, DHL Supply Chain has taken a focused and measured approach, in which we have identified 14 target technologies – seven of which involve collaborative robotics. These technologies, such as goods-to-person robots and autonomous pallet jacks, can be fast-tracked into our customers’ operations and make our associates more productive without the need for prohibitively expensive capital outlays. We are vendor agnostic, which allows us to select the provider and technology that best fits the specific requirements of each customer, while also giving us the flexibility to adopt new technologies as they emerge or customers’ needs change.

In 2020, we expect that three key trends will support this continued (and continually accelerating) journey towards automation in logistics. Robotics providers will introduce more interoperability to their technologies, allowing customers to combine different solutions more easily on a shared operating platform, further improving efficiency and opening the door for creative new applications and use cases. Artificial Intelligence will further drive the performance of robotics solutions, building on the body of data generated by operations – and also the collaboration on tasks with humans – in different warehousing environments to date. Finally, more innovative financing solutions – such as leasing and “Robot as a Service” pay-per-action models – will enable more companies to pilot and deploy robotics in their logistics operations. In short, for the foreseeable future, we will see men and machines continue to deliver a more efficient, intelligent, and responsive supply chain together.