Retail warehousing is witnessing the rise of the machines as automated technology takes over processing, stock management and storage duties from humans. Will man or machine be the ultimate victor?
Humanity has a habit of designing itself out of jobs - the more sophisticated the machines we create, the fewer roles we leave for ourselves. The retail warehouse, once a hive of humanity, is a prime example.
“If you had the capital and the willing, you could get a machine to do every single job in the warehouse,” says Andrew Dalziel, vice-president of product management at trade and logistics software provider Kewill.
But people have not yet been driven from the warehouses entirely because the retail proposition for warehouse managers is tricky - products are diverse and change frequently, and volumes can shift daily. Machines excel in some areas beyond their human creators but, in other areas, the creators remain lords of the domain.
Where technology is most dominant is in order processing, stock management and storage/replenishment. For the former two, Craig Sears-Black, UK managing director of warehouse software developer Manhattan Associates, says computing power is too efficient for humans to compete. “Nearly every warehouse will now have an off-the-shelf warehouse management system or one they have built themselves,” he says.
Capgemini Consulting head of supply chain consulting Steve Wilson says technology dominates storage/replenishment too. “With storage, you need accuracy,” he explains.
“With humans, there is more chance of a product being put away in the wrong place and in an ecommerce process, the first person to realise a mistake is likely to be the end customer - which is a disaster.”
Wilson adds that technology also enables high-value items to be placed out of the reach of temptation for thieves, as cranes hoist them high into the warehouse’s upper reaches. “One of the UK’s largest retailers uses a system like this for jewellery lines,” he says.
But the one caveat to this digital dominance is that machines and computers are only as good as the data they receive. If the data is wrong, then damaging errors can occur throughout the warehouse journey for that product.
A popular pick
Picking is one area where people have dominance over machines. To fully automate picking, Sears-Black says high volumes are first needed, because the only way to get return on investment on the expensive picking machines is if the saving made per unit is multiplied enough times. He estimates only about 20% of retailers would fit into this bracket.
The second requirement is to have a product range that is static and uniform in size. This is because machines work best when built to perform within certain size tolerances. If the size and weight of the boxes keep changing, the machine will also need adapting or replacing.
Wilson says there are only two areas of retail that meet this second requirement. The first is pharmaceuticals because even when the product changes, the box dimensions tend to remain the same. Here an A-Frame, whereby crates are run on a conveyor and products are fired in automatically from storage above according to a scanned order barcode, makes practical and economic sense.
The other area is grocery but, despite products tending to be static and stored on set sizes of pallet, Wilson says fully automatic picking is not common because of the costs involved. In the turf war of the supermarkets, the return on investment is often not good enough, despite high volumes. Morrisons, however, has signalled its support for automation with plans to spend £46m to expand the Ocado warehouse it is purchasing in Warwickshire.
For most areas in retail, then, humans are the best option. “Retailers tend to have large ranges - 40,000 to 150,000 different products - and they change them frequently,” says Wilson.
Humans can quickly adapt to whatever product is in front of them, whereas machines can’t do that cost-effectively.
And humans can easily pick and transport different types of product, while machines find this difficult. Humans can also scale up quickly - you just add more bodies to the mix if there is an unexpected peak in demand - whereas a machine built for a set volume is incapable of upping that.
While machines are evolving fast, humans are holding their own in picking, packing and quality checks in the complex world of retail warehousing. As Wilson says: “The human element is not going away, partly for flexibility and cost and partly because retail is all about a changing landscape, and machines find it very difficult to cope with that.”
The human touch
For most retailers, the implementation of technology in the warehouse is a simple matter of cost-per-unit sums - when it is cheaper to automate, they automate. At cosmetics retailer Lush, export customer service manager Graeme Trevett says things are different. He explains that care for the products is the number-one priority and as a result retaining the human element to the warehouse is essential.
“Within our Lush fulfilment operation we like to put just as much care into packing our shop and customer orders as our compounders do with making our product range,” he says. “This means everything is done by hand and then scanned to ensure we can accurately trace all of our 380 products to their end destination.”
This takes organisation. “The warehouse is well organised and the store orders are systematically picked to make sure that the heaviest products are on the bottom of our pallets while the most fragile are picked last to help them survive the sometimes bumpy journeys,” he explains.
At pure-play gift retailer Firebox there is more automation in the system but Kerry Okikiade, finance and operations director, says the human element is still a vital factor in the warehouse strategy. “No one understands human needs better than humans. Machines only really work as well as they are designed to, whereas humans can intervene if and when something doesn’t go according to plan, which allows for flexibility over orders that fall outside the normal configuration.”
At Screwfix, where the scale of operation and product range mean technology is essential, humans still have the last word, according to Dave Lowther, operations service director. “It is always our warehouse staff that make the final decisions and sort out discrepancies or problems with our warehouse technology. The human eye and brain is a much more complex and agile system than any technology will ever be.”
Automation case study: IAG Cargo
International freight carrier IAG Cargo handles, stores and transports perishable goods to and from Europe for leading grocery retailers including Waitrose and Marks & Spencer at its custom-built handling facilities at Heathrow and Madrid. At Heathrow its cargo hub Ascentis - regarded as one of the world’s most advanced freight processing facilities - uses sophisticated automated technology to handle and store up to 800,000 tonnes a year across a total floor area of 887,675 sq ft. In fact, advanced IT support systems are needed not only to manage capacity and inventory, but to move the freight, track its location and billing customers.
When freight arrives in the UK, automated systems identify the type of goods and whether they need to be transported as an intact unit, built or broken down. The freight is then either automatically made available for customer collection or booked on its onward journey and presented automatically airside for delivery to the aircraft 180 minutes before departure.
If the unit needs to be broken down, it is mechanically allocated to a workstation. The correct number of empty cages for the broken down unit to be loaded onto is also automatically delivered. Then the freight is scanned into the cages and sent to the cage store without any human interaction.
In contrast to a traditional manual warehouse operation, automation significantly reduces fork-lift and people movements in the facility. “It speeds processes up, saves resources and improves efficiencies,” according to Darren Peek, manager of global products. Automation also means the entire cargo store is unmanned, making it a more secure area, which is another appeal for retailers using the facilities.
But automation has its drawbacks, Peek says. “There are always challenges - power failures can be very costly and we’ve invested a lot of money in an IT and server upgrade.”
Working in harmony
Technology is vital in helping staff in the picking process. Screwfix operations service director Dave Lowther says technology selects the right-sized carton for the products, which are sent around the warehouse on conveyor belts, stopping at stations where humans add items.
At pure-play gift retailer Firebox, technology works in three ways to help staff. “The technology prioritises pick lists and works out the fastest picking path,” explains finance and operations director Kerry Okikiade. Voice picking systems are also used, where the human picker is instructed by a machine on what to pick via a headset.
Manhattan Associates’ Craig Sears-Black says it gives a good return on investment, as does pick-to-light. “With pick-to-light you have a large number of smaller products in rows with lights in front - when the light goes on, the pickers select that product,” he explains.
According to Capgemini Consulting’s Steve Wilson, quality checking is becoming automated too: “Scanning and weight checking ensures the right products are in the packs. It knows what the weight of the products should be and if it doesn’t match it’s channelled to a supervisor.”
But humans haven’t lost the battle yet, says John Bailey at software developer JDA. “While automatic pickers are suitable for items such as DVDs, it isn’t any good for fashion or high-cost items, which need to be presented well to customers.
“As for quality assurance checks, there isn’t technology that can do it better than a human.”