Consultants in Logistics

Logistics Automation Update

Logistics Automation Update

Digitalisation in Logistics

Over the past few years, Automation & Artificial Intelligence have come to the forefront of the supply chain agenda.

Appearing in news media across the globe, the current interest is driven by rising online sales, reduced labour supply, changing markets and the development of less capital-intensive technologies such as autonomous trucks.

It is time to take stock of progress and look at the key elements fuelling the widespread adoption of automation in the logistics industry.

Labour Shortage Solution

When considering the use of automation in the Supply Chain, changes in the cost and availability of labour are key.

The Office of National Statistics’ (ONS) UK labour market report of January 2018 shows the following:

  • The employment rate for the year from January 2017 increased by the highest margin since records began in 1971

  • Unemployment reduced by 160,000 to 1.44 million nThe unemployment rate was down from 4.8% to 4.3%, the lowest since 1975

  • Average weekly earnings before adjusting for inflation increased by 2.5%

  • Average weekly earnings adjusted for price inflation fell by 0.2%

  • Job vacancies were the highest since records began in 2001 at 810,000 for Q4 2017

In summary, the UK has less unemployment and more job vacancies with wages rising slightly less than inflation.

The FTA Skills Shortage Report from November 2017 showed the following year-on-year trends in the logistics industry:

  • The proportion of EU-national van drivers has increased from 8.8% to 12%

  • For fork lift drivers the increase was from 20.6% to 21.6%

  • The overall number of fork lift truck drivers in employment has decreased by 9%

  • The number of managers and directors has been trending upward for 3 years, with a 14% increase last year alone

This evidence for continued labour shortages means that the logistics industry is primed for automation.

MARKET DYNAMICS

The IMRG MetaPack UK Delivery Index Report from December 2017 shows a continued increase in online retail volumes:

  • The 2017 peak shows new record levels in eretail, with December 2017 up 16.7% on 2016

  • The December 2017 peak was softened by Black Friday falling slightly earlier, allowing more orders to be dispatched in November

  • Premium delivery options were reduced at peak to manage the carrier workload

  • These findings are consistent with the IMRG Capgemini Online Retail Sales Index

  • The continued growth of eCommerce adds to the demands of logistics operations because of smaller order sizes and shorter service lead times. There are no indications that this trend is likely to change in the foreseeable future.

This environment requires huge resources, particularly for personalised packing. The largest eCommerce centres employ thousands of employees so accurate delivery of services at the right level of efficiency is very important.

Automation Technology Uptake

Generally, MHE sales are increasing, as shown in BITO’s quarterly sales snapshot of November 2017:

  • Following a strong start to 2017, annualised forklift truck deliveries were up 8.2% compared with 2016

  • Demand from the retail distribution sector was 40% higher than 2016

  • Pedestrian warehouse trucks remain in highest demand with a market share of 39%

Specific sales figures for automated trucks are unavailable, but case studies from major MHE suppliers suggest that Automated Pallet Movers are between the Introduction and Growth stages of the product cycle. Make no mistake, technology is coming.

WHAT AUTOMATION SHOULD YOU APPLY?

Recently, Davies & Robson has carried out a number of projects to review client automation options in detail. These have shown the following general trends:

  • There is a clear case for Automated Pallet Movers and VNA in high-volume operations

  • The less capital-intensive technologies (compared to cranes and ASRS) show payback periods within the planning horizon of many businesses

  • There is an increased use of vertical lift machines for medium-volume and mediumSKU range operations driving pick productivity. This is due to improved operating speeds over carousels and optimum allocation of stock

  • Robotics are most suitable for operations with large SKU ranges, smaller products, high space costs and a greater number of order lines

  • Labour intensity and space costs are traded off against the capital investment

  • Because of capital investment requirements, robotics and ASRS solutions have longer payback periods, making them more suitable to business with a longer-term strategic approach

A final observation from one of our clients: automation in the warehouse tends to affect the “nicer jobs” like VNA or Pallet Truck driver, leaving the more physically demanding jobs to be done.

Your Automation Solution

Is automation the best solution for your business needs? Whether you are seeking support with a review of operations or design and implementation of automated solutions, we can help you assess the options available. Call us on 01327 349090 to speak to one of our consultants or contact us with your logistics automation consultancy needs.

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