This article is based on research by Levvel, who joined the Endava family in 2021. The team surveyed over 500 US-based companies who procure transportation and logistics (T&L) services internally and externally to get their views on their challenges, needs and use of digital technology solutions.
While companies often perceive technology innovation to mean things like high-end robotics, artificial intelligence and fully autonomous vehicles, there are many elements in the supply chain that can be modernized without requiring great effort or cost, while still providing the competitive edge T&L companies are looking for. In this series, we will present current industry challenges and how digital technology can help reduce friction, enhance efficiency and provide a better experience for businesses and their customers.
Challenges to modernization initiatives— and reasons to modernize anyway
Technical advances, growing consumer demand and labor shortages are pushing the transportation and logistics industry towards automation. Warehouses and distribution centers need and want to keep up with the demand.
According to Levvel’s research, 75% of companies had implemented (or planned to implement) some warehouse and distribution center automation initiatives. However, only 14% reported widespread use of automation tools, and roughly 50% of warehouses and distribution centers said their automation capabilities were close to 0.
Several concerns are holding managers back from implementing new technology, including:
- Large upfront costs
- Concerns about maintenance costs and upgrades
- Training and retaining skilled personnel
These are valid concerns, but digital automation can solve many problems facilities face, such as:
- Managing inventory turnover, especially perishables that need to be carefully stored and quickly reshipped
- The increasing demands of e-commerce, especially during the pandemic
- Reducing strain on the workforce and improving their efficiency
Even piecemeal solutions and small automation investments to replace legacy systems can result in a satisfactory return on investment (ROI). But the key is identifying which systems to modernize.
Common digital automation features
Digital automation refers to non-physical technology that utilizes data and software to reduce manual workflows. These tools typically require less investment than physical automation tools, such as robots, and reduce the likelihood of human error while increasing safety on site.
Our survey found that the most common forms of warehouse digitalization used include those that help track cargo on the premises:
- Mobile scanning devices: 35% of companies surveyed
- Digital barcodes and radio frequency identification (RFID): 17%
- Global positioning system (GPS) tracking: 13%
However, companies were more likely to employ no digital automation at all than some of the more advanced forms of technology—such as cloud systems, Internet of Things (IoT) sensors, artificial intelligence, machine learning and other specialized software, all of which had an adoption rate lower than 5%.
The warehouse of the future
Digital automation technology can help distribution centers and warehouses reduce cost, prevent human errors and have a beneficial ecological impact. These “smart” facilities will also improve speed, visibility and transparency within the supply chain. But when only part of the warehousing process is automated, it still leaves room for inefficiencies.
One way forward that can solve multiple problems in the T&L industry is to implement digital automation in the form of a Warehouse Management System (WMS) or Distribution Center Management System (DCMS). We found that instead of seeking out turnkey solutions, companies are better off contracting with companies that help them tailor their automated warehouse solutions to suit their specific needs.
Regardless of further specifications, a good WMS or DCMS will include:
- The ability to connect to a Yard Management System (YMS), so drivers know the best location to unload their cargo
- Electronic document generation capabilities for Bills of Lading and any other vital documentation
- Digital mapping capabilities for accurate inventory selection and picking
- The ability to track items via barcodes, IoT and RFID to reduce damage and improve picking
- Easily generated reports to track performance metrics and identify pain points
In the end, tailoring an automated system to a company’s individual requirements will be the key to operating the warehouse of the future.
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