2017 and Beyond: How Automation is Changing the Face of the Supply Chain

January 09 2017

Breakthru beverage illinois — Warehouse automation at Breakthru Beverage, Illinois

2017 and Beyond: How Automation is Changing the Face of the Supply Chain

By Olivia Mitchell, Marketing Coordinator

In a world with smartphones, smart cars, and smart homes, it’s no surprise that many companies are beginning the transition to smart warehouses. 2016 was a headline year for automation in all facets of life. In recent years, the supply chain industry has exploded, coming to the forefront of the minds of anyone trying to efficiently run warehousing operations. Logistics Viewpoints recognizes the importance of warehouse sophistication in a recent article, “The Top Supply Chain Stories of 2016."

Warehouse automation, whether it be in the form of automated storage and retrieval systems (AS/RS), warehouse execution systems (WES), or any number of different options, is becoming an industry unto itself, and will continue to skyrocket throughout the New Year for a few reasons. First, as more retailers downsize their brick and mortar operations in favor of the relatively lower overhead cost of digital storefronts, the demand for a warehouse that can essentially operate on its own via sophisticated software is growing. Second, looking at 2017 and beyond, automation in manufacturing plants is expected to grow due to Donald Trump’s trade policy and emphasis on American-made products. Already in the New Year, Ford Motors has announced plans to invest $700 million in a new production facility in Michigan. In early 2016, Coca-Cola announced plans to overhaul their bottling partners in North America which it plans to complete in the upcoming year. Their goal is to blend the national brand with local, franchised bottlers. CEO Muhtar Kent described the refranchising and updating of bottling facilities, “… a broad initiative aimed at building on system capabilities to sustain success.” One of Coca-Cola’s largest competitors, Pepsi, has been a pioneer in automation with the help of Westfalia Technologies at their Tampa bottling facility. Find out how we helped Pepsi Bottling Group become eco-friendly and more productive.

Also, with the changing landscape of the supply chain, warehouse location is also a key to success in 2017. The modern world is one that desires immediate gratification, therefore smaller, high efficiency operations located in closer proximity to metropolitan areas are becoming a trend. AS/RS technology allows storage facilities to take advantage of vertical space, rather than expanding their building footprint outward, which makes better use of the scarce real estate in urban areas.

Lastly, warehouse automation virtually eliminates human error from the equation, developing new technologies that are able to not only store and retrieve pallets, but also pick specific items and place them on a loading dock; however, there are many factors to take into consideration before implementing and automated system. It is unrealistic to think that the payback period of an AS/RS will be achieved in under 12 months. Due to its 25+ year life span, typical payback of an AS/RS can be achieved in three to five years, but for a company looking to expand long term, these systems can increase productivity. If long-term growth and sustainability is the goal of your organization, an AS/RS should be a fundamental piece of your process. Mike Brown, Regional VP of Operations for Breakthru Beverage Group understands the value behind long term planning: “Our operational landscape was drastically changed with an AS/RS. We planned for about 10 years out, but built our facility so we can hit 20 to 30-year growth plans just by adding to [it] and not completely redesigning the building.” Successful businesses are not built overnight, and an AS/RS is essential to planning long-term success.