business

Will It Automate? Supply Chain Edition

Human-machine teaming is the way

The doomsday narrative arising out of automation is that soon enough, the human workforce will be outmoded and unnecessary. But the reality is that retailers who resist automation are going to fall behind those who leverage the power of humans working in tandem with machines.  

The ethics of supplanting human jobs alone is not the only critical question to evaluate when automating a business, it’s the efficacy of automation to begin with. In short, what can be automated isn’t as important a question as what should be automated.   

Let’s look at a few of the areas where automation can be integrated into the supply chain in a way that augments employee intelligence, creating a potent human + machine partnership.

Automated inventory means much higher precision         

Geodis and Delta Drone are ready to launch drones that perform after-hours warehouse inventory later this year. There’s no interruption to daily operations or increased safety risk to humans, and site employees can rid themselves of this duty while being able to count on even more reliable inventory. It’s a compelling prospect—the thought of automated “nocturnal work” that supplements daytime efforts by humans and improves overall productivity.

Inventory can be especially volatile in the healthcare sector, one of the industries to make large investments in smart shelving. After experiencing significant waste in inventory, White Memorial in Los Angeles made the move to “smart cabinets” for real-time, end-to-end visibility. This storage system automatically counts inventory every 30 minutes so that RFID-tagged supplies can be closely monitored at all times. As a result, manual counting time went down 67% for staff in the cardiovascular department, who were likely freed up to focus more on patient care.

Fulfillment Automation: the sweet spot of human-machine teams  

By relieving humans of repetitive, physically demanding work in a warehouse or e-commerce fulfillment center, automation can reduce picking errors and greatly speed up item fulfillment—especially during peak buying season. It’s part of the increasingly clear path to “perfect replenishment”.

Goods-to-person robots exemplified most prominently by Amazon’s Kiva, pick and carry items directly to an associate, who can remain at the packing station and focus on responsibilities that are less routine, requiring human judgment. These robots are effectively “cobots” that support human employees, giving them more control over other parts of the supply chain.         

The advantage of robotic systems is that they are largely modular, letting businesses pilot on a smaller scale to test when and where they’re most effective. A report from Information Services Group projects that by 2019 72% of enterprises will be using Robotic Process Automation to “reduce costs, improve productivity, increase compliance and shorten transaction times.”

Checkout Automation: where automation drives personalization

At the moment, automated checkout represents a bit of an arms race, with larger retailers and startups alike trying to keep pace with the perceived threat of Amazon Go. China’s BingoBox has already opened up over 200 cashier-less convenience stores where products are RFID-enabled for scan and purchase.

The results are not yet clear. What’s important to recognize is that the value provided may be specific to a certain kind of retail. Automated stores hinge largely on convenience, but they lack the human element that leads to true personalization in customer service. For legacy retailers, automation is a way to assist human associates in driving much stronger personalization.        

One of the strongest opportunities for brick-and-mortar automation right now appears to be order fulfillment in-store. Having seen success with Pickup Towers—(half a million orders placed since their 2017 rollout)—Walmart plans to launch at least 500 more in U.S. stores this year. An advantage here is that item retrieval doesn’t have to be divorced from the rest of the in-store experience. Customers can checkout as they please, but they can also interact with sales associates and make incremental purchases if they like.     

Automation is strategic, not catch-all.   

It’s clear that any automation strategy needs to be mindful of the human workforce but in a way that helps employees grow their skill sets instead of simply hewing to their existing responsibilities.  

A McKinsey report from November 2017 acknowledges the challenges to career stability that come with a more automated workplace but also suggests that “8 to 9 percent of 2030 labor demand will be in new types of occupations that have not existed before.” IBM CEO Ginni Rometty points to the evolution of “New Collar Skills” that stem from the growth of tech knowledge in the U.S.—made scalable with the assistance of new curriculum and apprenticeships.    

How can your business leverage automation in a modular, cost-effective manner that helps unleash employees’ true potential?

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Updated Jan 18, 2019 | Originally published April 2018

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