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Dark Warehousing: Spotlight of the day!!

Dark – the new light of the warehouse

Have you ever wondered what goes behind the screens once you place an order on your computer monitor in front of you? Before the order reaches you within a 24- or 48-hour window, what would have been its journey?

Well, if you would notice in the last 14-15 years of its onset, ecommerce industry has been a synonym for ‘explosive growth’ and there has been an exponential rise in terms of the no. of SKUs they handle, delivery times from being anywhere from 10 days to 24 hour delivery. Ecommerce has not only transformed how the businesses work but has forever changed the customer’s behaviour. The ‘want it now’ attitude of the customers is forcing businesses to upgrade their systems and processes to meet these expectations and are assorting to automation by introducing autonomous mobile robots, AGVs, driverless forklifts, palletizing robots, ASRS systems, automatic picking units through MPVs, cobots, mobile robots, sorter robots, tilt-tray sorters, robotic packaging & depackaging units, powerful softwares such as WMS, WES, MES, cloud solutions, a web of IoT solutions that provide visibility into everything inside the four walls of the warehouse, and to perfectly sync all the systems in real-time all the time.

If you could conceptualize one such warehouse, yes, you are right there & welcome to the wonderful world of ‘dark warehousing’!!!

So, what is it?

To define the nomenclature, a dark warehouse is a fully automated warehouse that operates without the use of human labor. Literally put off all the lights and let the warehouse function on its own. There is another definition also to it, which says warehouse that fully automated material handling systems – here the main reference is to the ASRS Systems, high speed sortation systems, mobile robots, and warehouse execution systems.

The ecommerce boom and the need for speed are the primary drivers for the dark warehousing concept as the completely automated systems increase the speed of operations by a manifold, ensure delivery of 100% accurate orders and improve overall safety aspects of the warehouse. One of the other key factors is the need for space, because the rising real estate rentals were directly taking a bite from the profit margin share & automation is the best way to improve space utilization and create additional space within the existing space, examples like dense racking through pallet shuttles or carton shuttles, crane based ASRS systems etc.

How do they work?

In case of dark warehouses, all the functions of warehousing i.e., inbound, storage, picking and outbound are completely automated & all these systems work in perfect sync with one another plus the other ancillary systems such as front end Order Management System, Vendor Management System, Truck Management System, Personnel management system..etc. Like all the inbound orders will be well planned and received through automatic telescopic conveyors which will supply the carton loads from different suppliers/vendors to the robotic palletization units where palletization of the similar SKUs is done. These pallets can be sent for storage through a fleet of driverless forklifts, where they deliver it to the automatic storage and retrieval systems. Once an order comes on these pallets, they will be fetched out of the system, sent for depalletizing robotic units and finally the cartons will be taken by the mobile robots either to the outbound order sequencing area with a carton shuttle ASRS or to the robotic decanting stations, where the items from the cartons will be poured onto the crates, which will again be stored in a carton shuttle ASRS system. Retrieval of these cartons will be done when the items need to be picked, which can be done through stationary robotic bin picking units. The packaging of these cartons/crates can be done through tunnel-based systems on the smart conveyors. After packing the orders will be sorted based on location codes or carrier type or any such criteria through a fleet of sorting robots & the sorted parcels will be loaded on to the trucks for dispatch again by the use of mobile robots. In the entire process if you observe there is a little or no human intervention.

And..

These dark warehouses can function on a 24*7 basis, ensure zero human error, there will not be any shift charges and provide complete visibility of the entire operations and enable data driven decision making. However, these completely automated systems are quite expensive, and require a thoroughly defined automation strategy in place.  As a concept it has emerged in the European countries when some large organizations installed highly automated systems with some regular equipment like conveyors. With the kind of capital investments, it requires, it is still possible for large organizations, hence its adoption rate is not that high. Also, dark warehouses are also not as flexible in operation for picking, packing, and shipping- For handling a variety of SKUs, the systems need to be tuned accordingly, which is not that easy. So, dark warehouses have been more popular for industries where there are a smaller number of SKUs or uniformity of SKUs in terms of its size and shape.

Concluding thoughts:

Despite dark warehousing appears as the panacea to achieve the best KPIs of the industry, it has been quite elusive since a decade. Because in the ever-changing volatile business world, investment in 100% automation seems quite bold and companies have been apprehensive about it; maturity of the technology, staff skills, organized or unorganized nature of the business ..etc might have been a couple of other factors. Whether warehouses become completely dark or not might be a question for the future, but the increased use of automation in warehouses is a booster & is the right way to realize the efficiencies.

 

Rise of Mega Distribution Centers and its impact on Logistics

Factors driving the emergence of Mega Distribution Centers

A modern supply chain facility has no leeway to miss out on paying close attention to all the different elements in order to stay competitive and reap benefits. Companies may have to rethink and replan their strategies for designing their inbound (Raw Material – RM) and outbound (Finished Goods –  FG) in their Distribution Centers to stay nimble but yet be in a position to respond to black swan events a la corona virus – COVID 19. On the one hand, companies have far too long focussed on Just in Time (JIT) principle of managing their inventory, they will now, on the other hand, be forced to devise strategies to be able to bear short to medium term shocks that would impair their supply chain security.

Companies must be wiser after every calamity and should put robust infrastructure and processes in place to deal with shocks.  As the legendary business leader Jack Welch said, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” It is therefore important for businesses to be ahead of the curve when it comes to business strategies. Mega Distribution Centers with commensurate logistics are a class that belongs to those businesses being ahead of the curve.

Logistics and Infrastructure

While designing the best fit solution for Mega Distribution Centers, logistics and its related infrastructure form a critical pillar in the structure. The task of distribution with matching logistics could be simplified to mean products having to move from point A to point B which is the right location in the most efficient way. This again means it needs to be transported to the right location, at the right time, in the right condition, for the right price. Distribution centers should be designed with a focus on meeting all the objectives mentioned just now.

According to a research paper on Mega DCs “Factors determining distribution structure decisions in logistics” authored by Alexader T C Onstein, et al, we come across different structures as shown in figure below:

“Decentralised” distribution structures include multiple DC locations in a so-called multiechelon system (layout 4 &6 in the above image).  A “multi-country system” includes an international DC and a number of regional or local DCs.

It is evident that the nature of distribution that a business opts will drive the logistics and transportation infrastructure to meet its demands.

It is imperative for companies to drive efficiencies by digging deeper into the levers to work on, to gain advantage. Ideally an analytics approach will be needed to decide about determining these levers. Many businesses have identified it would be cost effective to have fewer larger facilities than multiple smaller ones.

Even in these Mega DCs, one should de-risk the operations from many external angles that may hamper operations in unforeseen exigencies such as fire, snow, etc. Therefore, a campus style approach where a Mega Distribution Centers could be one with a cluster of a few medium-sized buildings that total the typical area to qualify to be a Mega DC. These buildings could safely be separated by roads for mitigating the effects of fire. Of course, it is important to run a cost benefit analysis from all angles, initial investment, operational expenses and such. Operational expenses could offset the benefit of a cluster of buildings making up a Mega DC as the material handling and automation systems may add to unreasonable cost. *

What Goes into a Mega Distribution Center

Mega distribution Center, by its very nature is the Mothership and should satisfy a variety of needs. Therefore, it is a multifaceted and multitasking entity that is designed to perform end-to-end logistics demand for any business. It should have the following attributes:

  1. A large facility typically of an area around 400,000 Sq.ft. would qualify as a mega DC.
  2. Designed to suit large inbound and outbound traffic at high throughput
  3. Have very good locational advantage and be capable of handling heavy truck traffic continuously
  4. Must lend itself well to be connected to mini and mega markets to meet the demands. This will in turn make the mega DC a viable proposition
  5. Fully automated material handling system, storage and retrieval system linked with business ERP system on a real-time basis

All the above attributes will essentially mean having multiple subsystems that handle material movement within the premises in a seamlessly integrated manner.

Technology and Solutions to be built into a Mega DC

Mega DCs normally operate 24*7 and hence are ideal candidates for automation due to the continuity of service and running multiple tasks simultaneously for meeting high volume of operations.

A good approach would be to break the domains down to:

  • Business need in general
  • Structure of the mega DC – Does it serve as a Mother DC feeding cross-dock DCs to serve the needs of a mini distribution centre
  • Transportation
  • Geography – Locational aspects

Technology and automated material handling solutions are commonplace these days. They help in meeting all the demands – ease of operation, higher productivity per person deployed, unparalleled operational safety and the consistently very high throughputs and accuracy. A carefully designed combination of infrastructure, automated material handling solutions and location will deliver a good value proposition to a business in smart supply chains.

It is precisely in these areas Addverb Technologies, with its domain expertise of both technology and business processes will provide a full bouquet of products and solutions to meet the digitization program of a business to modernise its warehouses and supply chains.

Adoption of technology will result in operational improvements of a warehouse, but the key differentiator is in choosing technology wisely, and here Addverb’s portfolio comes with a promise of delivering results beyond compare.

The rise of automation in 3PL industry

How you sell matters, what is your process matters but how your customers feel when they engage with you matters more. Selling is the most exciting part of a business. But what happens when a customer places an order? It has to reach the right person, at the right place and at the right time. And here come the 3rd party logistics providers in the picture to ease the above task. With the changing supply chain dynamics, the 3PL suppliers have geared up to become the catalyst in the chain to ensure accurate and timely order fulfilment.

To become the real catalyst in the process the industry has set to make moves towards advancing their operations through technical innovations such as automation and advanced software solutions. With the emerging ecommerce sector, 3 PL industry has to undergo several operational shifts in order to meet the ever-surging demand. It is changing the shape of e-commerce product distribution by providing a range of flexible storage and distribution services to its customers.

 

An amalgamation of 3PL and automation

1) Pick-Pack-Ship:

A 3PL company is more than simply a partner in the value chain for a company. It organizes the whole process of order fulfilment and owns it end to it till the last-mile delivery. Vast item selections, omnichannel order fulfilment, same-day shipping options, and advanced order tracking have all become necessities to compete for business. And this is where automation becomes an inevitable choice for 3PL providers. Solutions such as automated picking technologies and automated storage & retrieval system act as a catalyst in the operation.

2) Brains in Motion:

3PL partners use intelligent software to process the entire order fulfilment in cohesion and coordination. Automation fulfils this requirement of 3PLs and boosts the efficiency at every stage, be it picking, kitting or assembly operation.

3) Store-in-the-Hump:

3PL companies facilitate inventory management and handling peak season demands. AI-powered solutions in 3rd party logistics inventory management allow for systematic storage and retrieval of warehouse material, streamlined inventory management, and facilitation of order fulfillment.

4) Space No bar:

With many 3PLs serving different customers, space optimization is essential when housing so many SKU varieties in a single warehouse. Automation in 3PL can augment warehouse height utilization, unlocking higher storage capacity thus delivering more value for the same floor space.

5) Returns are welcomed:

Returns handling accounts for almost 30% of the purchase price in an ecommerce business. The modular features of a robust software solution ensure effortless handling of returns via proper data integration across all systems thus enhancing supply chain & inventory management, with positive ripples spreading to deliver enhanced customer experience and satisfaction.

In recent years, the 3PL industry has expanded at an unprecedented rate with an increase in revenue of 21.6 percent between 2017-2019. This unrelenting growth is attributed to the aspirations of retailers to stay competitive and meet increasing consumer expectations for on-time and accurate deliveries. They are tapping 3PL providers to augment their order fulfilment capabilities. The global 3PL market is projected to reach over $1,100 Billion by 2024 as a wide range of industries turn to these providers to handle various levels of warehousing, order picking, packing, transportation, and shipping operations.

Some of the 3PL players still deter to adopt automation into their system. Unpredictability in ROI is one of the top reasons for keeping this contention. Also, there are uncertainties around the investment option in a rigid automation solution for a customer today that might not even be in the warehouse tomorrow. The new-age automation is breaking all these fallacies and emerging out as the unanimous choice for all the 3rd party logistics providers. Automated warehouses and distribution solutions have become flexible and scalable enough to deal with the dynamics of business in today’s era and ensure smooth material handling to achieve unmatched efficiency in the warehouse.

“You never change things by fighting the existing reality, to change something, build a new model that makes the existing model obsolete” and technology in building these new models every day for every industry!