Food & Drink Warehousing
Paul Trudgian Ltd | Supply Chain & Logistics Consultancy No Comments

Automation is becoming the name of the game in warehousing, but in some instances, it is needed more than in others. Two primary factors are driving the requirement for food and drink warehousing to fully embrace automation: a fall in the availability and quality of labour, and the noticeable increase in costs that the UK is facing.

Food and Drink Warehousing – What’s the Problem?

In the UK, food and drink warehousing has typically struggled to keep pace with the mechanisation and automation we’ve seen globally, and particularly on the continent. However, now we have some additional big hurdles in our way, which if we don’t use automation to jump, we’re going to significantly fall behind and experience wide scale disruption in our food and drink supply chains.

In addition to rising costs, and our labour force shortfall, we’re also in the midst of a seismic change in consumer shopping habits.

The two primary factors – labour and costs – are coming on the back of Brexit. There are still so many unknown factors but what we do know is that costs are rising because of a weak pound, and uncertainty. Additionally, we’re losing a vast number of our warehouse workforce, many of whom have been EU workers who are now heading home amidst the falling real value of their wages. These workers are typically those working in the warehouse, in logistics, and in administration.

In short, if we lose the workforce and know that we will struggle to replace it, our only solution is automation. You cannot ignore it. Automation will also be the means to achieving faster and more efficient order fulfilment and meeting the demands of higher volumes.

Learning from Elsewhere

This might be banging at the door and quite new to us in the UK, but it’s nothing new to elsewhere in the EU. Labour costs in continental Europe have traditionally been higher than in the UK and that has driven companies to automate more processes. Automation of picking, packing and pallet building is not uncommon across mainland Europe and we, in the UK, need to import that learning.

Demand is Unrelenting

This is of urgent importance because of the changes we are seeing in the customer’s interaction with food and drink warehousing. The ecommerce boom is also driving change. Last year, online grocery retail in the UK was estimated at £9.9 billion, and is predicted to reach £11.1 billion by the end of this year. It is still a small part of the market, but the speed at which it is growing is astronomical. Last year, sales in online grocery increased by approximately 15%, whereas total food retail sales only grew by 1.5%.

Nick Carroll, the senior retails analyst for Mintel, has stated: “Online grocery is the quickest growing grocery channel. Once seen as simply a service to replicate the needs of a supermarket shop online, a number of new services came to market in 2016 that have the potential to elevate online grocery beyond this barrier and adequately serve the more fluid and frequent shopping behaviours seen in the wider market. Growth is being driven by encouraging users who have done most or some of their shopping online to do more. This suggests that it’s just as crucial for online grocery retailers to engage as much with their current consumer base as it is for them to attract new shoppers to drive sales.”

What Type of Automation Will Be Important?

This is an interesting sphere because much of the automation that we need already exists, we just need more of it, and for it to be more cost-effective. Some of the traditional problems faced by food and drinks distributors could be met by improving logistics network design and having more, smaller, satellite sites bringing the goods closer to customers. However, the automation that will really matter is things such as driverless vehicles and advanced picking technology.

We’re already seeing, for example, Ivanti’s Speakeasy voice-recognition picking technology that allows for increased speed at the picking stage simply because the warehouse pickers can work hands-free. The benefits of this are further realised in a food environment, where pickers may be working in sub-zero temperatures and wearing protective clothing.

Then there are the booming number of inventory management systems which can also be used to create greater efficiencies in the food and drink warehouse. This helps the entire chain with greater collaboration between partners, for example, ensuring that a supplier can meet a retailer’s demand on a day by day basis. It creates a leaner supply chain.

Ocado as a Case Study

Ocado has succeeded in reducing its picking time from 2 hours to 15 minutes through adopting automation. Their warehouse receives 10 commands per second to every one of their 1000 machines, using a 4G telecoms network. A human simply couldn’t do that. The machines are then mechanically moving 1.3 million products per day around in a densely packed warehouse to complete the picking, loading, moving and replenishing which is required. Labour is reserved for unpredictable and fragile products such as fruit.

Automation in Food and Drink Warehousing

It’s safe to say that warehouses that work on a traditional supermarket model aren’t going to be able to keep pace. Investment in automation needs to take place if you want to meet the demands of the future.

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