Smart Warehousing and the Role of the IoT

Customer expectations are shifting perhaps more regularly than at any other time in the history of supply chains. Technology fuels this. Businesses haven’t got any choice but to rise to the challenge and work out how they can meet customer expectations in a way that still enables them to thrive and grow. This means matching the availability of technology and its affordability with customer expectations, particularly in the arena of warehousing.

From our role as supply chain consultants, we know that the vast majority of warehouse managers are taking steps to implement technology, and plan to increasingly do so. They know it is an area where investments need to be made in order to meet customer expectations of streamlined ordering and dispatch.

It’s also essential for warehouse managers to invest in technology for the purpose of opening up a more transparent supply chain, where goods can be tracked along clear pathways, again in line with consumer expectations.

Therefore, the majority of investments in technology are focusing on the move to cutting-edge warehouse management systems (WMS) along with using real-time tracking for inventory (as well as barcode scanning technology). A huge area of investment that we see is in the internet of things (IoT), particularly through wearable devices, robotics, automation and drones.

The IoT takes centre stage here. By creating a network of devices that ‘speak’ to one another, large quantities of data actually become manageable in terms of taking action. They work by using sensors throughout different points in the warehouse (most notably on the products themselves) and then using the cloud to share this for making changes and improving efficiencies.

Warehouses under change: digitisation

Warehousing is, by its very nature, a hugely influential link in the supply chain. They are conduits of action and ability. For supply chains to work, and certainly thrive, their warehousing needs to be flexible and capable. This is particularly facilitated through their adoption of, and use of, technology and their ability to scale this as demand requires.

Fortunately, we are seeing warehouses rise to the challenge. 10 years ago, warehouses using WMS, especially in the SME sector, were definitely in the minority. Now we see WMS, in some form or other, being utilised in the majority of warehouses.

However, the problem comes on a number of different levels. There isn’t consistency in approach from one warehouse to another. However, there’s also often lack of integration between different technology and systems within an individual warehouse. Technology is sitting alongside each other, never harnessing its full capability as a cohesive system.

In many cases, technology capability is held back and therefore not used in the way in which it could help. The result is the tools are there, but effective warehouse management still struggles, and unnecessary costs ramp up.

Warehouses that succeed in fully integrating the technology with their physical landscape and overall aims, see much greater efficiencies and vastly improved performance across the board.

What does the IoT look like in the warehouse?

The IoT has a huge range of potential in the warehouse. Inventories lend themselves to data-driven solutions. The IoT enables this through such things as sensors and RFID tags which enable warehouse operatives to trace goods on an item-by-item basis in real-time.

Inevitably, this works to improve accuracy, often the bane of a warehouse manager’s life. There is reduced loss and reduced damage. Bottlenecks rarely get the chance to take root and load discrepancies are more easily eliminated.

Fundamentally, the IoT facilitates automation across a number of laborious, time-consuming and typically error-ridden manual tasks. By handing these tasks over to automation, efficiencies are simply par for the course, as well as improved accuracy and reduced labour needs. When integrated with point-of-sale (POS) systems, the whole process becomes more integrated and seamless.

Bigger businesses are already demonstrating how the IoT can be successfully implemented into warehousing. DHL is a great example of this. They use a smart warehouse system which they developed along with Conduce and Cisco Systems. This partnership has brought together the power of a Wi-Fi infrastructure with data visualisation. DHL warehouse managers can view data in real-time, which is collected through the WMS and use it to fulfil orders in an efficient and safe manner.

Amazon, of course, is another example of the effective use of the IoT in warehousing. Amazon uses a staggering 100,000 robots as part of its warehousing automation globally. They move and group stock to create efficiencies in order fulfilment. They are also, as we know, experimenting with the use of drones for delivery.

Amazon is also considering the development of using connected wristbands to give real-time insight into a warehouse operatives hands, which would give incredible insight in to each and every item.

However, not all warehouse managers are operating with the strength of industry leaders such as DHL and Amazon behind them.

The IoT and barriers to implementation

There’s no doubting that we are seeing increased use of technology, including the IoT in warehouses globally. However, at this point, the wide-scale use of IoT within a warehouse is more unusual than the norm. It’s being used by the likes of DHL and Amazon, but not by your average warehouse down the road.

This isn’t to say that these warehouses can’t see the advantages of the IoT for warehousing. But it is a realistic state of play for the vast majority of warehouses who face enormous barriers to entry for ringing the IoT changes.

The first step to improving adoption rates is to go back to the WMS and improve its use in all warehouses. Without an advanced WMS, it is impossible to adopt use of IoT technology. We need to ditch the spreadsheets and individual software packages, and start using WMS which has scope for expansion to IoT technology.

This, of course, is hindered by cost factors. At the moment, certainly for smaller players, the costs simply outweigh the benefits. Until this changes, nothing will. Technology typically rapidly becomes more affordable over time, so as this happens, we expect to see more adoption.

The changes are coming though. The barriers to entry won’t always be so insurmountable. In the near future, smart warehouses will become the norm, not the exception.

If you need further support with your supply chain, then call our supply chain consultants today.

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Tamsin Giles, Client Service Coordinator, contact photo

Hello! I’m Tamsin, Client Services Coordinator at Paul Trudgian. Please get in touch by phone, email or the contact form and I’ll make sure your enquiry is dealt with promptly and passed to the right member of the consulting team. We look forward to hearing from you!