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Automated DCs…..how close are we really?

It may sound like something from a science fiction novel, but DCs are becoming more and more automated: sorting, packing, and loading product with little human intervention. 2012 saw substantial investments in technology after many years of holding out for a better economy.  And although we’ve yet to see jus what exactly Amazon is planning with its acquisition of Kiva Systems, this move has caused other companies to reassess their automation strategies.

As Executive Director of Tompkins International’s Supply Chain Consortium I’ve spoken to top executives at hundreds of leading companies this year, and I can tell you that over the past year many companies have increased the number of automated distribution centers (DCs).

Our survey report on this topic, which you can read here, highlights the following findings:

  1. Overall, the Consortium found that in spite of current economic challenges, material handling and storage automation has seen more usage compared to previous years.
  2. Companies still view DC automation as one of the best ways to increase their labor productivity.
  3. Solution savings are improving, indicating more successful implementations of automation.
  4. Use of specific equipment, such as sorters, shows a clear upward trend in the last three years.
  5. Picking methods using technology and automation are also increasingly used in today’s DCs.
  6. So what are the primary drivers of the automated DC? The big three are ROI, company growth, and customer service.

Note that there is still demand for human labor, especially during peak seasons. Otherwise, most companies will have procured unnecessary technology that will sit unused for long periods of time. (See this article in  BusinessWeek for more.)

However as the economy strengthens and spending continues to grow, more automated distribution operations will be the result. My advice to you regarding automating your DCs? Be proactive, but remember strategy before structure.

Automated DCs are possible today. What are your plans for more technology in your facilities?

 

 

 

Bruce Tompkins

As the Executive Director of the Supply Chain Consortium, Bruce serves as a subject matter expert on topics spanning the supply chain, and he is the conference chairman and facilitator for the Consortium’s annual event – the Supply Chain Leadership Forum.
He has been quoted in numerous industry publications including Supply Chain Quarterly, IndustryWeek, SupplyChainBrain, and Appliance Magazine.