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Getting Fit for the Supply Chain Evolution

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Dematic explains how automation can enhance resilience and agility as global supply chains and distribution channels are subject to constant change. 

The last 18 months has shown how significant changes to supply chain can be and that any change can have significant consequences. To stay ahead companies need the right adaptive strategies, focused on maximising resilience to disruptions and agility to deal with volatility.

MAJOR SHIFTS, MULTIPLE CHALLENGES

The current pandemic has fundamentally changed consumer behaviour, leading to a complete shift across supply chain landscapes. In the early days of the pandemic, shoppers, fearing the unknown, cleaned out store shelves to stock up on essentials. This unexpected demand left many store shelves empty, highlighting the inefficiencies within the global and local supply chains. 

As lockdown initiatives took effect, online orders began to surge dramatically. Online shopping was on a growth trajectory well before the pandemic surfaced, but the speed has accelerated globally. In Australia, e-commerce spending grew significantly in the eight weeks after the pandemic was declared, with some major retailers announcing up to 80 per cent growth in online orders in this period, and in the most recent May NAB Online Retail Sales Index, online spending comprised 13.2 per cent of total retail trade in Australia, up 38 per cent higher than 12 months earlier (on top of 52 per cent growth in the previous 12 months). 

At the same time, consumer behaviour has also shifted: today, the service level expectations of online shoppers are exceptionally high. They expect almost unlimited choice, they want products available at the best price, they want it delivered the same day – and free of charge. Moreover, consumers have an endless amount of information at their fingertips, allowing them to easily compare product specifications, price, availability, delivery timing, and returns policies. They also have access to products from all over the world, which opens up a new era of hyper-competition.

THE COST AND AVAILABILITY OF LAND AND LABOUR

As supply chains have come under heavy pressure, so too have distribution centres (DCs). Having DCs close to the customer is key. However, with increasing urbanisation, land is becoming scarce and very expensive. In Australia specifically, rent for warehouse space has increased by 25 per cent in the last three years, and the availability of commercial land in a city such as Sydney has reduced by 35 per cent in the last five years.

Finding and retaining labour in a DC is additionally becoming an increasing challenge for many industries. In Australia and New Zealand, the cost of labour is constantly on the rise – and keeping staff safe, complying with regulations, and needing higher productivity from people are real challenges. Occupational health and safety is always crucial, but to keep up with demand, many employers are asking their workforce to work faster. It is evident that this cannot be the right strategy to get ahead of supply chain challenges. Instead of asking how to work harder, logistics operations need to start working smarter. 

Companies are increasingly looking to fully automate processes.

BUILDING RESILIENCE IN THE ERA OF E-COMMERCE AND OMNICHANNEL

A market survey of food and beverage and other manufacturers by Gartner last year showed the key focus of companies was on building resilience and agility, with 28 per cent currently investing in fully automated “lights out” logistics processes and 58 per cent looking to invest in fully automated processes in the next five years. This is in line with Dematic’s food & beverage and retail customers in Australia and New Zealand increasing their investments in automation for improved resilience and agility.

Automation in stores, distribution centres and production facilities provides companies with the capacity and flexibility to identify and adjust to rapid changes in customer buying patterns, whether it’s supplying DCs, stores or online orders. 

Dematic’s Flexible Mixed Case Fulfillment automates the process of order fulfilment of mixed case orders for grocers, general merchandise for retailers replenishing stores and food & beverage manufacturers building route trade orders. The technology allows companies to maximise productivity and reduce reliance on increasingly hard-to-find labour, maximise order accuracy, order throughput, replenishment speed, product quality and on-time shipments in a reduced building footprint. 

Dematic Micro-Fulfilment is also paving the way for better efficiency in the B2C online supply chain. These highly compact, high-performance automated order fulfillment systems can be implemented close to consumers in footprints as small as 1000 square metres (such as in the back of a retail store or in a nearby online fulfillment dark store) for optimised click and collect and last-mile home delivery fulfillment. Companies are no longer left to rely on DC or in-store fulfillment, reacting to spikes in demand quickly and efficiently by shifting between fulfilment channels. While a number of leading global retailers are investing in Dematic Micro-Fulfillment systems, the solution has been applied to food & beverage manufacturers for their expanded channels strategies. 

Automated Guided Vehicles (AGVs) have become an increasingly adopted innovation within production, warehousing and distribution environments as robotic forklifts that move, store and retrieve goods without manual intervention. AGVs improve shipping speed and accuracy, safety and reduce product damage with automated product movement from production and storage to shipping. They are highly flexible and scalable, with AGV readily able to be added in line with throughput growth. 

AGVs move, store and retrieve goods without manual intervention.

FASTER DECISIONS FOR A SUCCESSFUL FUTURE

Warehouse Management Systems (WMS) and Warehouse Control Systems (WCS) allow businesses to make faster decisions. Dematic’s Software Suite makes intelligent, data-based decisions to improve distribution and fulfilment processes, which helps companies to respond to spikes in orders or changes to profiles across different fulfillment channels quickly and effectively.

While new challenges are emerging, new innovations are also being created all the time. Companies that invest in supply chain resilience and agilility are turning these challenges into opportunities – and taking advantage of growth potential. Dematic sees it as our task to enable these opportunities – to help our customers not just to survive, but to thrive.

For more information on Dematic, click here.

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