Prological’s Founder and Director, Peter Jones, explains to MHD what supply chain convergence is and how businesses will only survive if they’re willing to adopt new technologies and re-envision their warehouses.
Technological advancements – particularly over the past four decades – have turbocharged supply chain convergence, and businesses can either take advantage of the generational changes occurring or fall behind by maintaining last generation practices.
Supply chain industry stalwart and Prological Founder and Director, Peter Jones, has witnessed many of these seismic shifts throughout his almost thirty-year-long career.
He has useful advice for businesses that are reluctant to modify their operations, and for the wise, how they can stay ahead of the curve without overinvesting.
Four ways to optimise operations
Automating processes are becoming normative as companies grapple with labour shortages and find new ways to cope with increasing demands.
Facilitating supply chain convergence is integral to businesses’ survival. Besides automation, they need to embrace Warehouse Management Systems (WMS) and implement sustainability-related initiatives to meet ESG targets.
Core technology developments such as six-star design elements can be incorporated into warehouse design, as well as power generation and storage. Additionally, part of next generation warehouse design is increased clearance height and charging stations powered by energy generated by warehouses for electric vehicles.
“All of this is achieved with warehouse employees kept in mind,” explains Peter. “Automating and designing a facility needs to be people-centric so the conditions are suitable to workers.”
“Cost of the infrastructure is not only offset by the electricity consumed by the building, but it’s also offset by the diesel that would otherwise be consumed by the vehicles. Moving your delivery fleet to electric has a far greater carbon offset than your building will ever have.” This is not yet for every business, but it has been achievable for many for some time now.
B2B emulating B2C
Optimising these new technologies can be challenging when occupying a warehouse with legacy infrastructure. Businesses looking to move into a brownfield or greenfield site should consider how they’re going to integrate the elements of height to optimise automation capacity, sustainability, WMSs and ESG height.
Occupier-owners and tenants are limited by the height available in the facility they own or rent. “The higher you go, the less land footprint is required,” says Peter. “You have a cost offset; the higher cost in your building, however, can be as high as a two-to-one benefit on the cost of land savings. For every two dollars you save on the land, you may have to spend around one of those extra dollars on the building.”
Capital can be saved when businesses – particularly those in Sydney – utilise the clearance height (vertical space) instead of the square metre footprint (horizontal space) as rental and investment prices continue to climb there and in Australia’s other major capital cities.
The picking process has gone through considerable changes since Peter started working in supply chain as it’s moved from manual to automated processes.
“We’re seeing businesses adopting automation and storage and businesses that aren’t. Those with this equipment have much lower operating costs than those who don’t.”
Service levels including the timeline from order placement through to dispatch is compressed when automation is involved. This is important in a B2C context where the end-user is expecting their orders to arrive at a certain time on a certain day.
In the past five to seven years, Peter says the B2B industry has been trying to emulate the B2C model in terms of customer service performance, whether it’s on a systems basis or receiving order confirmation and updates throughout the fulfilment cycle.
Facilitating convergence
Traditional warehouses are no longer suitable for workers, and they don’t enable people to perform at their best.
By embracing next generation warehouse design and converging emerging technological solutions, businesses are more likely to attract and retain high quality and over time, experienced employees.
“Their workforce will be happier, and more productive and stable,” explains Peter. “Disruptions like pandemics and recessions can prompt businesses to better prepare for uncertainty, be more flexible, have the ability to make the right decisions, and de-risk operations so they can have better control of their circumstances.”
“Today, anything is possible. From the engineering, research and development perspective, it only requires an opportunity that’s significant enough to justify producing a solution. The general rule today is if it can be conceived, it can be executed. The questions are: is it economically viable, and does it make sense? If it doesn’t make sense today though, it might make sense in three years’ time.”
As technology has evolved – especially between the 1980s and now – businesses have been able to move into specialised WMSs and integrate them into both upstream and downstream processes such as Order Management Systems (OMS), Transport Management Systems (TMS), and Freight Management Systems (FMS).
Technology convergence isn’t only larger and more complicated than what it once was, it also carries more risks, but can make one business stand out from some of its competitors that mightn’t be as quick or capable o adopt these solutions.
“The supply chain gap in some sectors will widen significantly over the next 10 years,” Peter says. “Those who don’t adapt may struggle to exist. Slow and late adopters will develop operational costs that are much higher than those who have implemented the next generation infrastructure while achieving convergence in their systems and operations.
“There can be material reductions in labour in warehouses, with recent case studies showing up to 70 to 80 per cent transitioning from people-based walking/picking to highly automated designs. Not everyone will achieve this result, but most will gain significantly. This is why, in the end, it will all comes down to the ‘haves’ and ‘have nots over the coming decade.”
For more information on Prological Consulting, click here.
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