Upstream Automation: The Missing Piece of the Supply Chain Puzzle
Changing consumer habits in the virtualized post-pandemic world have transformed the e-commerce industry. With more consumers taking advantage of online ordering and in-store pickup options, e-commerce demand is expanding and the mix is changing rapidly, leaving some retailers struggling to adapt. Not to mention, as Amazon.com continues to dominate the fast-paced retail industry with its sophisticated shipping networks, retailers need a solution that enables them to capture customers and compete against the retail giant.
For most retailers, the answer lies in fulfillment centers where they can ship large quantities of products daily across their varied channels, ensuring customers are satisfied with their experience from checkout to delivery (or even in-store pickup!). But what if retailers are focusing on the wrong bottlenecks in their supply chain?
The State of the Warehouse
Although many retailers have made the jump to warehouse automation to supplement their existing processes and workflows, most retailers only focus on their downstream supply chain — i.e., the process of picking and transporting finished goods to end customers.
Historically, distribution centers (DCs) and fulfillment centers have relied on shipping homogeneous, single-product pallets to stores to meet retail demand. However, with e-commerce demand increasing by $244.3 billion in the aftermath of an online-driven world, “rainbow pallets,” or pallets composed of variations of the same product in a single load, have become necessary to keep the retail supply chain moving.
As warehouses often struggle to retain more than one day to two days of inventory at a time, DCs and warehouses must replenish products on a regular basis in order to avoid potential disruptions to order fulfillment. Additionally, the business-to-business (B2B) market is outpacing direct-to-consumer (DTC) by five times in size, which means that as businesses ramp up bulk orders, warehouses will be expected to accommodate the increased tonnage of heavy pallets.
And with the end to warehouse labor shortages nowhere in sight, warehouses are struggling to navigate downstream fulfillment operations hampered by the need to ship multiple varieties of products more frequently, but with less staff.
Upstream Lays the Groundwork for Seamless Downstream Automation
Retail moves on pallets. Most retailers can’t compete with Amazon’s sophisticated model of urban fulfillment centers located near major cities, directly reducing shipping and labor costs. However, they can lay the groundwork for a seamless omnichannel customer experience by focusing on order fulfillment and replenishment at the source — upstream workflows for pallet-sized loads.
To help warehouses store and process a higher mix of SKUs and ship rainbow pallets out faster to stores, retailers need to supplement their upstream supply chain with a comprehensive network of automation solutions.
Warehouse automation companies offer solutions like autonomous mobile robots (AMRs) to boost productivity and efficiency in pallet picking without compromising on safety or speed. With the average size of warehouses having increased by 108,665 square feet and only expected to grow, warehouse workers can expect to spend the majority of their time navigating tight, narrow aisles instead of rapidly picking pallets to meet customer demand.
Upstream Automation Enables Order Fulfillment and Scalability
With warehouses facing a complex mix of struggles hindering e-commerce order fulfillment, they should take a holistic view of their entire supply chain operation rather than merely focusing on downstream fulfillment.
As warehouses look to augment their operations, automation provides a scalable solution that can adjust to changing needs. In turn, retailers can increase picking speeds and process a larger mix of orders more efficiently, enabling them to see immediate return on investment and meet consumer demands, carving out their own legacy in the retail world.
Craig Malloy is the chief executive officer of Vecna Robotics, a flexible, intelligent material handling automation company with solutions engineered to make businesses go.
Craig Malloy is the chief executive officer of Vecna Robotics. He brings 25 years of experience in founding, scaling, and leading global technology companies in venture capital, publicly traded, and private equity environments, including Lifesize, Bloomfire, and ViaVideo. Before entering the corporate world, he served as a lieutenant, surface warfare officer and nuclear weapons officer, in the United States Navy. Malloy holds a bachelor’s degree from the United States Naval Academy and a master’s of business administration from the University of California, Los Angeles, Anderson School of Management.