To succeed in this new world driven by fast-moving e-commerce and ever-shifting customer demands, smarter brands are moving away from a reliance on selling through retailers and going direct.
The financial and brand benefits of the direct-to-consumer (DTC) model can be substantial, but requires a dramatic retooling of operational expertise and efficiencies. This includes everything from customer service and experience to returns management, direct merchandising, direct delivery and warehousing and logistics.
As website software improves its capability to integrate directly to warehouse management systems (WMS), more and more companies are eliminating the profit-reducing stages of using a retailer and setting themselves up in DTC.
Trying to process e-commerce “each” orders in the same way they picked pallet and case orders for retail quickly proves inefficient. Without process changes, the cost of picking will be disproportionate to the order value.
Consequently, intralogistics needs to be carefully managed in the DTC model as it’s all about efficiency with higher volume and smaller orders to satisfy customer demand for shrinking delivery timeframes. A highly configurable and adaptable WMS helps with the competing demands of efficient storage vs. variable order pools, no longer a wave-planned task.
It’s all about perfecting the order flow. An advanced WMS will optimize operations and labor by controlling every development on handheld devices in prioritizing sequence. It will juggle and interweave movements, order pick optimization, route optimization and carrier pickup cut-off times to get the most efficient use of precious resource, delivering savings of around 20% in most areas.
Understanding the importance of material handling at a more granular level is also vital, as companies moving to DTC need software to deliver better data quality, resource allocation and streamlined process flow. This in turn enables simultaneous order picking for further efficiencies, along with the segregation of single-item orders, since the latter can be picked into a tote, cage pallet or trolley. Multiple line orders are key as well, often using a segmented pick trolley.
Furthermore, each order quantity can be directed into its allotted compartment during the pick itself, with multiple compartments where each deposit is confirmed by a tote scan to avoid errors. The trolley or cage then moves to the pre-packing area and a carrier label is automatically printed where required, drastically reducing the time required to match up picked stock with customer orders.
Automated storage and retrieval systems (AS/RS) have grown popular since functionality controlled by the WMS automatically places and retrieves stock quickly and easily, ensuring the right product is in the right place. This enables efficient storage solutions in a better organized fulfillment center, reducing labor costs as picking roles can be freed up and resources allocated to more productive functions.
Carton or tote-sized AS/RS systems can be ideal for storing large volumes of small or similar products in high density. But if this isn’t balanced carefully with the product mix, it can become inefficient, so carefully consider the putaway and re-travel time.
Control via a fully integrated WMS is central, because the cost of AS/RS systems can be high and fit-for-purpose software can bring it all together. The return on investment is fantastic in terms of labor and space saving, but getting it wrong can be an expensive mistake. Make sure you choose a system that can react swiftly based on shifting business needs and customer demands.
In 2015, blockchain (the technology that makes digital currencies such as bitcoin work) was starting to be explored as a solution for supply chains. It promised cost savings, increased efficiency, and heightened transparency, among other benefits. For that reason, many companies were happy to run pilots testing blockchain for themselves. Today, these small-scale projects have been replaced by large-scale enterprise adoption of blockchain-based supply chain solutions. There are plenty of choices now for blockchain supply chain products, platforms, and providers. This makes the option to use blockchain available now to nearly everyone in the sector. This wealth of choice does, however, make it more difficult to decide which blockchain integration is best (or, indeed, if your organization needs to use it at all). To find the right blockchain, companies need to consider three factors: cost, sustainability, and the ultimate goal of trying new technology.
Choosing the right blockchain for an enterprise supply chain begins with the most basic consideration: cost. Blockchains work by securely recording “transactions,” and in a supply chain, those transactions are essentially database updates. However, making such updates has varying costs on different chains. If a container moves locations, that entry is updated, and a transaction is recorded. Enterprises need to figure out how many products, containers, or pieces of information they will process daily. Each of these can be considered a transaction. Now, some blockchains cost not even $1 to record a million movements. Other chains can cost thousands of dollars for the same amount of recording. Understanding the amount of activity you will need to record against the cost of transactions is the first place for an enterprise to start when considering blockchain. Ask the provider which blockchain their product is built on, and its average transaction cost. This will help you find the most cost-effective product or integration.
The question of cost becomes even more important when your supply chain partners have other transparency obligations, like that of a “Protected Designation of Origin” product. This kind of requirement means that your adoption of blockchain will likely involve more transactions, or records, to serve your purpose, which means utilizing a blockchain with lower costs is imperative. This was the case for producers of Fontina cow’s cheese. This is a “Protected Designation of Origin cheese,” which means it must come from the Aosta Valley (and only the Aosta Valley) in Italy. Utilizing blockchain helps prove the provenance of this artisanal cheese to its customers and partners, which is one of the reasons it was adopted by the group responsible for its production (the Consortium of Producers and Protection of Fontina PDO). However, when reporting on their adoption of blockchain in their supply chain, they also acknowledged that the potential high costs of using the technology were a concern (but this was allayed by their choice of blockchain platform and design of their pilot).
The second consideration is sustainability. Supply chain partners are being pressured to deliver on ambitious environmental, social, and governance (ESG) targets across the board. The addition of new technologies to any system, especially technologies like blockchain and artificial intelligence (AI) that are known for their energy use, can be counterproductive to meeting these expectations. However, just as different blockchains have different costs to run transactions, so too do different chains have different environmental footprints. This can also be easily vetted by asking your provider if the chain is proof-of-work or proof-of-stake.
Proof-of-work is most well-known because it is used by bitcoin, and can cost an extremely high amount of energy and electricity to run. If the blockchain is proof-of-stake, it is more likely to be environmentally friendly. The good news is that many supply chain and logistics service providers are stepping in to offer these greener blockchains as an option for their projects. One of these is Finboot in Spain, which worked with the energy company CEPSA to implement blockchain to trace vegetable oil from its source to its end use in its biodegradable surfactant production. Still, ask for their sustainability credentials anyway. If there’s any reason to doubt that the blockchain being used or the solution being proposed is carbon-neutral, the solution has to be disregarded. There’s just no reason to adopt more technology if it will present more problems later on.
The final consideration is the toughest but also the most rewarding: the ultimate goal of adopting blockchain. What improvement is the most important to your business? Blockchain could address several of them. For example, there is a movement towards maintaining a fair trade for goods like chocolate and coffee. However, the true “fairness” of the provenance is only as good as the records. Blockchain can help here, as proven by the household Italian coffee brand Lavazza.They integrated blockchain to simplify and streamline the supply chain journey of its La Reserva de Tierra Cuba coffee bean, making it easy for consumers to see the journey from farm to cup. Each coffee bean harvest and reception, environmental data and processing information, quality control, and transportation are recorded on a publicly available blockchain for the company and the consumer to use. They are also using a carbon-neutral chain with low costs, helping them hit their sustainability as well as their fair-trade goals.
Improving internal provenance records is also a valid reason to adopt blockchain, making it easier to maintain a stringent, auditable record that can be provided to other departments, shareholders, governments, or regulators. This kind of provenance can be more detailed and more sensitive to attempts to access or change the data. So, using blockchain to certify medicine shipments, as one example, allows an enterprise to securely control a record of authentic, noncounterfeit medications. This is especially important if counterfeit medicines end up causing harm and government agencies investigate. Otherwise, blockchain can help make supply chains more resilient to digital attacks or intrusion, reduce costs of maintaining records, fight the threat of counterfeit goods, and more.
The supply chain sector is under pressure to be even more efficient and reliable despite a challenging economic and geopolitical landscape. Still,a recent report from EY stated that enterprises plan to “shake up their supply chain strategies to become more resilient, sustainable, and collaborative with customers, suppliers, and other stakeholders.” If that is the case for your organization, then certainly blockchain can help you. Blockchain’s internal provenance and integrity makes a supply chain more resilient, including by helping identify potential disruptions early, streamlining regulatory compliance and internal audits, and detecting counterfeit products and fraudulent activities. Blockchain is also a tool for collaboration with your stakeholders. Lavazza is just one example of how it can be used to give customers verifiable information about product origin, journey, and authenticity, building confidence and loyalty through transparency and traceability. And if you choose a blockchain that is itself sustainable, it can help achieve sustainability goals too. The most important filter, however, remains the ultimate goal. What do you want to improve or change about your operations? If the answer involves becoming more resilient, more transparent, or more efficient, blockchain can help. Use this goal to evaluate your options first, followed by an analysis of costs and its sustainability metrics. By considering these three factors, you are more likely to find a scalable, resilient, and efficiency-delivering use of blockchain in your supply chain business.
An advanced transportation management system can help with route optimization, real-time tracking, multimodal management, and predicting potential supply chain challenges.
A transportation management system (TMS) is a critical tool for all supply chain and logistics practitioners. It provides shippers, third-party logistics companies (3PLs), and fourth-party logistics providers (4PLs) with the visibility they need to manage the supply chain and optimize the movement of products and goods. There are various types of transportation management systems, and while using a basic TMS is better than no TMS at all, advanced transportation management systems offer enhanced functionality and can scale with you as your business grows.
Getting the right TMS in place can have considerable benefits, as a TMS helps with planning and executing the movement of goods on a comprehensive level, which aids in reducing the risks of disruptions at every point in the supply chain. Companies that better manage risk will see significant savings. Data from the supply chain risk intelligence company Interos found that of the organizations they surveyed in 2021, the average organization lost $184 million in global supply chain disruptions. Similarly, a McKinsey study found that, within 10 years, the cost of supply chain disruptions adds up to nearly half of a company’s profits.
What Is the Difference Between an Advanced TMS and a Basic TMS?
Differences exist between TMS solutions, with not every organization or product offering the same features. More advanced TMS solutions go further, providing greater visibility and control. Consider some of the differences of using an advanced TMS for your logistics operation.
Functionality
A basic, or “lite,” TMS solution offers some nice features and enhances productivity. It offers features related to basic routing and order management, and it gets your products moving.
By comparison, an advanced TMS will include additional tools to enhance success, including:
Advanced route optimization to take into account changing conditions or specific factors related to your business.
Real-time tracking so you can catch and adjust problems early on or offer real-time solutions for unplanned delays.
Multimodal management provides organizations with more options to move products faster and more efficiently and affordably, depending on the factors that matter most.
Predictive analytics is yet another benefit of an advanced TMS. Its ability to predict potential supply chain challenges allows for better planning and mitigates risks.
Scalability
A basic TMS solution is typically best suited for small businesses. It does not provide advanced features to support more complicated needs. The more complicated your logistics needs are, the more robust the features on your TMS must be, including both in the planning and execution stages.
An advanced TMS offers more of what you need if you are a medium-sized business planning to grow or if you are a large enterprise right now. It offers solutions to adapt to more complex and intricate supply chain models. In high-volume networks, this is critical. If you expect to see significant demand increases, or your supply chain experiences seasonal demand fluctuations, an advanced TMS is the better solution.
Data Integration
Organizations also must consider how well their existing data and tools will integrate into a new system. A basic TMS will facilitate some options but tends to have limitations on what types of products and solutions it will integrate with overall. More so, it does not have the ability to take the data it has and provide you with comprehensive analysis, but rather just offers the data for you to analyze yourself.
An advanced TMS goes further by providing more advanced analytics, including opportunities to incorporate the tools you need as you grow, such as an enterprise resource planning system, warehouse management system, order and inventory management tools, real-time visibility tools, and accounting systems. It also offers more comprehensive reporting tools.
Unlocking Your Full Potential
Partnering with a 4PL or managed transportation services provider and implementing an advanced TMS is a strategic play that's going to have a very dramatic impact on the profitability of your business’s profitability and resilience.
An advanced TMS equips companies with essential tools to capture and leverage data effectively, offering enhanced visibility, and control over logistics processes. By enabling real-time insights, predictive analytics, and seamless data integration, an advanced TMS transforms complex supply chains into strategic assets. This level of supply chain optimization empowers businesses to address disruptions proactively, drive growth, and maintain a competitive edge in today’s dynamic global marketplace.
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Labor strikes can stop supply chains in their tracks unless companies take steps to build up resiliency.
Strikes and potential strikes have plagued the supply chain over the last few years. An analysis of data from the Bureau of Labor Statistics by the Economics Policy Institute concluded that the number of workers involved in major strike activity increased by 280% in 2023 from 2022. Currently, the U.S. East Coast and Gulf Coast ports are facing the threat of another dockworker strike after they return to the negotiating table in January to attempt to resolve the remaining wage and automation issues. Similarly, Boeing is continuing to contend with a machinists strike.
Strikes, or even the threat of a strike, can cause significant disruptions across the global supply chain and have a massive economic impact. For example, when U.S. railroads were facing the threat of a strike in 2022, many companies redirected their cargo to avoid work stoppages and unhappy customers. If the strike had occurred, it would have had a massive economic impact. The Association of American Railroads (AAR), estimated that the economic impact of a railroad strike could be $2 billion per day.
Similarly, although the U.S. West Coast ports avoided a strike in 2023, the labor negotiations caused companies to reroute freight. For example, companies with locations on the East Coast went through the Panama Canal instead of having their cargo land at West Coast ports. As a result, West Coast ports’ market share dipped during this timeframe. Now as the East Coast and Gulf Coast ports try to finalize negotiations to seal the deal with the International Longshoremen’s Association (ILA), companies are searching for alternative routes and transferring their shipments back to West Coast ports. The economic impact of the strike is estimated at $3.8 to $4.5 billion per day by J.P Morgan.
Labor negotiations also threaten to further exacerbate inflationary trends, which have been a key concern across the supply chain. The ILA and port operators reportedly reached a tentative agreement to increase wages by 62% over the next six years. Similarly, the Boeing machinist strike is mainly related to a request for a 40% pay raise, with machinists recently rejecting a proposed 35% increase. These demands come as companies and consumers across the spectrum are resisting increased costs.
Nor are these strikes completely focused on pay increases. The ILA is also demanding a total ban on the further automation of cranes, gates, and container movements that are used in the loading or loading of freight. This issue still remains unresolved. Such a ban would not only increase costs, it would also threaten the competitiveness as the U.S. ports, which are already some of the least competitive in the world. According to the Wall Street Journal, L.A. and Long Beach ports are about half as productive as China’s best port in terms of average container moves per hour.
Creating a Resilient Supply Chain
Labor unrest and strikes have caused executives to open their eyes to the volatility, uncertainty, complexity, and ambiguity (VUCA) in their supply chains. Many are responding to the volatility and disruptions by working to create more resilient supply chains.
No company can thrive in a supply chain disruption-ridden environment if it is not prepared to pivot as conditions change. However, preparation alone will not suffice. To thrive in a VUCA world, companies should be ahead of changing conditions or perhaps flip the situation on its head to become the disruptor instead of the disrupted. As the competition struggles to maintain customer service levels, profitability, and working capital requirements in the face of disruptions, companies with a more resilient supply chain will gain market share.
There are several strategies to create a resilient and proactive supply chain. The most successful approaches include rethinking strategies, upgrading business processes, and automating and utilizing advanced technologies. The bottom line is to create resiliency/flexibility, quick responsiveness, and upgraded performance.
Rethinking Strategies
Old strategies will no longer suffice in this more volatile world. For example, producing in China to reduce labor costs provides no resiliency when chokepoints arise in the global supply chain and/or as geopolitical risks surge. For example, the Red Sea crisis has created a supply chain chokepoint, delaying goods transiting from northeast Asia to the East Coast of the U.S. and Europe. Container ships have re-routed around the southern tip of Africa, adding cost, time, and other risks to the trip. As labor disputes and/or strikes arise, the risk increases that the product will get stuck or delayed in transit. If there are strikes on the East Coast and Gulf Coast ports, ships will have to divert to the West Coast and be shipped across the country, adding time and cost. By moving manufacturing closer to customers and consumers through reshoring, nearshoring, and vertical integration efforts, these risks are mitigated. If local disruptions do occur, companies can recover quicker due to the shorter distances, quicker lead times, and greater control.
Thus, proactive executives are rethinking their manufacturing and supply chain network. For example, Ascential Medical & Life Sciences last year expanded its domestic manufacturing footprint, opening a 100,000-square-foot facility in Minnesota that will specialize in developing custom manufacturing machinery and solutions for medical and life science companies. The facility is part of a broader reshoring effort by the company.
In a similar vein, many companies, such as GM, Samsung, and Dell, have followed a nearshoring (also called friendshoring) strategy to Mexico. By moving closer to customers, they not only are more resilient but also can take advantage of trade agreements, such as the United States-Mexico-Canada Agreement (USMCA), as well as lower regulations and costs.
In addition to moving manufacturing, companies are also diversifying their supply base. They are pursuing strategies such as adding backup sources of supply, establishing strategic partnerships and joint ventures, and vertically integrating their supply chain.
Upgrade Business Processes
The most successful companies are aggressively upgrading strategic processes to support resiliency, customer success, and profitability. For example, rolling out an SIOP (Sales, Inventory, Operations Planning) process can help companies respond more quickly and proactively to changing customer demand and/or supply chain disruptions. Similarly, companies that have upgraded their demand, production, and replenishment planning processes are able to provide customers with higher service levels while also freeing up cash by reducing unnecessary inventory. These upgraded planning processes also improve margins by increasing efficiencies and productivity while reducing waste.
For example, a manufacturer of health care products utilized a SIOP process to better predict revenue and to create a better operational rhythm. The company’s demand plan was translated into machine capacity and critical raw material requirements. By taking this step, the company became aware that it needed to get a backup supplier to avoid a potential critical chokepoint in the supply chain. At the time, the manufacturer was purchasing all of its most important material from Brazil. Due to geopolitical risk in the region, there was the potential for supply chain disruption. To mitigate this risk and ensure reliability, the manufacturer began sourcing 20% of its material requirements from a backup supplier in the United States. Fast-forward a few years, and there was a port strike that made it difficult to receive the materials from Brazil. The manufacturer’s SIOP process provided a forecast of what was required to bridge the supply gap during the disruption. Because of the already existing relationship, the backup supplier was willing to ramp up volume to cover the manufacturer’s supply gap, even though the supplier was receiving an overload of requests from other companies. As a result, the manufacturer was able to maintain supply of this critical material and continue to meet its customer service levels. While its competition struggled, the health care manufacture was able to grow its revenue by 15%.
Automate & Digitize
Technology can also help companies respond better to disruptions and volatility. For example, advanced planning systems can help planners can quickly pivot with changing conditions, such as strikes. The most advanced of these systems will be equipped with artificial intelligence (AI) capabilities that will recommend changes on the fly to satisfy customer needs in the most profitable and least risky manner. For example, as strikes arise, the system will quickly assess changing conditions and recommend that the manufacturer move demand to plants and/or routes not impacted by the strike. The planning systems will also provide the planners with a better picture of requirements so that they can change production plans and ensure high service levels for customers.
In the same fashion, companies that automate their manufacturing processes, such as by using robotic welders, can more flexibly respond to changing customer requirements change while also mitigating costs. Similarly, companies that use additive manufacturing technologies can produce and customize on demand. By using robotics and automation equipment, manufacturers can run lights out, thereby increasing output and flexibility, while reducing cost. Therefore, if a strike occurs at the manufacturer, some level of production is likely to occur, as long as they can assign a resource to keep the robotics and automated equipment running.
In logistics, advanced technologies can seamlessly sort, package, and move products. These technologies can help companies quickly respond to changing conditions so that packages can be re-routed at any time. Similarly, transportation planning can use predictive models to optimize freight costs and rerouting shipments through the global supply chain in response to changing conditions, thus ensuring timely deliveries. For example, as strikes arise, the system will quickly assess a company’s transportation network, evaluate alternative routes, and recommend the optimal one. Changes will also be made to current routes for goods in transit so that they meet the customer due dates at the lowest cost.
Delivering Bottom Line Business Results
The bottom line is to create a resilient supply chain and craft tomorrow’s supply chain today. Companies that invest smartly in the future will be prepared to take market share as disruptions occur. There will be more opportunity than ever before for those that rethink strategies, upgrade business processes, and automate and digitize their end-to-end supply chain.
About the author: Lisa Anderson is founder and president of LMA Consulting Group Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She recently released SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue & EBITDA Growth that can be found at https://www.lma-consultinggroup.com/siop-book/.
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Supply chain professionals should be aware of how the different policies proposed by the U.S. presidential candidates would affect supply chain operations.
For both Donald Trump and Kamala Harris, the revival of domestic manufacturing is a key campaign theme and centerpiece in their respective proposals for economic growth and national security. Amid the electioneering and campaign pledges, however, the centrality of supply chain policy is being lost in the shuffle. While both candidates want to make the supply chain less dependent on China and to rebuild the American industrial base, their approaches will impact manufacturing, allied sectors, and global supply chains much differently despite the common overlay of protectionist industrial policy.
Both Trump’s “America First” and Harris’ “Opportunity Economy” policies call for moving home parts of supply chains, like those that bring to market critical products like semiconductors, pharmaceutical products, and medical supplies, and strengthening long-term supply chain resilience by discouraging offshoring. Harris’ economic plan, dubbed the “New Way Forward,” aims to close tax loopholes, strengthen labor rights, and provide government support to high-priority sectors, such as semiconductors and green energy technologies. Trump’s economic plan, dubbed “New American Industrialism,” emphasizes tariffs, corporate tax cuts, and easing of regulations.
Supply chain policy differences in rhetoric and priorities will become a growing attack vector in the lead-up to Election Day. While political discussions focus on the economic benefits, corporate leaders need to understand the implications of policy changes and the effect on their firms’ ability to navigate risks and disruptions.
U.S. manufacturing base and supply chains
Trump’s emphasis on sweeping tariffs creates uncertainty over supply security and fears of inflation. Harris’ continued emphasis on “Bidenomics,” such as the Inflation Reduction Act and the CHIPS and Science Act, impacts multitier global supply chains and trade policy around the world. Under either plan, the net effect would be that free trade will continue to regress under the impulses of decoupling from high-risk markets, geopolitics, and regionalization. Both parties emphasize the opportunity to create new, well-paid jobs. At the same time, customers are likely to have to bear the higher costs, either directly by paying higher prices in stores or indirectly through subsidies financed by taxpayers’ money.
Labor, immigration, and the workforce
Trump’s emphasis on mass deportation of illegal immigrants will impact the manufacturing and agricultural sectors that already have labor shortages. Harris’ focus on labor rights will amplify organized labor’s influence in supply chain operations and thereby increase costs as seen in the recent longshoreman strike on the East and Gulf Coasts. Both directions will only strengthen inflationary pressures and cause organized labor to resist technological advances such as automation and artificial intelligence to replace jobs. The net effect is that organized labor sees its influence growing under either election outcome, resulting in more potential strikes, and the educational sector being called upon to develop the requisite training and development programs and public–private partnerships to address the manufacturing and supply chain skills gap. Access to top domestic and global talent will be critical to support a growing U.S. manufacturing base.
Sustainability
Trump would roll back some of the environmental regulations, climate initiatives, and decarbonization measures. Big Oil companies, such as Exxon Mobil and Phillips 66, however, have come to embrace the low-carbon energy provisions of the Inflation Reduction Act. Harris is expected to strengthen protections and enforcement alongside international allies and partners. In continuation of the Inflation Reduction Act, a Harris administration would continue providing incentives to green technologies and businesses. The net effect of both approaches would be that corporate leaders will stay committed to decarbonization measures that were set in motion years ago.
Regardless of the election outcome, the uncertainty around supply chain policy will continue well into 2025. In particular, there are growing concerns about costs and their inflationary impact on the deficit and national debt; reform of the de minimis exemption for low-value imports; the role of friend-, near- and re-shoring; and the renewal of the U.S.-Mexico-Canada Agreement in 2026. The authors are hopeful that supply chain policy steps announced by the U.S. Department of Commerce in September at the Supply Chain Summit will be institutionalized and survive leadership turnover. The election outcome will determine supply chain policy’s next form and shape the U.S. economy’s ability to compete in an increasingly uncertain global market.
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Future warehouse success depends on robot interoperability.
Interest in warehouse robotics remains high, driven by labor pressures and a general desire to further automate distribution processes. Likewise, the number of robot makers also continues to grow. By one count, more than 50 providers exhibited at the big MODEX show in Atlanta in March 2024.
In distribution environments, there is especially strong interest in autonomous mobile robots (AMRs) for collaborative order picking. In this application, the AMR meets pickers at the right inventory location, and the workers then place picks in totes on the robot, which then moves on to another location/picker or off to packing, greatly reducing human travel time.
While the use of robots in distribution is still early in its maturity, for many, if not most, companies, the future is one of heterogeneous robots—different types of bots from different vendors operating in a given facility. With the growth in robotics, these different robots will often need to communicate with each other—either directly or indirectly through use of an integration platform—to automate the flow of information and work. This is broadly termed “interoperability,” and it is an important concept for companies planning warehouse robotics initiatives, with the ultimate goal of achieving a “plug and play” environments where new robots can easily be added to the automation mix and processes adapted over time.
Interoperability example
Why is interoperability important?
Consider the following example. A company buys perhaps 20 AMRs to support collaborative picking. A few years later, additional AMRs are needed to support growth. But now there is another AMR from a different vendor that the company prefers for cost, design, change in stock keeping unit (SKU) attributes, or other factors.
Interoperability will allow a company to keep the AMRs they have and seamlessly add the new AMRs to the mix. Beyond basic integration, a company will want to manage the robots across both vendors in terms of visibility, task assignment, performance measurement, and more, operating as if it’s a single fleet.
That’s a good example of what interoperability is all about.
Are there interoperability standards?
There are some initiatives across the robotics sector to develop cross-vendor integration protocols that will make interoperability much easier. However, these standards, such as VDA5050 (a standardized interface for automated guided vehicles) and the Mass Robotics 2.0 AMR Interoperability Standard, are either not widely used or are still under development.
Many vendors have also started offering support for what is called a “robot operating system” (ROS/ROS2). However, this is a loose, open source framework (not a full standard) that doesn’t fully address the interoperability challenge.
The robotics platform alternative
In the absence of useful standards, companies still have a few options for achieving interoperability. One is the traditional approach of manually programming interfaces between different robots and interfaces between robots and software systems such as warehouse management (WMS) or warehouse execution systems (WES).
The downsides of this approach are well understood. They include extended developing times and the high cost to get the integrations done, as well as a significant lack of flexibility down the road, with some added risk thrown into the mix as well.
A better alternative is the use of a platform strategy. Which begs the question: What is a robotics platform?
A robotics software platform is a middleware ecosystem—cloud-based or on-premise—that provides various capabilities and services from integration to fulfillment planning and execution. It also acts as a bridge between automation systems and various enterprise software applications.
The starting point for any robotic platform success is, in fact, integration. That integration capability includes advanced tools that enable flexible “no code/low code” approaches to connecting robot fleets.
The right platform can also more rapidly integrate with WMS/WES or other software applications, using AI to greatly accelerate the often time-consuming data-mapping process. Once the WMS/WES is connected to the platform, then the robots are also connected to enable real-time, bidirectional access to the WMS/WES data.
Such a platform delivers interoperability across robot types and connects different automated processes. A simple example would be a communication from the platform to a robot needed to move goods from receiving to reserve storage, where another robot is made aware via the platform that there is a new putaway task ready for completion.
Other interoperability considerations
To maximize interoperability opportunities, companies should consider the following interoperability-related capabilities that may be available from a given robotics platform:
Flexibility in integration based on robot software functionality: Different robot vendors come with software at different levels of maturity. An interoperability platform should be able to work with robotic vendors at any level of software functional capability, ensuring flexibility in robot selection.
User experience consistency: For interoperability to be functionally effective, the user interface across robotic-enabled processes should be consistent, so that users can easily interact and switch between different tasks.
Flexible communication protocols: A platform should provide support for a wide range of different protocols, such as application programming interfaces (APIs), socket communication (a two-way communication link between a server and a client program), web services, ROS/ROS2.0, and VDA5050, to name just a few.
Observability: AMRs especially will generate huge of amount of data on their movements and activities that can be used for analytics. The robotics platform should normalize data packets from different vendors to create a unified dashboard.
Safety and risk mitigation: A robotics platform can help achieve safety across different types of robots by understanding the safety protocols of different machines and coming up with a common set of rules. These rules will exist in an extended fleet manager that runs in the platform and sits on top of the fleet managers of each individual brand of AMR.
While some of these capabilities may not be relevant in a company’s early years in warehouse robotics, they could prove valuable down the road, so give them some consideration today.
Interoperability use cases
We’ve already covered a couple of common robotic interoperability use cases:
Adding new robots of the same type but from a different vendor and having all of them operate together as a single fleet.
Connecting different types of robots or automation to support multi-step process flows (for example, receiving to putaway).
Here is another: One global consumer goods company wants to heavily automate distribution processes but give individual regions or countries they operate in the flexibility to select the vendor for a specific type of robot (for example, a layer picker) and be able to easily plug that specific equipment into the larger platform infrastructure. This allows a centralized automation strategy with local execution.
The Interoperability Imperative
For a significant and growing number of companies, the future on the distribution center floor will be robotics of multiple types and vendors. To maximize flow and productivity, these heterogeneous environments must adopt interoperability strategies, enabling systems of different types to operate as if a single fleet. While standards to help with all this may arrive in future, for now a robotics integration and execution platform will provide an attractive alternative to traditional programming-heavy approaches.