@ Supply Chain Management


Warehousing the future

Everything’s changed in 20 years; yet nothing’s changed in 20 years. Veteran DC consultant Ken Ackerman may rhapsodize about the potential of technology, but in the end, he says, the business is still all about the effective management of space and time.

And so begins a Q&A with Ken Ackerman by DC Velocity magazine (2003) that delves into Ken’s view of where warehousing has been and where it is headed. I have excerpted some of the views that I found illuminating below:

Q. If a stranger were to walk up to you and say, “Hey, what are the three or four most important elements in a good warehousing or distribution center operation?” how would you answer?
A. I would tell them they needed to be sure they were managing the space as well as it can be managed and managing time, which is the labor, as well as it can be managed. Is there some waste in the operation? Are there steps that shouldn’t be there?

I would agree but I think a larger point has been overlooked. Ken’s points are exclusively about what happens within a warehouse’s four walls. The first important element in a good warehousing operation is location, location, location. Today, these warehouses may even be located in a third country replicating inventories and buffers in different parts of the world. If you supply chain has some hard infrastructural decisions to be made, one of them is likely to be where the warehouse(s) are located.
The next set of Q&A has to do with the influence of technology and how it is spreading into the warehousing world:

Q. Let’s say you’re a logistics professional and your job is overseeing your company’s DC operations. What has made your job profoundly different today than it was,say, 15 years ago?
A. It is the information revolution.

Q. Are you talking about this parallel flow of goods and information and how they interrelate? How is that really changing the job? Are people more productive or are people able to make better decisions because they have more information? Or is there another side to this, with people becoming overwhelmed by information?
A. Both. I think if I look back at the last 20 – some years, the biggest thing to come along has been automatic identification, specifically bar coding and scanning. The next big thing, which I believe will supplant and possibly replace scanning, is voice recognition in the DC.

Q. What are some of the inherent advantages of voice? Are we talking about a technology that can really change the game?
A. Yes, and I’ll tell you why. Your hands are free with voice. You don’t have to hold a scanner. You don’t have to hold any papers . You run down the aisle we a ring your earphones, your microphone and a computer attached to your belt, and you pick orders. The machine says, ‘Go to X-70’; you say, ‘ I am at X-70 and I see queue #1234′; it says, Pick six pieces’; you say, ‘Six , five, four, three, two, one, check’; and it tells you to proceed to the next location. It’s programmed to check the count, too – which means better accuracy. The wholesale grocer that I saw doing it bought this system to improve accuracy; it did not buy it to boost productivity. Getting both was a pleasant surprise.

There are two aspects to Ken’s response – there is the informational aspect (typified by how IT is bringing information to those who need it) and then there is the intelligence aspect (typified by how new technology is developing “directional” capability when it sits on top of the information that has been generated by the IT systems). Now, the reason that IT systems were absolutely necessary (or even is absolutely necessary in different applications) is that while economics dictates the scale of an operation i.e. getting larger distributes marginally increasing costs on a larger volume of stuff, scale overwhelms the human being’s mind when it comes to deciding/choosing the best way of doing things leading to sub optimal decision making. IT systems collect information even from a very large scale operation and are able to aggregate them in a way conducive to establishing patterns that in turn lead to systematic processes. However, when systematic processes scale bigger than the human beings ability to execute, then intelligence of a rather low-level variety is required to sort out these choices. As you can see, there is a trend there – scale, metaprocess, scale, metaprocess where the metaprocess is what people develop to handle scale and the inherent complexity of scale.
Also, I’d like to think that the gap that opens up between scale and metaprocess is the entrepreneurial gap wherein new solutions are warranted and whole new ways of doing things open up.

Q. Let’s look into the crystal ball a bit. You touched on some of the fundamentals that haven’t changed in 20 years. You touched on some of the changes technology has brought to the DC. But where will the industry be in five or 10 years?
A. Basically, the eight things are as follows: a greater emphasis on systems and flow in measuring performance; greater use of artificial intelligence; branding in the supply chain; simplified released-rate pricing to eliminate liability hassles; more paperless and almost laborless operations; more emphasis on worker education and training; consolidation to two types of freight carriers, linehaul and last mile; and federal involvement in rebuilding the transportation infrastructure, particularly as the railroad rights of way become national property.

These insgihts into where the warehousing and logistics industry is going are great ideas to watch out for. I can already see more paperless operations with the adoption of WMS technology and more emphasis on worker education and training. The trend of warehousers and logistics providers being consolidated into a single and seamless service offering is another trend as well as international logistics and warehousing offerings another.

HT: Logistics List’s blog post on Warehousing in the future.

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Category: Logistics, Supply Chain Management


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November 2006