How quickly is the supply chain changing? As recently as the 1990s, companies would optimize their distribution networks every five years or so. As a result of multiple acquisitions, rising transportation costs and changing trade patterns, many now are doing it annually, said Rajiv Saxena, vice president of global supply chain engineering at APL Logistics.
APL Logistics, a wholly owned subsidiary of NOL Group, operates about 26 million square feet of warehouse space globally, including about U.S. facilities with some 20 million square feet of combined space.
Most distribution centers operated by APL Logistics and other large 3PLs are not highly automated. For 3PLs, the goal is maximum flexibility, given that many 3PL-shipper contracts are three to five years in duration and new clients may have different warehousing needs. A number of companies that invested heavily in robotics or other automated systems when markets were strong are regretting those investments, as weak consumer demand and shifting distribution patterns render the facilities half-full and/or inefficient.
“They are finding that they don’t have enough volume to adequately use the facilities, and are finding it very costly to sublease or reconfigure them,” Saxena said.
Companies that own their own facilities or are committed to long-term leases are more likely to invest in warehouse automation. APL and other 3PLs are generally moving cautiously as they dabble in robotics and other automated technologies.
“There’s a move to automation, but it’s smarter,” Saxena said. “You don’t want to invest $20 million and find out that half the building isn’t being used or your next customers don’t need that type of solution.”
APL utilizes labor management systems in many of its facilities and is increasingly using layer picking, for simultaneously building of cases for different customers, which can increase productivity threefold.
Saxena believes more companies will employ smarter and more flexible automation warehouse management systems in the coming years. Cloud computing is likely to lower the barriers to entry for smaller warehouse operators by reducing the need for significant investment in software and hardware.
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