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2023 Technology Roundtable: Evaluate and apply

In this annual event, we gather four top supply chain management software and technology analysts to discuss how some of the latest software and automation innovations are being put to work to help logistics professionals streamline their operations to keep pace.

Here we are in 2023 and words like “chaotic,” “overwhelming,” and “uncertain” are still being used by top analysts to define the environment in which we find logistics professionals operating.

There’s no doubt that the readers of Logistics Management have never been under more pressure to balance rates, capacity, and service, and the need to apply more technology to better manage the realities of this complexity is pressing.

However, as we’ve been reporting, the software and automation tools shippers need to meet today’s challenges are more available than ever—all we need to do is evaluate our operations and apply what makes the most sense.

Of course, that’s easier said than done. But to help us along this path, we’re joined by Brock Johns, senior principal analyst at Gartner; Norm Saenz, partner, managing director at St. Onge Company; Howard Turner, director, supply chain systems at St. Onge Company; and Dwight Klappich, vice president, fellow at Gartner.

Our “2023 Technology Roundtable” covers the continued evolution of transportation management systems (TMS); the many roles automation plays inside our four walls; the vital importance of supply chain management software (SCM); and the rise of what Gartner has defined as the “heterogenous robotics fleet.”

TMS: Momentum Builds

Logistics Management: We continue to experience unstable rates, driver shortages and new customer expectations in both B2B and B2C. How would you define the transportation management environment for shippers?

Brock Johns: If we could sum it up in one word: chaos. To be fair, most transportation professionals would probably say that chaos has described their world for years. Shippers have dealt with pricing volatility and disruptions for as long as I can remember. But it feels like the pandemic crisis, and all the events since that point, have really gotten the attention of shippers.

It’s almost like they knew managing transportation was tough, but the events of the last few years have just reinforced how tough things can be—and for many shippers, how tough they really are.

And now shippers must worry about new and changing customer expectations on top of the traditional challenges of rates and capacity. So, moving forward, instead of chaos, the new term to define the environment might be ‘overwhelming.’

LM: Based on this overwhelming environment, what would you say are the biggest transportation management pressures facing logistics mangers?

Johns: While we’re seeing transportation rates soften, there are still pricing pressures and rate increases taking place. Logistics and transportation are almost always one of the first places organizations look to try and contain costs, and transportation leaders know they’re going to be under the microscope when it comes to optimizing their freight spend this year.

With trying to optimize costs, there will be a need to look at increasing their carrier pool, more frequent bidding, and potentially shifting to other transport modes. On top of costs, more transportation professionals are getting asked tough questions about sustainability and how the organization is performing. In North America, and particularly in the United States, this is not something they’re used to dealing with yet—many have no idea where to begin.

LM: Taking those challenges into consideration, how can TMS help shippers meet today’s evolving challenges?

Johns: Thankfully, the TMS solutions available to companies today can help with some of these challenges. Let’s take the big issue of cost optimization as an example. Many of the TMS solutions available today can help a shipper manage costs by selecting the optimal mode and carrier. For a lot of companies, they have simply picked the carrier they know.

“It’s almost like they knew managing transportation was tough, but the events of the last few years have just reinforced how tough things can be, and for many shippers, how tough they really are…And now shippers must worry about new and changing customer expectations on top of the traditional challenges of rates and capacity.”
— Brock Johns, Gartner

However, organizations need to be able to guide their internal teams into making the right selection. Today’s TMS solutions can even automate that process, from planning and consolidating orders into shipments and assigning and tendering the optimal carrier.

A robust TMS solution will help a shipper streamline the freight procurement process, and it will make it easy to compare your contract rates to the spot market and make it easy to shift between the two. Some of the biggest areas of potential ROI for a TMS exist in the procurement and optimization categories.

LM: Historically, TMS was thought to be for the ‘big players.’ With the proliferation of Cloud, are we seeing the small- to mid-sized businesses jump in and put TMS to work?

Johns: That is 100% true. We see the trend of small- to mid-sized businesses [SMBs] exploring the benefits of a TMS solution. Those companies are realizing that there are a lot of TMS solutions in the market and that many of them are tailored to their needs and requirements, which are often less complex than large, enterprise shippers.

Solutions that target this market segment typically have simplified user interfaces, support truckload and LTL, at a minimum, and offer some analytics and reporting capabilities. These solutions are usually more affordable and offer speedy implementations. Vendors in this space are growing because of this focus on speed, strong ROI, and lower total cost of ownership.

SMB shippers can select a solution that will meet their transportation complexity and can get a solution that will provide a positive return on investment. Cloud solutions have helped to reduce upfront costs for these shippers, which has really helped to accelerate adoption. And over the last couple of years, growth in this segment has been double that of the overall TMS market.

LM: As transportation management gets more complex, it appears that vendors are doing a good job of integrating more advanced options into their platforms to help shippers wrap their arms around these complexities. What are you seeing?

Johns: TMS vendors, believe it or not, do a pretty good job of listening to their customer base. And based on that customer input, we’ve seen vendors expanding their capabilities. For some vendors that means adding support for additional transport modes, such as parcel or ocean.

For others, it has meant providing better user interfaces and a unified user experience across all their modules or associated offerings. In the TMS market, almost all vendors are offering a more advanced TMS solution and have been investing in artificial intelligence [AI] and machine learning [ML] for at least a few years.

We’re starting to see more examples of those technologies being used in areas such as predictive ETAs, transportation forecasting, dynamic appointment scheduling, and tools to help drive improved collaboration, both inside and outside the organization.

LM: Let’s look down the road a bit. Can you define the capabilities of a truly advanced TMS and the big picture benefits shippers may be able to realize?

Johns: If you look back at the last five years, we’ve seen quite a bit of acquisition activity as TMS vendors have looked to increase or add new capabilities. I think what TMS buyers in the market are really looking for over the next few years is the ‘everything’ TMS.

Companies want to see solutions that can truly support them at a global level for all modes of transportation, from truckload to LTL to parcel, ocean, and autonomous vehicles. They also want that solution to be equally effective at supporting their inbound and outbound requirements, and that includes extending to last-mile.

And to top it off, they want great analytics and reporting, as well as complete visibility across the entire transportation network. Oh, and all of this while minimizing their environmental impact. I think the drive toward these types of TMS solutions will be really interesting to watch.

Automation: What's working? What's being overlooked?

LM: Based on what you’re seeing inside your clients’ operations, how would you define the environment inside today’s warehouse and DC facilities?

Norm Saenz: The environment is one of concern and uncertainty in today’s warehouse and DC/fulfillment operations. This challenging environment is a result of the shaky economy, tightening labor market, extending lead times, and rising equipment costs.

We have a mix of clients, including some worried about the economy and experiencing declining sales, others with surging demand and a shrinking workforce, and many looking to invest in major capital improvements with longer than desirable lead times and increasing equipment costs. The reality is everyone is dealing with something, and how you react and predict future challenges is essential.

LM: With this new reality in mind, what would you say are the three biggest challenges brought on by this still unsettled situation?

Saenz: It’s clear that the three top contributing challenges include the labor market, extending storage/materials handling equipment lead times, and rising capital costs. Most companies have strategies for navigating the potentially declining economy, but what remains is retaining a strong workforce or reducing your reliance on labor with automation.

However, if automation is the solution, what is your strategy for the next year or two years while the automation is manufactured, delivered and installed? And, what automation is the right solution, affordable, and provides the required objectives.

We’re seeing an escalating number of projects including the evaluation of automation, and development of long-term strategies to achieve a more sustainable supply chain. Many of these projects include logistics optimization, involving facility consolidations to increase volumes to help justify automation. Others are ready to add automation at almost any cost with little return.

LM: Our recent survey numbers reflect an ‘automation acceleration’ over the past couple years. Considering your time in facilities, how do you see warehouse/DC operations responding and does this acceleration still have momentum?

Saenz: Adoption of automation has strong momentum and is where many are turning to deal with the labor market concerns. The battle is with the rising cost of automation and lead times for realizing change. What management should also consider is the wide-range of productivity improvements within a conventional design.

Either during the lead time, or the initial evaluation of automation, management should evaluate: the labor productivity gains from improved processes; WMS functionality; order/wave management; product slotting; layout/material flow; equipment changes/maintenance; labor management; and training.

Ideally, there could be more than a 30% reduction in your labor requirements with no-cost/low-cost solutions that can be implemented within a few months.

LM: Did you see any predominant technology trends being applied to help tackle these significant challenges?

Saenz: The biggest trend in technology is where capital costs, lead time and complexity are the lowest, but the return remains high. The predominant technology providing this type of result includes autonomous mobile robot (AMR) systems that can be installed within existing operations at a lower capital cost than fully automated designs— and are available with shorter lead times, can be easily tested, and are expandable.

Essentially, what technology can you insert into an existing operation fairly quickly and remove a large portion of labor? Other goods to person technologies are shuttle and AutoStore applications that fit within traditional warehouse clear heights. This trend should continue, while many are also looking at traditional, fully automated AS/RS buildings, ATLS, palletizers, and other technologies to minimize labor requirements throughout the facility.

LM: Considering all of the innovations and automation solutions available to us, are there any tried-and-true pieces that continue to be overlooked as a solution to today’s pressing challenges?

Saenz: There are many tried-and-true best practices that can make big differences in an operation. As noted earlier, conventional to mechanized best practices can drive big labor savings in today’s operation. Simply moving from a single pallet rider to a pallet rider handling two or three pallets is a game changer for manual order picking. There are some using manual pallet jacks versus standard pallet riders.

Product slotting can drive 15%+ labor savings, and many are not using software to support these critical SKU placement decisions. Labor management software and maintaining accurate labor standards can also enhance your ability to identify training needs and scheduling the right staffing levels. The irony with improving these manual best practices is that not addressing them may result in your new automated solution failing.

LM: Because so much attention has been put on the benefits of warehouse/DC automation, are there any myths you can dispel?

“We have a mix of clients, including some worried about the economy and experiencing declining sales, others with surging demand and a shrinking workforce—and many looking to invest in major capital improvements with longer than desirable lead times and increasing equipment costs. .”
— Norm Saenz, St. Onge Company

Saenz: An automated system often brings to the surface operational inefficiencies or bad practices that have been buried with manual workarounds for decades. When you move to an automated system, flexibility is mostly removed for handling manual workarounds. Don’t assume an automated system solves all of your current operational issues.

One example is that automated systems rely heavily on accurate item master data, including dimensions and weight. In fact, the design and operational efficiency of an automated system depends on the accuracy of the item master data.

Another example is how automated systems handles exceptions. With manual designs, exceptions are set aside and handled however necessary. But, at what point does an exception get handled within the automated design? Do all exceptions just hit the reject line?

The documentation of all requirements, including exceptions can dictate a successful application. And that means that all of the various scenarios and possibilities must be a part of the specifications, evaluation and design of new technology.

LM: What advice do you have for logistics and warehouse/DC operations managers who are looking to accelerate their use of automation?

Saenz: My answer always remains the same, and I stress it more given the rising importance of a successful automated solution implementation. Get your current operations working smoothly before inserting an automated system.

This starts with ensuring that you have a quality item master, strong processes and systems, and a trained workforce. You need to allow the required time to evaluate the various options when selecting the best automation for your business. The risk is technology excitement can lead to uninformed decisions.

Perform the diligent practice of a base case design—improved conventional design—and compare this against multiple automated alternative solutions. Understand what data is required to efficiently design and operate a system, including item dimensions and weight and the integration of automation controls with your existing warehouse systems.

SCM Software: Tying operational design to execution

LM: It has been a few years for the history books, but perhaps the dust is about to settle? From your experience working with clients recently, how would you best define the current environment inside today’s logistics operations?

Howard Turner: If I may, I’d like to continue with the dust settling metaphor. The dust is starting to settle; however, we still don’t have a clear view of the horizon. We can see shapes and outlines of our post-pandemic future, but it’s still not entirely clear.

Since the pandemic, we’ve seen tremendous interest in software and automation—both new and upgraded systems. Because the pandemic exposed the vulnerability of supply chains, companies can now clearly see the value in investing in software and automation.

We’re also in an interesting situation where our economy is strong—despite stress from inflation and rising interest rates—so, there’s capital available to support these investments.

This is such a unique period in my 25-year career. Previously, these types of investments were generally only made in the United States if there was a clear savings opportunity, such as labor reduction. Now, operations understand that these investments are needed to strengthen their supply chain, provide an improved customer experience, and better compete in an e-commerce driven world.

LM: What would you say are the most fundamental challenges facing operations?

Turner: When you look inside a typical distribution center, you still predominately see infrastructure that’s ill prepared to pivot to a customer-service-centric, e-commerce model. Broadly speaking, warehouses and DCs were not designed for customer service—they were designed for fulfilling stores. Stores were designed for customer service.

What does a customer-service-centric model mean in terms of warehouse operations? Well customers want real-rime visibility of available inventory. They want clear expectations set for delivery. They want one-day and two-day delivery. They want real-time updates throughout the fulfillment process.

Fulfilling these orders require systems capable of efficiently processing and planning large volumes of smaller orders. You need automation to augment warehouse labor to effectively fulfill these orders, and you need properly defined and integrated systems to collect and disseminate the data needed to support visibility and customer service requirements.

Companies generally know what needs to be done. Determining and executing a strategy to make this pivot
are the primary challenges.

LM: We’ve already mentioned the ‘great automation acceleration’ period that was brought on by the pandemic to help meet these challenges. Are you seeing this acceleration in your client operations?

Turner: There is no doubt that there is some level of acceleration. In my opinion, we’re still in the beginning stages, as broad adoption of automation is still a future consideration.

Like any new technology, I believe we’re in a period where systems are playing catch-up to potential. Companies understand the potential and vision for automation in distribution operations, but there’s a reluctance to be at the forefront with this technology. Also, there are learning curves associated with available technology as well as best-use case scenarios for each type of technology and system integration options.

We’ll see two things as the technology is rolled out across more and varied distributions operations. First, we’ll see improvements in the implementation and integration experience. Second, we’ll see more use case studies being collected to demonstrate the value. This is currently being worked on, and as it’s refined, you’ll see adoption increase.

LM: What steps need to be taken in order help those operations that expressed interest, but may be reluctant to make the leap to software and automation?

Turner: Ultimately you have to prove the value of a solution. As part of my job, we look for the best solution to meet our client’s requirements and business needs. That is data driven. We analyze the data and identify the needed processes to best meet the needs of the business.

What we’re seeing, for the reasons previously discussed, is that modern software and automation systems are capable of providing the tools to enable needed processes.

For example, if we identify that an operation is best suited for a goods-to-person process for fulfillment, there are various software and automation tools that can be considered. Again, because this is data driven, we can prove the value—productivity gains, improved accuracy, labor savings, better customer service—of the overall solution.

Proving the value of investing in software and automation helps to build trust in the tools. Also, as I previously mentioned, because these tools are still maturing in the market, there’s work to do to confirm their effectiveness. An approach that we see often is rolling out these software and automation tools to a very specific portion of their operations rather than an initial broad rollout.

LM: In our pages, we’ve called supply chain management software ‘the hub’ or the ‘great orchestrator.’
Is that a fair assessment?

Turner: I’d say that’s pretty accurate. All of the components of an effective operational solution—process design, equipment/automation selection, software integration and change management—are critically important to enabling expected benefits. But software is what ties the operational design to the execution.

It’s how we as humans communicate the needs of the operation to warehouse automation. It’s how we provide the necessary inputs—data—needed to make decisions and execute tasks. It’s also how warehouse automation communicates with us to confirm tasks and report issues.

LM: What are some of the biggest benefits you’re seeing from the application of supply chain management software both insided and outside the four walls?

Turner: We’ve been talking about the growth potential of e-commerce for a long time. And e-commerce growth has responded accordingly. In fact, we’ve have seen about 20 years of steady growth in this area. But that growth accelerated during the COVID/post-COVID period.

According to the U.S. Census Bureau, e-commerce sales grew steadily from 2012 to 2019 at a rate of 12% to 16% per year. But consider the fact that e-commerce sales grew more than 40% between 2019 and 2020—that’s a large number, and businesses are struggling to keep up.

Because e-commerce fundamentally changes business requirements for the reasons previously stated, the ability of software execution systems to provide decision intelligence is very appealing to companies—especially to those that use warehouse automation to support operations.

As a result, the benefit to businesses is that they’re able to operate in a very agile and flexible way. This allows the ability to dynamically adapt as necessary so that operations are continuously optimized. The direct benefits of this approach are faster order turnaround times, improved customer service, increased throughput, and better utilization of labor.

LM: Can you give us an example of what an ideal operation might look like once it has its material and data flow synchronized across the entire supply chain?

Turner: Synchronizing the material and data flow is the objective. We like to do this exercise with our clients where we overlay a data flow map with a material flow map.

Where we find disconnects are opportunity areas for an operation. That’s because we’re not able to leverage computing resources to optimize tasks in those gap areas. So, having this synchronization—commonly referred to as a digital twin—is part of imagining how this operation may look.

Next would be integrating both internal and external supply chain systems. Ideally, the digital twin concept would expand across the supply chain. For example, operations would have real-time visibility of inbound product from the point it’s ordered until it’s delivered, across all supply chain partners including vendors, carriers, brokers, etc.

Having fully integrated systems across the supply chain enables execution systems to utilize AI and ML to be proactive in dynamically making decisions. This directly improves operations, and this is done by analyzing large amounts of data from various sources and orchestrating key activities in facilities to optimize fulfillment operations based on real-world constraints.

LM: For those operations managers who like the idea of what you describe, what steps do you suggest they take to start moving in the right direction with software adoption?

Turner: The first step in the process is to assess your overall needs. It’s similar to having your doctor ask you: ‘where you do you hurt the most?’ This involves systematically assessing current operations to determine needs and objectives. It may seem a bit trivial, but listing and prioritizing your needs builds the foundation for determining the path forward and measuring success.

Next, I suggest documenting everything related to your operations. This includes mapping the current layout, slotting, material flow, work processes and tools used to plan workload and assign tasks. This later becomes a key reference for identifying operation improvement opportunities and system requirements documentation.

After documenting operations, it’s important to establish processes to collect key operational data—number of SKUs, receipt volumes, order volumes, shipments, etc. Profiling your warehouse is an important step in assessing current operations and also provides an analytical foundation for comparing improvement opportunities.

This data is also used to create key performance indicators [KPIs]. KPIs are great for measuring success, and they should be carefully thought out to be sure they’re meaningful and drive desired behavior.

Finally, it’s critical to catalog existing systems and capabilities. It’s necessary to identify which functions will be added, replaced, etc. We recommend a review of existing information systems to identify disparities and determine a software approach to fill the needs.

Keep in mind that the best supply chain technology installed in operations with ill-conceived material flows and processes will only enable users to do things badly—faster.

Robotics: The heterogenous fleet takes shape

LM: From your vantage point at Garner, what do you see happening inside today’s fulfillment operations?

Dwight Klappich: Gartner research finds that supply chain organizations, especially logistics, remain under extreme pressure to improve performance under difficult economic and business conditions. Customers are more demanding and yet more fickle. Simultaneously, economic conditions put pressures on operations to do more with less.

While in the past e-commerce was the impetus for digital transformation, we now see similar issues across industries and functional areas. For example, many of the challenges of e-commerce now affect consumer products companies pursuing direct to consumer initiatives.

To address these challenges, Gartner finds that two of the top business priorities for supply chain business users are increasing productivity and efficiency while improving resiliency, continuity, risk, and security.

LM: What would you say are the most fundamental pressures that you’re see evolving inside today’s logistics operations?

Klappich: In Gartner’s 2023 Supply Chain Technology User Wants and Needs Study, we asked supply chain business users a number of questions around their challenges, goals, and supply chain technology investment plans. One question we asked was: ‘What were the top internal obstacles to achieving your organization’s supply chain goals and objectives?’

The top two issues identified were controlling costs, at 35%, and addressing labor constraints at 30%. Furthermore, the top three challenges respondents reported facing in their pursuit of digital supply chain initiatives were attracting and retaining the right talent, integrating with partners, and managing investment costs.

Consequently, while companies value the importance of digital transformation, they recognize that this will require laser-like focus and commitment.

LM: What role are you seeing robotics play to respond to these new challenges?

Klappich: In another question in the study, we asked about respondents’ plans for cyber-physical automation, and 97% said they either were or were planning to invest in automation over the next two years. We followed this up by asking respondents what their primary motivations were for investing in automation, and 59% said it was labor availability issues with the remaining 41% saying it was rising labor costs.

When then asked what their plans were for robotics, 96% of respondents said they either were or were planning to use robots over the next two years. Companies that had already deployed robots also said that they planned to increase the size of their fleet (93%) and look for new use cases for robotics (95%).

A key takeaway from the study is that companies are highly motivated to look at automation—especially robotics—to help improve the performance of their supply chain and logistics operations.

LM: What levels and types of robotics are you seeing being put to use now?

Klappich: Gartner is tracking about 34 different categories of intralogistics smart robots. Intralogistics smart robots are the class of smart robots that orchestrate and perform work within the four walls of a site and can be mobile or stationary, operating autonomously or collaboratively with humans or other robots.

Of those 34, around six dominate: transport robots or AMRs; collaborative picking robots; mobile goods-to-person robots; sortation robots; picking robots; and engineered robotic systems. Engineered robotic systems are solutions that combine some type of flexible robot with an assembled structure like a hive or grid.

Within these 34 categories there can be sub-categories, like truck-unloading. Typically, we find that our customers start with one notable business need, but as noted above, these companies look to identify additional use cases to address their broader labor and cost challenges.

LM: How would you define a heterogenous fleet?

Klappich: As companies expand their use of robotics, a majority of large organizations will have a mixed, or heterogeneous, fleet of robots from different vendors doing different things. A company might start with collaborative picking, add some basic transport, then look at robots to help un-load trucks, and so on.

We encourage our customers to look at their warehousing operations and identify pain points where automation might help. They can then define the needs for that area and then look for various solutions that might fit that need. In one case, this need might be addressed with a robot platform they already use; in other case, they may use a different type of robot and vendor.

Some large 3PLs are well down this path, with one saying that they had more than 1,000 robot projects across their global operations.

LM: Is there a way to neatly summarize some of the benefits operations will realize once they apply and optimize a heterogenous robotic fleet?

Klappich: This trend toward companies having heterogeneous fleets of robots is a good news, bad news situation. On the one hand, companies can focus their automation efforts on targeting specific problems with specific solutions with shorter times to value and pay back.

The challenge, or kind of bad news, is that this will introduce the need to have a software layer that can help integrate and orchestrate work between the various automation solutions. Gartner refers to this as a multi-agent orchestration platform.

These systems will sit between the company’s business systems like a WMS and the various automated things that need to be connected to and coordinated. We call this multi-agent and not multi-robot because agents can be a variety of other types of automation like conveyors, elevators, and doors.

LM: What advice do you have for logistics managers looking to move toward robotics solutions?

Klappich: As companies look to more aggressively pursue robotics, they will soon realize they need a governance and control structure that we often call a robotics center of excellence (COE).

While not every company calls it a COE, leading edge organizations realize they often need a smaller, centralized group to help address things like knowledge gathering, education, business case development, problem solving solution taxonomies, innovation, and governance and control.

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About the Author

Michael Levans's avatar
Michael Levans
Michael Levans is Group Editorial Director of Peerless Media’s Supply Chain Group of publications and websites including Logistics Management, Supply Chain Management Review, Modern Materials Handling, and Material Handling Product News. He’s a 23-year publishing veteran who started out at the Pittsburgh Press as a business reporter and has spent the last 17 years in the business-to-business press. He's been covering the logistics and supply chain markets for the past seven years.
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