60 Seconds with Dwight Klappich, vice president of Supply Chain Research at Gartner

Dwight Klappich

Gartner

Title: Vice president, supply chain research, Gartner

Location: Atlanta, Ga.

Primary Focus: Warehousing fulfillment technologies

Modern: You just completed a survey on the readiness of the industry and its customers for the next generation of warehouse automation. How is the landscape changing?

Klappich: Gartner is seeing a significant increase in the interest in automation in all types—everything from conventional conveyor and sortation solutions to emerging technologies like mobile robots. What’s different is that the interest used to be driven by labor cost reduction and now its labor availability constraints. People can’t get labor, so they’re interested in increasing productivity of their existing labor force. Many businesses experience what we would describe as extreme cyclically. For some, Christmas is their busy time and for some it might be spring or summer, but they have dramatic peaks. They’d like to have a stable workforce and use automation to reduce the amount of labor they have to supplement with temporary workers.

Modern: What led up to this survey?

Klappich: Given the increased interest we’re seeing in materials handling systems, we wondered where is that interest today. In the past, automation was limited to big companies with big pocketbooks. We also wondered how ready buyers are to use the automation and if the industry is looking at things like automation as a service? That’s where we started.

Modern: What areas did you explore?

Klappich: One of the first was: What is motivating people to invest in new technologies? We wanted to understand buyer satisfaction. What are the things they like and what are the things they wanted to improve? For example, 70% of responding companies were satisfied with their return on investment. But they were dissatisfied with the adaptability of the systems in a dynamic environment. That’s an opportunity for the industry.

Modern: What did you find most interesting?

Klappich: One of the questions we asked of sellers and buyers was: What is the readiness of customers to implement and manage advanced materials handling solutions? Eighty-five percent of respondents thought they were completely ready, and they thought their customers were similarly equipped to do so. That’s good. But, only 50% of buyers felt they were ready to adopt these systems. What I believe is that a lot of end user companies considering automation don’t have engineering departments and don’t know if they are prepared to build the business case for automation. Now, 70% of users feel the industry is prepared to help them, but 30% is a fairly healthy percentage of users that doesn’t feel the industry is ready to help them. That confirms my hypothesis that readiness could be a barrier to growth.

Modern: Did you identify other barriers to adoption?

Klappich: The cost of ownership is a big one. Only 35% of respondents said they’re completely satisfied with the cost of ownership. These systems are expensive to buy and maintain. Scalability, adaptability and flexibility were also rated very low. Companies know that with conventional systems, you better get the design right up front because the ability to change it later is low. So, how can companies offer adaptable systems?

Modern: Finally, what are you advising your clients when it comes to these emerging technologies?

Klappich: I advise an honest assessment of whether they have the internal expertise to do this. Some organizations do and they need to tap into that. If not, they have to look to partners who can help them. They can protect you from your exuberance. Don’t always look for the most elegant and automated solution. Something like mobile robots may be simpler. The last point is to think about how you can design adaptability into your systems. No one knows where we’ll be five years from now. Adaptability is going to be more important in the long term.