Industry Forum

Automation is already starting to cause the next big industry shake-up in the logistics sector, and, when the dust settles, the leaders will be those that get it right. However, many large companies are caught between, on the one hand, the need to automate across their operations in order to meet client demand and reap the rewards of being an early adopter, and, on the other, the fear of getting this big, strategic investment wrong.

This creates a dilemma about whether to dive in now, even though some questions about the best approach to take still remain unanswered, or wait on the side a while longer, watching what others do and how they fare before taking the plunge.

We looked in some detail in our article What lessons can the logistics sector learn from the automotive industry? at the factors driving the inevitable automation of this industry. It’s clear that it’s not so much a question of whether to automate but rather when and how to do it and which parts of the business to prioritise. However, a number of issues are holding companies back.

Risky decisions

E-commerce has been disrupting the retail and logistics sectors in a number of ways for some time and continues to do so as it solidifies its status as an established and maturing distribution channel. While it is an automation driver, it has also complicated the marketplace, with customers competing with their suppliers in some cases. Large e-retailers are increasingly bringing their distribution functions in house, if they weren’t already, starting with the most lucrative and easiest to fulfil. This is driving third-party logistics companies (3PLs) into higher cost, lower margin areas, at the same time as their customers are pushing for shorter contract lengths to enable them to adapt with agility to the fast-changing retail environment.

Meanwhile, e-commerce itself is just one facet of a wider omnichannel retail environment, in which consumers can purchase and receive goods via any combination of channels – for example, buying online and collecting in store or receiving delivery at home, buying in store and leaving with the goods, or having them delivered elsewhere. This, combined with extreme seasonal peaks and troughs and the unpredictability caused by factors like COVID and Brexit, demands exceptional flexibility, which can make it difficult to right-size operations capacity across the supply chain. Supermarkets and other retailers saw a huge increase in home delivery requests during the Coronavirus lockdown. This is prompting some to reassess current systems that involve picking goods in store for home delivery, and look instead at a more centralised approach to distribution.

Another complication is that there are a large number of automation technologies available to choose from, with new developments coming out all the time, and none has yet proven to be the de facto solution or gained a wide market share.

All of this increases the risk and complexity for logistics companies looking at investing in automating their operations, even as it pushes them to do so.

Incremental approach

It makes good sense, therefore, to automate operations incrementally, site by site, on a regional basis, beginning with functions that involve a high proportion of manual labour. In this way, companies can test different approaches and then roll out only best-of-breed solutions.

Similarly, deploying hybrid systems that partially automate manual operations and make them much more efficient can be a lower risk steppingstone to fully automated warehouses, distribution centres and delivery mechanisms. This might include things like exoskeletons for super-charged manual lifting or retrofitted forklifts that can be operated both manually and autonomously.

But how do you work out what’s right for your business? The temptation is often to over-specify in order to be able to meet any future peak in demand. However, that can result in excessively costly and complex solutions that can actually hold you back.

Scoping out exactly how to successfully introduce automation requires a methodical and analytical approach. It’s essential that you ask the right ‘what if’ questions, make the right decisions in the right order and ensure you have the right skills and expertise in place to make it all happen. The end game is automated systems that will give you the flexibility and agility to respond to all kinds of changes over the next ten years. That means you need to be confident you’re making the right choices now.

Fortunately, there are some tried-and-tested techniques you can apply here that will help to ensure you do it well and reap the associated rewards for your business.

Early Management for rapid success

Total Productive Maintenance (TPM) provides a structured approach to eliminating all kinds of losses across a whole organisation and throughout its value stream. However, it can also be used to solve specific business challenges or introduce new products and processes quickly and effectively. As such, it can be extremely helpful in formulating and implementing an automation strategy.

Early Management is one of TPM’s eight pillars of activity. It enables companies to build on lessons from previous experiences in order to eliminate potential for losses throughout the planning, development and design stages of new systems and services. That includes, for example, zero equipment breakdowns baked into the design process and rapid development lead times, with different teams working on activities simultaneously. This results in cost savings and efficiency improvements, both during the introduction phase and throughout the equipment life cycle.

Avoiding equipment issues

The more your business relies on automated equipment, the more important it becomes to ensure it works reliably and effectively, with minimal downtime. The introduction of TPM methodologies to your business should go hand in hand with automation. As well as helping you ask the right questions early enough in order to specify, implement and roll out the best automated systems, TPM can ensure their ongoing absolute efficiency through Autonomous Maintenance – a step-by-step process to optimise equipment and prevent accelerated deterioration.

How well equipment is operating is calculated using TPM’s Overall Equipment Effectiveness (OEE) measure, the de facto standard for gauging equipment performance by looking at its availability, performance and output quality. These three factors are then broken down further into types of losses, such as breakdowns, changeovers, minor stoppages and speed loss.

By looking in such granular and methodical detail at every type of potential problem and solving it before it happens, you can reduce costs while offering a top-quality service to customers.

Lean machines

If you’re just embarking on your automation journey, lean management methods are also likely to be helpful in enabling you to precisely specify the approach you need to take. Equally, fully automated businesses can make big improvements to their productivity and profitability through lean techniques.

Lean helps to eliminate everything that does not add value to your business. It works on the principle that the key to reaching and sustaining world-leading competitiveness is to have a vision of the desired future state of a process or product and a strategic plan for making that vision a reality. It then helps companies achieve this by unleashing the potential of each individual employee, unlocking their problem-solving capabilities and reinforcing management skills. Everyone then engages in applying specific improvement tools and techniques designed to make change happen in a sustainable manner. It’s not hard to see how this could help with the introduction of new automated systems that require people to change their ways of working.

Picking the right tools for the job

Every company is different, and there is no one-size-fits-all approach to automation. However, the same kinds of questions need to be asked in every case. Both TPM and lean offer tried-and-tested methodologies to guide you through complex or risky business transformations, helping you make good decisions, confidently.

If you’re not sure which methodology to apply, we can help. In many cases, a mix-and-match approach works best, picking the elements from each that will be most helpful for your business at different stages. We can work with you to understand your current situation and prioritise your needs, then help you develop and implement a plan of action, drawing on TPM and lean management techniques as needed. In this way, the methods you use to get your automation right will also have positive repercussions across every part of your business, standing you in good stead for the challenges ahead.

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Article written by: Simon Carr, General Manager SMMT Industry Form

Simon has 24 years engineering and operations experience gained within aerospace, industrial processing, automotive, food and drink, defence, electronics, fabrication, petrochemical, offshore systems, pharmaceutical, healthcare and banking. Simon was one of the original Industry Forum recruits and was trained by the Japanese Master Engineers.  Recent assignments include significant capital projects for the Ministry of Defence and in the Oil & Gas sector.