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Supply Chain: Transforming logistics and warehousing

Supply Chain: Transforming logistics and warehousing

25 Dec 2023

As Malaysia pushes full speed ahead towards digitalisation, the supply chain sector finds itself in a period of transformation as businesses figure out how to manoeuvre this rapidly shifting landscape and not get left behind.

David Irecki, director of solutions consulting at Boomi, an integration and automation solutions provider, says the transformation is long overdue, given the global economic, social and political climate.

“[It started with the] Covid-19 pandemic but, since then, we’ve seen political instability and there have been strikes. [The impact of all these] different things globally can be seen in Malaysia as well,” says Irecki.

The pandemic led to more people than ever moving to online shopping, leading retailers to rely on deliveries and warehouses being overloaded with orders and traditional manual labour falling behind.

Subsequent geopolitical tensions and wars changed supply chain conditions, having a great impact on the acquisition of raw materials and other goods, says Irecki. And, should businesses find new sources, there are limited insights into the tracking of those materials and goods.

These events necessitate that digitalisation stays competitive. Even though the pandemic has receded, retailers continue to grapple with a high volume of orders.

Citing a case study with a small Hong Kong manufacturing company making cases and covers for iPhones and iPads, Irecki says the company needed to understand its supply chain to gain real-time visibility on where its goods are, what is being manufactured, which warehouse they are stored in and which ones had been shipped at any point in time.

This company also needed to use all this data for predictive analysis to provide real-time insights instead of responding to unforeseen circumstances from any part of the supply chain.

In response, AI was integrated to perform real-time analysis and make predictive solutions.

Outside of AI, many shipping companies have joined with blockchain-enabled digital shipping solutions to track cargo in real-time, using blockchain technology for greater transparency.

Warehousing — the other side of the coin in the supply chain — has also made leaps in technological transformation to meet the rise in demand for deliveries.

“Commerce retailers continue to have to meet customer demands for a large variety of stock-keeping units (SKUs) to be available rapidly to wherever is most convenient for them,” says Erik Strømme, project manager of the R5 Pro Robot — a new model of warehouse automation robot — from AutoStore, an automation specialist from Oslo, Norway.

The accelerated demand that retailers faced over the last two to three years shows no signs of abating and sees retailers adopting a growing number of tools available in automation, observes Strømme, whether it is “using AI to ensure the right SKUs are stocked close to the customers who demand them, installing an automated storage and retrieval system (ASRS) to better leverage your available warehouse space, or robotic picking to reduce error rates in rapid order fulfilment”.

Robot warehouses right out of science fiction

One of the most visual transformations in the supply chain process is the automation of warehousing, whether it is a partial transformation with drones or robots moving through aisles or a complete overhaul removing the need for forklifts altogether, replacing aisles with a grid.

Chuah Di Ken, founder and CEO of Malaysian robotic warehouse start-up Pingspace, helps companies with either automating an existing warehouse or installing their own robotic warehousing system.

“In warehouses, you may be doing 500 or 1,000 orders a day. So, to do that successfully, [the warehouse] has to pick and pack the right product and send it to the right customer,” says Chuah.

The issue with traditional manual labour is that it becomes difficult to process such a high volume of orders accurately and efficiently.

With automated warehousing, however, robots can swiftly find and pick up the needed inventory for delivery. In Pingspace’s system, the robots find the requested goods stored in the warehouse and deliver them to workers to be packed for delivery.

Inventory in the automated warehouse is stored in bins. “The bins are stored in the grid and stacked on top of each other. Then there is a reel at the top, where the robot moves on top of it,” explains Chuah.

The robot lifts and sends bins to the workstations for manual workers to pick up the item to be delivered.

“In our system, we don’t have an aisle where people can walk. All access points are from the top, where the robots pick up the bins and send them to the station [for packing and delivery],” says Chuah.

“People conventionally would have to go to the aisle, pick up the item and then pack it. At [automated warehouses such as ASRS], robots bring the item to the workers.”

The lack of aisles and space for people or even forklifts means that another advantage of robotic warehouses is more storage space.

So, in about 1,000 sq ft, an automated warehouse could store about 300 pallets’ worth of items.

“This system is also decentralised, so you have multiple robots working on their own,” says Chuah. “Even when one of the robots is down, the other robots can still operate. So, it won’t affect operations.”

Philipp Schitter, AutoStore vice-president of business development for Asia-Pacific, breaks down the ways in which robots’ decentralised systems work, using the company’s R5 Pro Robot as a reference.

“If one robot needs attention, the other robots will pick up the work and carry on without a system shutdown, which in turn helps facilitate constant uptime and higher efficiency.”

These robots have changed warehousing by improving speed and efficiency as well as by being able to work around the clock with short charging times that, owing to the decentralised nature of warehousing, does not affect productivity.

This technology can boost and improve supply chain efficiency by reducing the waiting time from “warehouse to doorstep”, making an impact on even cross-border commerce, where deliveries take the longest time, says Schitter.

“If the process of finding inventory, packing it up and preparing it for shipping can be enhanced through greater efficiency and speed, cross-border commerce is no different in becoming more efficient through a quicker warehousing solution.”

One new technology making its way into warehousing that has yet to be fully implemented is AI. Visionary AI is able to see objects through a camera and process the data.

“If the vision technology is mature enough, then they can teach actuators like robotic arms to pick up items,” says Chuah, speculating on the potential of AI.

DHL Malaysia has implemented visionary AI via a drone to check and record inventory at one of its warehouses in Shah Alam.

Building a resilient supply chain

While warehousing adopted innovations to increase efficiencies, the logistics side had to adapt to take on a host of issues, from the pandemic to wars that caused disruptions and prompted a need for a strong and resilient supply chain.

“I think companies are just focused at the moment on how they can enhance productivity in their business and how to bring automation technology to bolster their supply chain resilience,” says Boomi’s Irecki.

He adds that, in some cases, manufacturers are looking to pivot quickly and stay ahead of those supply chain interruptions. There is a growing need for an automation platform to give real-time visibility into their partner networks and trust the analytics coming out of the reporting tools.

“So, if there is one of these events, then [these businesses] can very quickly pivot to a different supplier or application, or whatever it might be,” he says.

One technology that Boomi uses is AI. Its BoomiGPT allows users to connect systems, automate them or even find faults in a conversational manner — for example, by asking the AI for any faults or issues in the supply chain. The AI can pick it up, do an analysis and offer recommendations on not only when to pivot to a different supplier but possibly also who to pivot to in order to maintain the supply chain.

These types of technologies have also become almost indispensable for supply chain sustainability. In particular, says Irecki, AI is able to “look at the data that’s coming off tracks, trains, aeroplanes and ships”.

Businesses can then look at how they can optimise routes, reduce waste and improve energy efficiency. All this can help businesses reduce their global carbon footprint, which is increasingly becoming vital for them to meet sustainability goals.

Getting everyone on board

While the promise of automation and modern technology is exciting, these solutions remain financially inaccessible to small companies. Those that use automated warehousing tend to be larger companies that can afford such technology, admits Chuah.

“We are working on trying to come up with a solution to give smaller customers that have, say, 1,000 orders a day .”

Chuah says his company is targeting medium enterprises involved in outsourcing operations that have a budget of RM60,000 to RM80,000 a month to adopt automation, with the possibility of including smaller ones a couple of years down the line.

In addition, the government is trying to get smaller companies involved, with automation being part of the budget in the New Industrial Master Plan 2030.

“There [were] various funds and schemes being established. [Funds have been allocated] to provide grants to small and medium enterprises to update their apps, new point of sale systems, accounting systems and inventory management,” he says.

“If you want to stay relevant in this market and ahead of your competitors and increase your market share, [you have to be aware that] integration and automation form a large part of that strategy.”

He adds that AI is also a part of the strategy and everyone in the industry is now scrambling to understand it and incorporate it into their business. The pandemic was just the trigger for digitalisation and the industry will continue moving towards this future.

“Whether a company has realised it or not, everybody requires integration and automation in some way,” says Irecki. “Whether you’re a small business or a large enterprise, it’s there to help you move your business forward and become more agile and resilient.”

Source: The Edge Malaysia