Material handling, as defined by MHI, is “the movement, protection, storage and control of materials and products throughout manufacturing, warehousing, distribution, consumption and disposal.” This foundational definition explains what supply chain practitioners do daily to ensure that physical (and virtual) store shelves are stocked with the items consumers and businesses need when they need them.
Yet, while the definition hasn’t changed since the term first appeared over a century ago, the demands on material handling have steadily increased. In turn, the trends in technologies and strategies have rapidly evolved. Today’s fundamental material handling parameters have already become vastly different than just a decade ago. Then they changed again sharply with the onset of the coronavirus pandemic in early 2020.
The impetus? Consumer adoption of e-commerce (a concept that material handlers working during the Industrial Revolution couldn’t possibly have imagined) was accelerated by as much as 10 years’ worth of growth, according to McKinsey. COVID-19 changed the distribution and fulfillment game so much that retailers were forced to upend their existing material handling practices and strategies to keep up with demand, remain competitive, and meet customers’ expectations for fast, free delivery or curbside pickup. Some did so more successfully than others.
As a result, we’re at the dawn of the next generation of material handling fundamentals. Of course, material handling is still all about moving, protecting, storing and controlling products through the supply chain. What’s new — and still evolving — are the latest technologies, strategies, and software required to meet what has become the top priority of material handling: customer service.
The customer was always king. Now that the customer has become accustomed to the convenience, immediacy, simplicity and experience of e-commerce and buy online/pickup in store (BOPIS) shopping, experts say the majority of them won’t go back to strolling brick-and-mortar aisles if they can avoid it. Indeed, according to a Shopify global survey, 84% of consumers shopped online during the pandemic. In the era of Material Handling 101 Version 2.0, the baseline differentiator is fulfillment.
Here’s a look at the top technology, strategy, and software trends that are helping distribution centers and warehouses deliver on customer fulfillment expectations.
Flexible, Mobile Autonomous Vehicles
As a broad category of wheeled transport units that navigate independently around obstacles and along pre-defined paths, mobile autonomous vehicles (MAVs) include autonomous mobile robots (AMRs) and automatic guided vehicles (AGVs). Often deployed in fleets and directed by overarching control software that routes them along the shortest, most direct path, these vehicles can travel freely and flexibly throughout a facility.
AMRs are smaller, more compact vehicles that carry lighter payloads. They are designed to work safely in and around humans without protective guarding, earning them the moniker “collaborative robots” (or “cobots”). Frequently deployed in picking and fulfillment workflows, AMRs are often deployed in one of four ways:
- To travel between individual associates located in different pick zones, collecting picked items and transporting them to an order consolidation area.
- To retrieve stored inventory and deliver it to forward pick zones for replenishment.
- To deliver totes of required items to associates at picking workstations in a goods-to-person operation.
- To carry completed, packed orders to outbound shipping areas.
AGVs — long a mainstay of manufacturing for in-process, line-side delivery of parts and components — are also increasingly being used in warehousing and distribution. They offer a particular advantage for the flexible, autonomous movement of large, heavy loads that weigh 2,000 pounds or more. They replace forklifts, which require certified operators who have become increasingly difficult to find. Further (and unlike forklifts), AGVs navigate autonomously along predictable paths, travel at constant speeds, and can be easily located with fleet management software.
Unlike fixed automated transport solutions — such as conveyor and automated storage and retrieval systems (ASRS) — MAVs can be easily redirected and redeployed as operational needs change, ensuring the optimal use of facility space. For these reasons, the global AMR and AGV market is projected to reach $13.2 billion by 2026 with a growth rate of approximately 35%, according to a study from Research and Markets. The report expects that 1.5 million of these mobile robots will be deployed in warehousing, logistics, and manufacturing in the next five years.
Localized Distribution from Micro-Fulfillment Centers
Thanks to the “Amazon Effect,” nearly all retailers have been pushed to offer fast, free, and sometimes same-day delivery to customers who have come to expect it. Yet this comes with high handling and transportation costs, as most distribution networks rely on a few large warehouses that are hundreds of thousands of square feet and are located far away from urban and suburban areas. A key strategy to get orders to customers faster is to build smaller facilities in city centers closer to the point of delivery: the micro-fulfillment center (MFC).
Typically ranging in size from 5,000 to 25,000 square feet, MFCs are often highly automated with shuttles or ASRS systems. They can be free-standing facilities or installed in the backroom or basement of a retail store. Some are even being deployed in high-rises in densely populated urban cores. Requiring lower capital investment and less time to build and install than traditional warehouses, MFCs offer significant cost savings by reducing labor through automation, locations that minimize last mile delivery distances, and reduced real estate costs.
The MFC strategy offers particular benefit to grocery retailers. With more customers having embraced the convenience of shopping for their dry goods, meat, produce, and dairy online for delivery or curb-side pick-up during the height of the COVID-19 shutdowns, the trend is unlikely to end anytime soon. For this reason, a recent study by Markets and Research expects the MFC market to grow by approximately $10 billion at a compound annual growth rate (CAGR) of roughly 60% over the next six years.
Overarching Warehouse Execution Software That Orchestrates Workflows
Given the complexities associated with today’s highly variable retail order and fulfillment demands, it’s become virtually impossible to optimize workflows and capacity while simultaneously adjusting to rapidly shifting volumes and staffing challenges. Unless an operation is leveraging the right kind of software.
While warehouse management systems (WMS) have been in use for more than 40 years, their primary role has been to manage and coordinate inventory, as well as to dictate actions surrounding its handling. Warehouse control systems (WCS) direct the actions of automated equipment throughout a distribution center, executing the directions of the WMS as orders are filled, packed, labeled, and shipped.
Combining the two is warehouse execution system (WES) software. Leveraging a WES allows a facility to optimize order flow and handling processes. It intelligently determines the release of orders based on delivery and service level agreements (SLAs), orchestrates all current manual and automated work processes, and reprioritizes tasks and orders for optimal throughput. It also offers insights into productivity metrics through dashboards, enabling continuous process improvement activities.
Because the software accomplishes all this automatically based on pre-set parameters, distribution and fulfillment centers leveraging WES can more easily achieve the efficiencies required to increase output and meet unpredictable consumer demands. These advantages contribute to Grand View Research’s valuation of the entire warehouse management system software market (WMS, WCS, and WES) at $2.64 billion in 2020, with an expected CAGR of 15.3% from 2021 to 2028.
Which of these Material Handling 101 Version 2.0 fundamentals will deliver the maximum ROI for your operation? Work with an experienced system designer and integrator to help you make that determination. Connect with us.
Curtis Jefferson, Vice President of Sales & Marketing, firstname.lastname@example.org
Curtis Jefferson serves as the Vice President of Sales and Marketing of Designed Conveyor Systems and leads his team with passion and over 16 years of experience in the material handling industry.
Curtis received his Bachelor of Science in Industrial Engineering from the Georgia Institute of Technology and immediately began his career in the material handling industry. He has since served in many roles including, supply chain management, systems engineering, and business development and sales.
Outside of the office, you can find him spending time with his family and pets in the great outdoors!