Ep: 12 Establishing the Warehouse of the Future

00:17 Therese Snow 

 

In this episode of Global Operations on the Go, a panel of experts discuss Connectivity & Optimization: Establishing the Warehouse of the Future. Listen to part one and find out what it takes to achieve this.

 

00:28 Paddy Le Count 

 

I'm Paddy Le Count, the Project Director here at Reuters Events Supply Chain. And today, I'm joined by  François Rispe, the Managing Director of Customer Led Solutions at Prologis, Paul Avampato, the Head of International Logistics for Henkel Laundry Supply Chain, and Prashanth Mysore, the Global Strategic Business Development Director for Dassault Systèmes. Gentlemen, thanks very much for joining us here today. So, maybe if we start with a quick introduction from yourselves, gentlemen. François, starting with yourself.

 

Meeting the Presenters on the Warehouse of the Future

 

00:56 François Rispe 

 

Good afternoon, everyone, and very happy to be with you all. So, my name is François Rispe, I’m a managing director, customer led solution. I've been with Prologis for about 15 years, I run the Southern Europe operations for about 13 years. And then I moved to this role of global head of energy. And I was also in charge of launching this new platform activity, Essentials in Europe, which is in a way related to what we're going to talk about. And for the few recent months, I would say I'm more in charge of actually taking care of our largest customer globally, especially those that are based in Europe. And I've been doing that and with this customer for many years, but now more officially, with a few of them. I’m trying to actually help grow their business, but also help them take advantage of the, I would say, the new world that is ahead of us.

 

02:03 Paddy Le Count 

 

Brilliant. And Paul, yourself?

 

02:06 Paul Avampato 

 

Hello, everybody. My name is Paul Avampato. I'm really happy to be here, and thank you all for joining. I work for Henkel, which is a company that's got adhesives division, a laundry division and a beauty division. You might know some of our laundry products and some of our products in adhesives, and certainly some of our beauty items. My role is in international logistics, with the responsibility for our distribution, transportation and our other materials needed like materials handling or the dreaded word pallets. I've been with Henkel for three years now. I started in North America, where I ran the North America logistics for Henkel in that country and that area, that region of the world. We also did combine beauty and laundry, rest of the world, it's mixed depending upon the market. Prior to that, I spent 35 years in the consumer goods industry, mostly in food. So, with some major brands between Nabisco, Kraft, Mondelēz, and then had the opportunity to come on over to Henkel. And now based in Amsterdam, where our global supply chain is. And look forward to a very productive panel today.

 

03:07 Paddy Le Count 

 

Thanks, Paul. And last, but certainly not least, Prashanth.

 

03:11 Prashanth Mysore 

 

Thanks, Paddy. Hello, everyone. Thank you for joining this session. And I'm Prashanth Mysore, and I'm a Strategic Business Development Director for Dassault Systèmes, taking care of infrastructure industries. And I'm part of the global team, which means I work with worldwide customers. And my responsibilities include developing strategies for digital transformation programs, especially on digital manufacturing and operations management, and some of the latest technologies and automation, IoT, robotics, and others is my responsibility.

 

03:47 Paddy Le Count 

 

Brilliant. Thanks very much, thank you all for that. Let's get into the discussion. Let's kick off with a question for everyone. Paul, we’ll come to yourself first. When we're talking about this, this evolution of facilities that people are going through at the moment, they're certainly growing in speed, which technologies can best assist in providing the most relevant data points to drive the digital transformations of these facilities forward? And the supplementary part of that question would be, you know, what are the key challenges faced when it comes to actually utilizing that data and taking the insights for the enhanced decision-making within that facility and ultimately, across the supply chain?

 

Technologies that Drive Digital Transformation

 

04:27 Paul Avampato 

 

Yeah, I would say that the, you know, we've got some pretty good core systems. So, we have good yard management systems, good warehouse management systems, good transportation planning systems. And now we have good platforms around visibility. But I would say what's really lacking is that seamless integration across, and then the application of AI, help use the information and the communication between the two and our four different types of systems that typically drive a near-in warehouse operation to make better decisions, more real-time decisions, and to improve the capacity and efficiencies of the facility. So, think about it this way, I look at the great visibility that we get now for real-time visibility, and my answer to everybody is so what? So now I know where this truck is, what can I do with it? And how do I take that data, translate that into a receiving slot, marry it up with everything else going on in the warehouse, and slot it in in a manner that drives the most efficiency within the facility that ultimately improves our effectiveness. So, I would say that the core applications are there. We need, we need now to link that real-time visibility and develop, I believe, AI across those platforms to manage that type of data flow within a warehouse.

 

05:49 Paddy Le Count 

 

And Prashanth, over to yourself on that front. Obviously, there's a few elements, so I imagine you have some thoughts on, from what Paul said, in addition to your own.

 

How to Make a Meaningful Decision

 

05:57 Prashanth Mysore 

 

Yeah, an extension to what Paul said, you know, he beautifully articulated. In my view and coming from a technology company, I would put it this way, you know, BIRD, BIRD is an acronym for blockchain, IoT, robotic process automation and data intelligence, you know, that stands for BIRD. Along with the virtual twins, you know, we've been working with multiple industry verticals, like Paul is also working in a similar vertical here. You know, my perspective is slightly different. You have IT sources, you know, you have ERPs and warehouse management systems and scheduling tools and CRMs and asset management tools at one spectrum. They're all IT world, right, information technology sources. And then you have operational technology sources, which are sensors and RFIDs and data visualization, AGVs and autonomous mobile robots in a service etc., in a warehouse.

But there comes the challenge, you know. Somebody has to contextualize data from IT sources, which is information technology sources with the data coming from OT sources. It's like structured and unstructured data, to make a meaningful decision or decision automation. This is where some of the platform technologies which can contextualize data, validate, historize data and simulate the data which can really help in, with the transformation journey, right. And as I was able to come to this particular point, Industry 4.0, where manufacturing is adopted, how to best, how to make best utilization of data with the right architecture in place with multiple systems coming in. And they have this famous seven Vs, you know, for the big data, which is velocity of the data, volume, value, variety, veracity, variability and visualization. Everything is actually important as far as data is concerned. And this is the challenge which we are addressing, right Paddy?

 

07:49 Paddy Le Count 

 

It's a very long list, of Vs that come together. But it's completely true. François, from your position in this ecosystem, we hear from a manufacturer, from a tech side, where does this discussion sit with yourself and where your, your sort of priorities?

 

Building Information Systems

 

08:06 François Rispe 

 

I think I would certainly complement Paul and Prashanth’s point of view by also adding the Building Information System, because that's also another, I would say, brick within the function system, global information system that is available for our customers. And I think one of the, one of the issue here is obviously to have this real-time visibility, but not only for the short term, but also for the medium term, because this is going to also trigger patterns. And it's going to actually show to what extent productivity or work organization within the warehouse can actually be changed or improved. And I think that's the use of the data. All this data that is going to be critical for the, say, process improvement and efficiency of tomorrow. So, I think that's one of the key things. So, having all this data available is fantastic. But making good use of it is going to be probably the next challenge.

 

Considerations for Facility Design

 

09:24 Paddy Le Count 

 

And, Prashanth, if we can come back to you now with a secondary question. It's, what are the considerations that need to be taken, specifically, obviously, we're talking about warehouses and DCs in this element or in this webinar, rather, we could have the same discussion about data or a similar one about all aspects of the supply chain, but specifically looking at the facilities here. What considerations need to be taken into account when it comes to the design of new facilities or the adaptation of legacy layouts and the physical, physical facility and what pressures does this put on the type of technology and potentially automation that comes to form the basis of a digital transformation that provides all this data that obviously we're looking to use the most effective way?

 

Discovering Fast Methodology

 

10:09 Prashanth Mysore 

 

Oh, my experience, Paddy, Paul and François, you know, I've been exposed to a methodology called fast methodology. FAC stands for, while we are designing or uplifting any warehouse or a distribution facility or even a logistics facility as well, right. Fast is a methodology which is a proven methodology which most companies are using this, which means, you know, you have stands for flow, accessibility, space and throughput. These are the four pillars which we need to consider while we are designing or upgrading any facility, right, and the fast is one. And virtual twins, you know, we since we are coming from a technology company, our experience working with 11 industry verticals is that virtual twins, along with fast methodology, plays an important role in our digital evaluation or digital acceleration of warehouse facility. Okay, and we also have experience in proposing four steps in achieving, you know, some of the technology adoption. These four steps are being proven, as far as discrete manufacturing industries are concerned.

Even ports, you know, ports of future and even logistics facilities have actually started applying these four methodologies. These are like, you know, model collaborate, optimize and perform. And one can model a warehouse, someone can model a facility with 3D and they can bring in simulation to validate and optimize the various what-if scenarios within the warehouse, right, be it robots and be it cobots, be it automated guided vehicles and sensors and all, it can model the whole process. And collaboration is the key, you know, in warehouse or any other facility. It cannot be a siloed operation, somebody has to have a constant interaction. And we should have a single source of information for all operations, flexibility and adaptability, right. That's the collaboration part. The third part being optimization. And this is where technology comes into picture. Optimizing the space, optimizing operations, optimizing schedules, optimizing manpower, you know, capacities, etc.

These are all driven by definitely technologies, you know, there are a number of technologies, and we are one among them to really optimize the overall warehouse process. And last, but not the least, is execution. We’ve planned enough, you know, we have planned everything, and how do we execute it? And this is where sensors and IoTs, and automation, robotics, and all will come into picture. So, a combination of these four processes will really help in designing and optimizing the overall warehouse of the future.

 

12:45 Paddy Le Count 

 

And Francois, your thoughts on there when it comes to that development? As you said, you know, you've been working with customers as their business priorities shift potentially, in terms of what they need from their real estate, where does it sit with you and yourself, when you, or what part or what role do you play in these developments?

 

Designing a Warehouse with Technological Considerations

 

13:02 François Rispe 

 

I think it's a combination of different things. But maybe let me start by saying that the basic design of a warehouse has certainly changed. I mean, fundamentally, when you look at it, it’s just about the same, but when you really look into the details, it's slightly different from what it used to be. And it's all about the different things. But first of all, you have a very global view on the design of a warehouse. More, I would say, reliable structure, because you're going to also take into consideration the weight of technology. And I'm talking here about solar panel, for instance, because that's going to be maybe a topic of discussion for later. You're going also to have, obviously, pre-cabling infrastructure that we didn't have before.

That is going to be an enabler for our customers to actually save time and save money. And we are actually providing this this type of infrastructure in our own warehouse. And they are actually also come up, can come up with, you know, private network, private Wi-Fi. They're going to be carrier agnostic, as well. So, that's the kind of stuff that we didn't have before and we need to think about it when we're actually planning for the design of a new a new warehouse for sure. But there’s more to that, there’s also everything that relates to the transportation because obviously, a DC is going to be replenished, is going to be a starting point for distribution. And tomorrow's truck might be actually electric trucks. And we need to start planning for electrical vehicle infrastructure charging. And that's, that's going to be a new, probably a new frontier, that is going to come up very soon. So, we don't see that very often, because there are virtually no electrical trucks right now.

But in a couple of years, it’s going to change totally, especially in the US, a little bit less as in Europe, I think it's going to take a little bit longer. But it's more a question of three to four years. And when you actually get closer to the, to the, you know, the center of the metropolitans, you're going to be at the heart of what we call the global logistics, which is the last mile distribution. And these are clearly facilities that are going to be even more connected than before, because the number of parcels that need to be delivered, the volume of flows is such that you've got to be in the, you know, in the mainstream of the technology by being able to drive your flow of business and goods that are going to go through these facilities and going to be distributed to the final consumer through electric trucks.

 

16:20 Paddy Le Count 

 

Paul from your side, obviously, as a manufacturer with the goods that need to move faster and faster, I suppose the context of the last 18 months, although we don't want to talk too much about COVID has, you know, that need for the speed and the flexibility and etc., was crucial for companies like yourselves and for retailers, etc. What are the key challenges that you find from your position’s ecosystem system, do you find yourself being faced with when aiming to create that connected and unified infrastructure that can ultimately lead to the flexibility and the optimization of supply chain operations that we've talked about here with Prashanth and François?

 

A Post-Covid Lockdown World

 

16:58 Paul Avampato 

 

Yeah, that's a good question. And you're hearing really good advice down here, you've got the technical piece around using the data to help drive your movement of goods, the physical layout, taking into account how things are going to move. You know, I'd say our first thing that we started to do post-COVID is look at our routes to market and try and understand how consumers are changing their behaviors. You know, coming out of COVID, we're seeing much more emphasis on sustainability. We're seeing much more emphasis on that delivery at home, which kind of counters sustainability to a certain extent. But it teases the way we think about how we want to run our facilities, how we need to lay out our facilities. And using the data that Prashanth was talking about, and the support from folks in the Prologis area or other areas that help us build our buildings to think through, that is very important.

But as you think about the big challenge, which was the responsiveness and the resilience of the supply chain, when you have brick and mortar, your responsiveness is going to eventually hit some sort of limitation. And I think what we found very quickly was that all of our tools, although very good separately, were not really working like a symphony. So, if you think about it we've got really good sections of tools and capability and visibility, but it wasn't synchronized. And as a result, we were having losses of capacity. And that lost capacity, which you see every day in a normal environment, you don't necessarily realize how much you're losing and what that means until that capacity becomes scarce, and you really need it. And then all of a sudden, that synchronization becomes a bigger, a bigger opportunity for us, because you think about your limitations, once a warehouse is laid out you're limited in a short term. Long term, you can do everything but short term, you're limited. So, it really came down to and it comes down to how well do you collaborate? How do you link your tools to better sync and find that trapped capacity.

So just like a plant, there's trapped capacity within a warehouse operation, and then in a transportation network and finding that and synchronizing that was a big challenge as we moved into this rapid change within the industry. I think the other thing is all partners have to realize that we're all part of an ecosystem. And we're going to have to put some run rules in place if we really want to have efficient capacity, right? Because we can build unlimited capacity, and it’ll sit idle for 90% of the time, but then suddenly, when there's a crisis or some sort of unplanned demand, everyone starts to panic and wonder why we didn't have unlimited capacity forever. But if you can synchronize the inputs and the outputs across the supply chain better, and work together better, then we can start to free up that trapped capacity. And I still think there's a lot of trapped capacity within the networks, but the collaboration that we can start to drive efficiencies with, as opposed to building more buildings are going up higher or racking inside of facilities to get more throughput.

 

20:10 Paddy Le Count 

 

This, it's a great example of a challenge that you bring up there. We've actually got a question from the audience, so I'd like to ask everyone just off the back of that. It's been asked, what would be the main challenge in the warehousing industry at the moment or that space that current technology can't address? And you mentioned AI earlier, but even AI maybe isn't the solution for now, obviously, putting on the spot in terms of what a massive challenge is now, but your thoughts in terms of like, what is it that's really quite key as a challenge that exists, similar to your point there on capacity, Paul. If there's any, any thoughts from Prashanth or François, from what you see from customers?

 

Adapting to New Technology

 

20:51 François Rispe 

 

Maybe I can get started. Certainly the most critical challenge that I hear from my customers is clearly about having their talent, their workforce, being able to adapt to this new technology to this new world. It's already a challenge to actually keep the talent until you have the talent, and maybe we're going to talk about that in a few minutes. But having the workforce being able to actually adapt to the new technologies is certainly one of the largest, if not the most critical challenge that I see, at least, if I hear and judge by what our customers tells.

 

Artificial Intelligence (AI) and Big Data

 

21:39 Prashanth Mysore 

 

François, I think, alluding to what you’re saying, since we are coming from a technology company, what we have seen, anything to do with human intelligence, you know, it's not replaceable. You know, we talk about artificial intelligence, right? It needs humongous amount of infrastructure, investment and skills to really put into better use of AI and big data. To answer to one of the questions here, I think, in our case, you’ve asked this question on technology, which is really difficult is human behavior and the health and safety aspects, right. You know, when it comes to warehouse or warehouse workforce, you know, people have a tagline, a lot of warehouse companies, Paul, probably yours and François’, you take pride in saying that same-day or a two-day delivery might sound really convenient.

But the increased demand on e-commerce, especially during this pandemic, is highlighting overworked warehouse employees and safety concerns, and the need for more suitable schedules, right. And this is where, you know, some of the technologies should really help. It should benefit both workers as well as the company. And you know, what we are working on some of these simple tools where the workers are enabled with smartphones or handheld devices, and the information is at their fingertips. So that, you know, they can avoid physical distancing, or safety distancing norms. And they're also given the some of the specific augmented reality devices so that they really, you know, avoid this contact, you know, =contactless operations, safety of the workers. So, these are important things which we have just started. And obviously, we can talk about robots and cobots, they're definitely there.

Cobots will really help warehouse employees to really reduce the workload, obviously, and then reduce the physical distancing and all. So, technology has its evolution, you know, it's just not, we can't just implement just like that, you know, replacing some of the human tendencies, I would say. No, artificial intelligence will not replace the human tendencies here. This is a slow and steady process, where we need to start with collaboration, you know, giving a kind of ownership to the employees and workers at their fingertips so that they can take some good decisions, even in the absence of the management, François.

 

24:01 Paul Avampato 

 

And if I were to build on both of those comments, I think real well, if you think about the technology piece, the user interface has to become a little bit more friendly, specifically because our workforce is turning differently. We used to have long tenured warehouse employees, they're aging out, and the young workforce coming in place is rotating extremely fast and much faster. To one, gaining and retaining labor is a challenge for us. I think probably one of our, and we'll talk about it a little bit there. But then, to what you both have said it's around how do you train that workforce to get rapidly up to the productivity that your volume and your DC is designed for.

So, if we're designed for an individual to do 300 cases an hour, and that person has been doing that job for 10-15 years and familiar with the technology, familiar with the items, familiar with the process, not a problem. But you bring someone in now new and that person has been on the job for two weeks, you turn them loose and you start and you get 150 cases per hour. And then they leave after 45-60 days because it's, you know, either something down the street or there's easier jobs down the street that they go after. So, how we can tailor that technology, that user interface, maybe even implement gaming technology to it, because we're dealing with a gaming culture now that's coming into the warehouses to drive that constant learning and productivity and excitement around the job, which, you know, I think labor is going to continue to be one of our number one challenges as we move forward.

 

Workforce Challenges

 

25:31 Prashanth Mysore 

 

Yeah, that's definitely the workforce challenge. You know, Paul, obviously, you know, warehouse is one of the biggest challenge. But even traditional industries, the workforce of the future is completely different, right? Now, they need techno savvy, as you rightly said, user experience, they want connectivity, they want to be connected always. They want something different, you know, as you rightly said, simulation or gaming technologies, would really keep them, you know, make this workplace enjoyable. So, these are some of the things which, this is really catching up. That's one of our key aspects also to work with the workforce of the future. Their technology needs, retaining workers. And not only that, you know, we also have to train the existing workforce, right? So, it's a good combination of workforce of the future and cross-training existing workforce. Make it as simple, usable, user experience, foolproof, and some of those things are really catching up.

 

26:25 Paddy Le Count 

 

If we look to the poll that we ran in the first half of this webinar, asking sort of what the key motivator behind this evolution and digitally of these facilities is. We've seen quite a consistent poll towards managing the fluctuations, certainly off the back of things like e-commerce’s growth over the last few years, etc. that seems to be happening more and more. Operational visibility, we talked about the optimization. I think that's, that was always going to be one of the top issues, it came up here with 40%. But a key area that people did tick, it is confirmed in the poll, but I imagined just because operational visibility is the logical answer to that question.

 

27:04 Therese Snow 

 

That concludes part one of Connectivity & Optimization: Establishing the Warehouse of the Future. Stay tuned for part two. I’m Therese Snow. Thanks for listening to Global Operations on the Go.