Too hot to handle?

As I gaze out of my hotel balcony door I see a cloudless blue sky; although it is before 10am the sun is already a bright ball of fire beating down on the parched earth. It is only the cacti who seem content to endure these harsh and arid conditions. As I write this article I am attending a business conference in Phoenix, Arizona. Arriving late last night I missed the cool spell, only 36° C yesterday. Today is rather warmer at 40° C, and the temperature is predicted to rise to 41° later in the week. They often say, “if you cannot stand the heat get out of the kitchen.” Today I am thinking, “If you cannot stand the heat then stay out of Arizona.”

My situation has caused me to consider the question, “Where is the hottest place in business today”. It seems to me that the warehouse is a fair contender, sandwiched right between the customers and the suppliers, with both exerting opposing pressures. On the customer side, we face demands for ever improving levels of service, faster fulfilment, better accuracy, and deliveries within very tight time windows. On the supply side there is an ever increasing reliance on imported products, or components, from half way around the world. Inevitably the result is longer production lead times and deliveries open to the vicissitudes inherent in a long range transport system; weather delays, port delays, customs delays.

So this leads us to our new saying for 21st century business, “If you cannot stand the heat, then get out of the warehouse.” In terms of survival in the business environment today, we need to look to the cactus as a model. It has acquired the attributes necessary to sustain life in extremely harsh conditions.

In the right conditions, longevity of life is one of the attributes of an oak tree, with many specimens having survived hundreds of years. The truth is that beautiful and imposing as they are, an oak will not survive very long in the desert. I make the proposition that in the business sense our ‘green and pleasant land’ has become an arid desert. If our businesses do not adapt to the new conditions they will not survive. We need to bring to our businesses the necessary attributes to prosper in the harsh environment of the 21st century.

There is no doubt that IT can play a major part in helping us survive the heat of the warehouse. You may well think I am biased, and I am willing to acknowledge that I have an interest in this matter, but in my view many small and medium sized businesses and even some large ones, have not fully exploited the benefits available within modern systems. IT investment has been devoted to office automation, accounting, and production, with the warehouse being very much the Cinderella left without her dress for the ball. There is no need for a fairy godmother; the warehouse can justify the best clothes in its own right.

In assessing the various technology options available for the warehouse it is interesting to compare the hype of each with the reality. When a new technology emerges it is normally accompanied by much hype; magazine articles, conference presentations, media stories. It seems that everyone is talking about the topic, although in reality the actual usage is very low. Because the hype has overplayed the impact of the new technology, there often follows a trough of disillusionment when everyone realises that the hype has vastly inflated the reality. Eventually, we come to a balance where the hype and reality equalise, at which point that particular technology has become generally accepted in the marketplace.

Bar code scanning is so ubiquitous in the retail sector that we all take it for granted. When we purchase an item we present it to the cashier, and hardly notice the beep–beep as the bar code is scanned and the price is retrieved. Given that this well established and proven technology has been at the heart of retail business operations for around 30 years, it is surprising that its usage is not more widespread in the warehouse. Simple, proven, reliable, low cost, well accepted standards, and easy to use, it is a great starting place for anyone wanting to remove paper from their warehouse operation. It has been shown to improve accuracy and efficiency, and normally gives a rapid pay back on the necessary investment. This is definitely a mature technology, but still has a good deal of life left in it.

The application of voice terminals in the warehouse is a newer development, although the base technology has been around for a considerable period with, until recently, relatively low uptake. The speech terminal has a limited vocabulary with which it communicates with the warehouse personnel, giving instructions in voice form and accepting a response back in voice form. In the early days of speech recognition the strike rate was relatively low, but continual improvement has allowed the terminal to be easily trained to recognise the accent and speech pattern of each user, resulting in very high hit rates. Moreover, recent advances have meant the cost of this technology has dropped significantly, and we are now seeing much more active interest and uptake. Voice technology is particularly useful where it is beneficial for the operative’s hands to be free, and generally results in a productivity gain of around 10%-15% over bar code scanning for item picking. In my view we are just about at the point where the hype and reality match, and this is set to be a technology that has increasing adoption in the next few years.

A couple of years ago all we heard about was RFID this, RFID that, and we were certainly in a situation where the hype far exceeded the reality. Having been through the trough of disillusionment, we are starting to see some positive signs. For the last few years RFID has been in the ‘Catch 22’ situation whereby if the cost of the tags were lower there would be more uptake and, if there were more uptake and consequently increased volumes being manufactured, the cost of the tags would fall. In the recent past there have been cost reductions, particularly for passive tags, and we are now starting to see signs of more widespread adoption of RFID technology. Of course, what will really drive the introduction of RFID are the demands of the multiple retailers. Once they insist that all items are tagged, RFID will have truly arrived. There is nothing wrong with the retailers being the driving force, for to realise the full benefits of RFID the tags must be used throughout the supply chain. If companies simply tag items to satisfy the demands of the retailers, but do not use them within their own business operation, they will be missing out on a huge benefit.

Finally, a brief word about the use of automated materials handling solutions. It is difficult to assess this equipment in a broad sense, as it encompasses such a wide spectrum, from a simple conveyor, though palletisers, carousels and sorters to full robotics. Certainly the investment required for these types of solutions, has been, and is significant, and this has been an impediment to their deployment. The relatively high cost means that the investment has to be viewed over a longer time period in order to create a cost justification. Uncertainties as to future needs and requirements, particularly in the 3PL sector, where committed contact periods can be rather short, constrain the situations where this type of project can be financially justified. It is unfortunate that in many instances where some form of equipment has been acquired it is used stand alone. For example, we often see automatic storage and retrieval carousels installed to optimise the use of the available floor space, yet these are not connected to the company’s stock or warehouse systems. A large portion of the potential benefit is thereby lost. Much of the basic mechanics of automated material handling equipment has been in successful use for some time, with the most dramatic change in the recent past being in the electronics. As a consequence of these improvements, the ease of integration between the various materials handling equipment and the warehouse management system has improved dramatically. As advances continue to be made, the opportunities for businesses of all sizes to implement integrated systems will increase, thereby enhancing the effectiveness of the overall solutions.

In the 21st century, the business cactus prospers by providing itself with the characteristics to survive the harshest of environments. The modern business should equip itself with those IT tools which will help it respond to the many and changing demands placed upon it. Improving accuracy, efficiency and timeliness are three key benefits that will be realised – you cannot survive as an oak tree in the desert.

Howard Turvey, Managing Director, Proteus Software


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