Today’s third-party logistics service providers (3PLs) rely on automation to provide clients with efficient and cost-effective warehousing and fulfillment solutions—a factor that’s becoming more evident as momentum behind the automation movement builds and advanced technologies become more accessible, easier to integrate, and more customizable.
Just ask Omer Rashid, vice president of operations development for contract logistics specialist DHL Supply Chain. Rashid points to the Covid-19 era as the launching point for today’s warehouse technology revolution, which he says is hitting its stride as solutions become more intelligent, affordable, and flexible.
“Covid highlighted the need for automation,” Rashid says, pointing to labor shortages the pandemic exposed and that continue to plague warehousing and logistics businesses nationwide. “Now we have affordable technology and automation solutions to continue to build off of that.
“The intersection of software, AI, [and] analytics capabilities with physical robotics and automation … is really exciting. I think we’re hitting that inflection point where you can bring intelligence into those physical solutions that we’re putting into our sites and really see tremendous benefit.”
That means early adopters like DHL Supply Chain are hitting the sweet spot in their automation strategies while smaller players are getting in on the game by adopting tested technologies that provide a good return on investment (ROI). These 3PLs are focused on two key areas as they build those capabilities: matching the right technology to the customer’s business model—and not the other way around—and focusing on flexible solutions that can scale up and adapt to shifting demands.
FITTING THE PROFILE
Automating your warehouse is no easy task, especially for 3PLs that serve multiple clients within a single facility. California-based DCL Logistics is in that camp, providing e-commerce fulfillment services to consumer electronics, health and beauty, and other consumer packaged goods (CPG) businesses. Company President David Tu says the key to maximizing automation in multitenant facilities is to home in on your ideal customer profile (ICP).
“I think the first thing a 3PL has to do is focus on a particular ICP,” Tu explains, noting that DCL serves customers that ship a low mix but high volume of small items. “Ninety percent of our customers [ship] smaller products with higher velocity—and there are not a lot [with high] SKU [stock-keeping unit] counts.”
That customer profile makes it easier for DCL Logistics—which operates seven warehouses nationwide—to adopt and apply automated equipment and systems, Tu explains. DCL includes automated packaging systems and robotic inventory-tracking solutions among its warehouse automation offerings.
“At a high level, automation thrives on repeatability. Low-mix, high-volume businesses naturally have that,” Tu says. “When you’re shipping a small number of SKUs over and over at high velocity, you can design very tight, optimized workflows around a narrow set of behaviors. That makes it much easier to justify and implement automation.”
Tu points to other conditions that make low-mix, high-volume environments good automation candidates as well: inventory slotting is stable and optimized for throughput; pick paths are consistent; item dimensions and handling requirements are understood and uniform; and demand is concentrated, so that systems stay highly utilized.
“All of that reduces complexity and increases the ROI of automation,” Tu says, noting that DCL seeks a one- to three-year ROI on any automation investments it makes. “Whether it’s conveyance, goods-to-person systems, or robotics, you’re solving the same problem repeatedly at scale.”
High-SKU environments add variability and complexity to the equation. Tu points to the apparel industry as an example, noting that a single T-shirt design can have many SKUs.
“That variability makes it much harder to standardize workflows. Automation systems either become underutilized or overly complex, or they require frequent reconfiguration, which erodes the return,” he says. “So it’s not that automation doesn’t work in high-SKU environments. It just requires more flexible solutions and a much more thoughtful design. That’s where you start to see the shift toward technologies like AMRs [autonomous mobile robots] and software-driven orchestration, rather than rigid, highly specialized systems.”
The point, Tu emphasizes, is to focus on what your ideal customer looks like.
DHL’s Rashid agrees that the customer profile always leads the way in applying automation. He says DHL Supply Chain takes a tailored approach to automating its more than 600 sites across the United States and Canada, most of which are dedicated facilities serving one particular client.
“Essentially, what always drives the decision-making is the data and the profile of the business we’re looking at,” Rashid explains. “We want to let our customers’ profile drive what we need to install. There is never a one-size-fits-all approach to automation.”
STAYING FLEXIBLE AND INTEGRATING WITH EASE
Understanding the customer profile will help determine whether fixed solutions—such as conveyors and sorters, and traditional automated storage and retrieval systems (AS/RS)—or more flexible options, such as AMRs, are the right answer to automating a facility. And though either path can yield positive results, the experts say flexibility is becoming more important as a way to help customers navigate future demands.
“More and more, especially in shared-use [facilities], customers don’t have sight to where their business will go five to 10 years out,” Rashid says. “So what’s really important is to bring in flexible automation [that] will allow you to adjust as your profile varies over time.”
Rashid says DHL Supply Chain has deployed thousands of robots at its facilities around the world, including AMRs that move product around facilities and interact with humans and other equipment on the warehouse floor. One of the 3PL’s most recent flexible automation projects grew from its partnership with AMR developer Locus Robotics, which recently launched Locus Array, a robots-to-goods (R2G) solution. DHL is using the solution at a facility in Columbus, Ohio.
Array is a fully autonomous fulfillment system that combines mobile robotics, an integrated robotic picking arm, and AI (artificial intelligence)-powered perception with autonomous execution to complete tasks without manual intervention. The tower-style AMR moves autonomously through warehouse aisles, using the robotic picking arm to pick and place items stored in traditional warehouse racks. The solution is powered by the LocusOne AI-driven orchestration platform and operates as part of a unified fleet alongside the company’s other fulfillment robots: its Origin collaborative AMR and its Vector heavy-duty AMR.
DHL is using all three solutions at the Columbus facility. Rashid explains that Array fills a critical gap by automating piece-picking of high SKU-count items in a dense area (the system works in very narrow aisles), while the work that falls outside of those parameters can be handled by Origin or Vector robots.
“Array is really excellent for us because it is combining multiple technologies in a single solution,” Rashid says. “It is also still a flexible solution—there are not a ton of bolts in the ground. You can move it, and it doesn’t take a long time to set up.”
It also incorporates the intelligence that Rashid says is becoming such a game-changer in warehouse automation today.
“I’m really excited about where we’ve arrived with the affordability of automation solutions, enabled by [artificial intelligence and software systems],” he says, adding that 3PLs like DHL Supply Chain are poised to continuously push the industry forward. “We’re there, and we’re trying to go fast.”
