Fulfillment Update: Distribution Disruption

This is an excerpt of the original article. It was written for the March-April 2020 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2020

Are you ready for NextGen technologies? Just the other day, I had the opportunity to tour one of Amazon’s highly automated robotic fulfillment centers. I expected to be dazzled—and I was. But it wasn’t because of the automation. The tour was a reminder that there’s no question that NextGen technologies such as Artificial Intelligence, blockchain, robotics, 3D printing and 5G are going to be the differentiators in tomorrow’s supply chain. The question is: Are you ready?

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As channels become increasingly integrated and digital consumers’ expectations mature, speed and convenience are now table stakes for every retailer. Delivering on that promise, at a lower total cost to serve, will require a radically different distribution center (DC).

Instead of humans continually walking the floor, replenishing locations, picking various items from boxes or crates to fill the constant stream of orders received and then packing them up for delivery to customers, the processes will be handled by machines. Autonomous trucks will pull up at the delivery doors, greeted by various automated handling equipment that unloads the trailers and tends to all movement throughout the facility. They’ll be busily picking, packing and sending off completed orders in real time, with no human intervention, save the handful of specialist workers on site who will monitor the machines’ performance on a dashboard and tweak them as necessary.

The future is here

It sounds futuristic, but it’s not far off at all. A new study from Accenture Strategy found the majority of retail executives (87%) believe they must leverage Artificial Intelligence (AI) to achieve their growth objectives and further, 68% agree they risk going out of business in five years if they don’t scale AI across their organizations. As robotic and AI technologies move from concept to implementation—and retailers push to scale across the organization—planning and distribution processes will require far fewer human interactions.

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