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How Automation can Transform Asia’s Supply Chains

by Andrew Pilkington, Head of Automation, DHL Supply Chain Asia Pacific

Supply chains in Asia are facing everchanging challenges. While the fast-growing economy of the region has led to more business opportunities, supply chains will become increasingly over-stretched, in terms of capacity and agility. Supporting the expanding markets in Asia Pacific is among the top concerns for senior supply chain executives. Changing consumer expectations, sales channels and order fulfilment models are also driving a shift towards omni-channel logistics.

Labour and operational issues will continue to pose significant obstacles for supply chains. In 2015, 40 per cent of employers in Singapore reported talent shortage, and several companies also had to contend with land scarcity and rising real estate costs. For example, Singapore recently saw a six per cent rise in commercial real estate prices. All these factors indicate that companies today must quickly learn to do more with less when it comes to supply chain and logistics operations.

A wide automation spectrum for diverse supply chain needs

Automation can offer organisations a transformative solution. Developments in the field have progressed rapidly, and they can add value to supply chains in terms of removing physical limitations, reducing processing time, increasing fulfilment accuracy and ultimately lowering costs.

Automation might sound daunting to many companies. But far from the common misperception of robots replacing humans, automation is truly about integrating technologies with existing manpower to deliver enhanced value to supply chains. However, in order for automation to be successfully adopted, there has to be a collaborative mindset, full understanding of the options available, and most importantly, knowledgeable people who can make it happen seamlessly without the supply chain missing a beat. The following stages show how diverse the spectrum of technologies is and the merits they bring to advancing warehousing operations to the next level.

Simple automation hacks for improved flexibility

The simplest form of automation is to implement technology for repetitive processes within the warehouse. This fundamental approach mechanises workflows, requiring minimal levels of investment and training while creating sufficient gains in productivity and quality to deliver substantial returns. A good instance of a simple transformation will be automating co-packing lines. With constantly changing product promotions and seasonal packaging, demands on the supply chain are escalating and causing copacking operations to move further down the supply chain to provide increased flexibility.

A leading confectionary company made improvements to the packing process by utilising equipment to weigh and place products in seasonal packets. The equipment improved packing productivity by 12 per cent, enhancing product quality and minimising human handling. For customers and businesses, this means increased flexibility, which will ultimately drive higher service satisfaction, brand trust and profits.

Dedicated automation for efficient warehousing

Companies that have the required supply chain profiles and are ready to make a bigger leap can select a far more advanced and intelligent system. A popular solution is an automated storage and retrieval system, which consists of a variety of computer-controlled shuttles for automatically placing and retrieving loads from defined storage locations.

Warehousing operations can benefit tremendously from this approach. Automation of this magnitude can reduce required space, optimise utilisation of manpower resources, keep track of inventories effectively and boost efficiency. Integrating this advanced automation is far more complex and requires very specific expertise and increased investment – in addition to the heightened risk. Making the step is a bold move and requires detailed data and an understanding that the returns will be realised over a far longer period.

Companies that wish to embark on this venture should partner with an experienced logistics vendor, in order to understand the costs involved and gain more accurate forecasts to understand the payback period. To deliver more value to its customers, a leading semiconductor company turned to such a dedicated solution for its distribution centre in Singapore.

With the solution, the company was able to store four times more products in the same floor space, raise productivity by 40 per cent and achieve better visibility into its inventory. The system drastically reduced the need for aisles, and leverages 36 robots to store and retrieve products. In addition, items are electronically tagged and arranged in grids for easier tracking. While the initial capital investment for a dedicated solution can be heavier than the other options, they are forecast to yield more significant results in the long term.

Maximising productivity for more customers

There is now another option for businesses looking to benefit from advanced automation without the need for heavy capital investment – multi-customer automation. By bringing together similar product and supply chain profiles, an efficient, cost-saving solution can be found. However, finding a like-minded business to collaborate with is not a simple task and that is where logistics service providers can act as a catalyst to make these visions a reality.

DHL Supply Chain launched a multi-user automation solution earlier this year in Singapore to provide a common platform for two leading technology companies to store and retrieve spare parts for distribution across the Asia Pacific region. After analysing the profiles of both companies, it became apparent that a single system for both would help them achieve 20 per cent efficiency gains and reduce space requirements by 40 per cent, in comparison to traditional operations.

Automation is a reality for Asia’s supply chains

With a myriad of automation options available, the barriers to entry to this technology have been greatly lowered – especially with the availability of collaborative approaches. Today, organisations looking for a competitive advantage should consider automating their supply chains in order to stay agile in the face of changing market conditions.

This will also allow them to practise better resource and time utilisation. In addition, it will open up new opportunities for employees by repurposing their skills for more value-added roles. Automation technologies are increasing and vary greatly in their complexity, investment and returns.

To ease the decision-making process, partnerships and collaborations will be fundamental to successful integration and delivery. The steps to automation can appear to be daunting given the fear of the unknown but automation maximises the use of resources and drives higher service, which will bring sustained success to organisations. Now is the time to start thinking differently.

About the Author

Andrew Pilkington is the Head of Automation for DHL Supply Chain, Asia Pacific. Based in Singapore, he drives the adoption of automation across 12 countries in the region to deliver worldclass supply chain solutions for customers from a multitude of sectors. He is also part of the Regional Solutions Design team, responsible for the design and re-engineering of high quality, innovative and cost efficient supply chain solutions. Andrew and his team play a key role in solutions development and implementation for new and existing businesses.

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