Fixed Vs. Flexible Automation

Industry 4.0 has brought multiple innovations across the entire supply chain value chain to improve speed, traceability & efficiency thus enhancing customer experience. Consequently, the initiation of all the critical processes impacting customer experience happens in the warehouse or factory, which drives the organization to have efficient processes.

Over 80 percent of warehouses currently lack any form of automation. Nonetheless, in the past decade, approximately 15 percent of warehouses have introduced automation with a mere 5 percent implementing advanced automation technology and solutions. This highlights a significant opportunity to enhance warehouse efficiencies through automation and digitalization.

However, organizations still face a dilemma in implementing automation despite the mandates they have. One of the key questions an organization needs to find an answer to is “ What would be the Right automation Strategy: Fixed OR Flexible”.

Let’s define Fixed and Flexible Automation. Simply put, Fixed Automation is automation which is grouted to the ground & doesn’t get easily relocated such as ASRS, Shuttle Systems, Cube Storage, Autopackers, Sorters (Cross Belt Sorter, Linear Sorters, etc.) where as Flexible automation refers to systems which can be easily relocated/ movable such as AMRs, AGVs, GTPs, TTPS, AMR based sortations.

Historically, Fixed automation has been popular with Flexible automation gaining popularity in the last 5 years or so with innovations in Robotics.

Here are some of the defining points, which you could consider while deciding on fixed or flexible automation:

1.      Business Growth: While automation is considered a business growth factor for logistics-led businesses, it’s crucial to define the expectations towards growth. For example, you may not want to plan your ASRS systems with 40-50% excess capacity for the next 5-year growth, which could essentially limit your investment fluidity in a distribution center.  Instead, you may want to look at P2G Cobots, Autonomous Case Handling Robots (ACRs), etc. which can keep on growing with your business, without any substantial downtime.  

2. Forecasting Accuracy: You should be able to classify your business in different forecast models, which could span from daily, weekly, and monthly to yearly forecast models. For example, Pharma business could easily plan at a yearly level, while fashion manufacturers need a rolling forecast at a monthly, or quarterly level. When we look at e-commerce fashion retailers, the volatility is further higher with daily-weekly rolling forecasts.

3. Investment Portfolio: Is your investment portfolio group looking at operational or Capital expenditure? While the CAPEX investment is planned for long-term strategic projects with a massive overhaul in business strategy, OPEX investments are done to have quick wins and optimization on business metrics for cost per unit metrics. It’s also important to underline that the CAPEX investments will generally lead to 2-3 times higher optimization in your cost structure in the longer run, as compared to OPEX investments. The OPEX model is where the automation integrators and OEM offer the solution in different models, including Robots-as-a-Service (RaaS), Pay-Per-Pick (PPP), etc. A very interesting shift in the industry has been towards a hybrid structure, where the fixed assets like racks, totes, etc. are on CAPEX and robots on the RaaS model. You could see examples of this with ACR robot OEM, integrators, cASRS (Pio’s model of Pay-Per-Pick), etc.

4.      Customer Demand Volatility:  This is specifically important when you’re in the business of “Good to Have” Vs. “Must Have” products, which essentially means that understanding the customer demand becomes more & more challenging with a wide array of SKUs. The critical challenge which this brings relates to the A/B/C categorization.  For example, imagine spending 2 hours at the start of your operations with Cube ASRS on re-slotting and bin digging, just because your C category item is now suddenly a fast mover due to ongoing sales listed last night, on your e-com website.

Here are some of the technologies that you could immediately classify as Fixed, Hybrid, or Flexible: