CSCMP's Supply Chain Quarterly
September 22, 2019

Seven technology trends shaping the future of material handling

Many of the disruptive technologies that are changing our society are making their way into warehouses and distribution centers. What are they, and how will they influence the way products move through the supply chain?

Technology is changing at an unprecedented pace across our society. Consider that the Apple iPad was introduced in 2010—just four years ago—yet tablets are already threatening to overtake both laptop and desktop computers in combined sales. Facebook was launched 10 years ago out of a college dorm room and now has more than 1 billion users. At the time of this writing, it had a market valuation of US $196 billion—nearly four times that of General Motors.

Who would have anticipated those developments at the beginning of this century?

That may be the question we are asking about material handling technologies 10 years from now as many of the disruptive technologies that are changing our society make their way into warehouses and distribution centers. "Big data," the Internet of Things, mobility, the tech-savvy millennial generation, advanced robotics, autonomous vehicles, and alternative energy sources are all going to influence how products move through the supply chain. And that is probably going to happen sooner than you think.

That's because these technologies and trends will play an increasingly important role in the continual effort to drive costs out of the supply chain and increase the speed and predictability of product movement. Material handling managers who begin to develop strategies for these technologies today will be in the best position to transform their disruptive power into competitive advantages for their organizations in the future.

These trends are already finding their way into business applications in a number of industries that will serve as development laboratories and proving grounds for the next generation of material handling technology. The automotive industry, with its work on driverless vehicles, will certainly have a significant influence on material handling. But a number of other industries—agriculture, aviation, medical, consumer products and the military—are also adopting disruptive technologies in ways that can serve as a model for material handling applications.

The following sections explore the seven technology trends that may have the biggest impact on the future of warehouse management.

1. "Big data" and analytics
One of the most common definitions of "big data" is data that exceeds the processing capacity of conventional database systems. Increasingly this definition is being broadened to describe efforts to capture data that is not currently being captured, consolidate it with other data, and analyze and use it to achieve specific objectives. In the context of warehouse management, big data includes the processes required to aggregate, inspect, clean, transform, and model data with the goal of discovering useful information, suggesting conclusions, and supporting decision making.

With the continuing digitization of information and processes, the application of big data and the analytics and modeling it enables has become such a powerful trend that Harvard Business Review called it a "management revolution" in its October 2012 "Big Data" issue.1 This is a revolution that metrics-driven supply chain executives should embrace. Yet, according to Deloitte's 2014 MHI Annual Industry Report, "at many companies the supply chain side of the house is a step or two behind the commercial side when it comes to tapping the full power of analytics."2

In our experience, one reason for that lag in the warehouse is that managers are concerned about the complexity of collecting and analyzing data from disparate sources. Data security, privacy, integrity, and integration into existing business systems are major barriers to the rapid advancement of big data analysis in warehousing and distribution. Another issue is that data is only useful when it is integrated into daily management processes. This often requires special training to ensure employees are maximizing the data-driven decision-making opportunities.

These obstacles must be overcome because there is little doubt that the organizations that can collect and use data effectively will be the ones that are most successful in achieving consistent improvements in supply chain reliability and efficiency. Overcoming these obstacles requires a commitment by senior management to strategically implement proven, high-value analytical tools that can both deliver short-term results and serve as building blocks for the future. Once an organization begins to see success in using data to support decision making its appetite for more ambitious projects will grow.

One example of how that is already occurring is the application of forklift fleet management software, which is increasingly being used to track vehicle impacts, operator productivity, and equipment utilization across fleets of lift trucks. Until this technology was developed, there was no way for warehouse managers to track impact events by operator or location. That often prevented managers from taking corrective measures in the form of additional training or tweaks to the warehouse layout. In addition, when warehouses don't track the number of impacts or react to events in any meaningful way, it encourages a culture in which operators don't recognize impacts as a problem.

When warehouse managers start to track these events and react to them, they are often surprised at the number of impacts that are occurring and the reductions that can be achieved by using data to change behavior. Food services provider The Clemens Group provides an example of how powerful this can be: Managers at that company used forklift fleet management technology to achieve an 80 percent reduction in impacts simply by monitoring and investigating impact events. Similar improvements are possible when data collection is used to track equipment utilization and operator productivity.

In addition to sustainable improvements in forklift utilization, warehouse safety, and operator productivity, systems such as forklift fleet management can introduce an organization to other uses of data-based management. One particularly interesting use of big data to drive improvements in material handling is the move to aggregate supply chain data across businesses. Bringing together metrics from similar organizations that are operating similar types of facilities makes it possible to produce baseline metrics that warehouse managers can use to benchmark their operations and help them identify best practices that maximize efficiency and compress shipping times.

2. The Internet of Things
The Internet of Things describes the sensors and data-communication technology built into physical objects that enable them to be tracked, coordinated, or controlled across a data network or via the Internet. While a contributor to the big data trend, the Internet of Things is distinct in that it represents direct machine-to-machine communication and coordination, while big data generally encompasses data from a variety of sources that are consolidated for human analysis.

In the warehouse, the Internet of Things will support communication and coordination across conveyors, automated storage and retrieval systems, forklifts, and other systems to enable new levels of visibility and automation.

One easy-to-understand example of how the Internet of Things might evolve is the connected home or office, which senses your presence and automatically controls the lighting, temperature, and entertainment options based on your preferences. Imagine what this kind of connectivity and intelligence could accomplish in the warehouse. It would take all the disparate systems and equipment—conveyors, robots, automated storage and retrieval systems, automatic guided vehicles (AGVs), forklifts, battery charging stations, dock equipment, pick carts, voice picking systems, lighting, and heating, ventilation, and air conditioning (HVAC) systems—and tightly couple them to warehouse control, labor, transportation, order, and customer management systems. Such a connected warehouse would allow supply chain and warehouse managers to reach new levels of workflow optimization, operational efficiency, and predictability, all while providing real-time visibility into operations and predictive analytics.

Having devices that can communicate is the first step in realizing the potential of the Internet of Things. The next and more challenging step is being able to capture data from devices across the facility, aggregate that data for analysis, and enable machines to act on it. It is this aggregation, processing, and decision making that transforms the Internet of Things from a collection of isolated devices sending out data into a powerful network that can work in concert to support objectives.

In the case of the warehouse, forklifts are already doing much of the data collection. Forklifts today are equipped with wireless connectivity, data storage, and sensors that allow them to collect information from their own internal systems as well as from their environment, and then transmit this data to management systems.

With the cost of sensors going down and the amount of processing power embedded in forklifts continuing to increase, the forklift, which is the only device in the warehouse that travels to every location in the facility, will be in a position to expand on its current functionality. In addition to moving product, it will become a mobile information technology hub that collects and processes data from products, operators, the environment, and other material handling systems to support unparalleled visibility into warehouse operations as well as increased automation.

3. Mobile technology
Mobile technology refers to the use of tablets, smartphones, and other handheld or wearable devices for communication and information.

Across all aspects of society, mobile devices are proving to be a disruptive technology that is moving fast and has widespread implications. One out of seven people globally now owns smartphones or tablet computers, and one in three Americans owns a tablet, a number that grew 200 percent between 2012 and 2013.3

Mobile technology is quickly penetrating the business realm. The global market research firm Forrester predicts that within the next two years, one-third of all tablets will be sold to businesses. Tablets are already replacing fixed-mounted terminals in law enforcement, agriculture, and aviation; they are just starting to be used in warehouses and distribution centers by managers and other personnel who don't want to be deskbound but still need to deliver reports and information. Technicians who service forklifts and automated material handling equipment are also using them for fast, convenient access to information on troubleshooting, repairs, and work orders.

As material handling operations increase their use of analytics and automation, mobile technology will emerge as the primary platform for displaying data. Developers of process and workflow management systems have already adopted a "mobile first" approach to developing applications. Experts believe this will quickly move to a "mobile only" development philosophy as traditional, full-screen desktop displays are no longer considered useful.

With mobile technology, warehouse managers will have access to a wealth of data, including equipment status and performance reports, wherever they may be. With more warehouses operating 24 hours a day, seven days a week, this will allow managers to track performance and respond to problems around the clock.

Other warehouse personnel will encounter mobile technology through their interface with equipment such as forklifts and automated storage and retrieval systems. Wearable technology, such as "smart glasses," is being integrated with warehouse management systems to enable hands-free mobility for workers using visualization and voice recognition to receive instructions for completing tasks.

4. The tech-savvy workforce
The prevalence of mobile technology in everyday life is making the workforce in warehouses and distribution centers comfortable and familiar with technology. The generation entering the workforce now will expect the equipment they operate to provide an experience that is similar to their engagement with technology in their cars or with their smartphones. While not a "technology trend" in the true sense of that phrase, the changes that will occur in the material handling workforce in the next 10 years qualify as a disruptive trend because this generation of workers has been so deeply influenced by technology.

The generation of people born during the 1980s and early 1990s has been called "millennials," "echo boomers," "the Internet generation," and "iGen." Whatever label you apply to them, they will bring into the workforce traits that will shape their use of technology, including confidence, tech-savviness, the ability to multitask, and the expectation of immediate gratification. These traits all influence the factors that motivate this group and the way information needs to be presented to them.

Currently, 93 percent of American teenagers have access to a computer in their homes, 78 percent have a mobile phone,4 and 76 percent are on social networks.5 Much of this time on computers and phones is spent playing computer games. American teens will spend on average 10,000 hours gaming by the time they are 21.6 Teenagers in other countries are similarly invested in technology.

This development presents both challenges and opportunities for material handling managers. Both management techniques and material handling equipment must adapt to this new generation of workers. In general, information needs to be presented in a more graphical format, and organizations should look for opportunities to use social sharing and gamification to keep workers engaged and motivated. Gamification is the application of typical elements of game playing to other areas of activity to encourage engagement or modify behavior. The research firm Gartner predicts that by 2015, 40 percent of Fortune 1000 companies will use gamification as the primary mechanism for transforming business operations.7

One example of how gamification is being used is Keas, an employee wellness platform used by enterprises to maintain lower group health-insurance costs and reduce expenses such as unnecessary sick days. Keas employs gamification within its platform to enable employees from client companies to log in to a personal dashboard to view statistics, earn awards for completing certain tasks, and support co-workers for making progress toward their goals.

These types of applications could find their way into warehouses and distribution centers. Order picking solutions are already moving from text-based information delivery to more graphical displays of product identity and location, which can improve productivity. Adding gamification and social sharing to these platforms may drive even greater improvements in the future.

5. Advanced robotics
The technologies discussed to this point have been focused primarily on making the warehouse workforce—from senior managers to forklift operators to order pickers—more productive. The next two trends, advanced robotics and autonomous vehicles, automate manual tasks.

Robotic equipment has been used in material handling for some time. But a new generation of advanced robots incorporates enhanced levels of sensing capabilities and algorithms that allow them to better sense their environment and make decisions based on changes in that environment.

This is an important development in the use of robotics in material handling. Material handling tasks typically have been too variable to make them good candidates for robotics. Unlike manufacturing, where products move down an assembly line and can be precisely positioned for each operation, products in a warehouse typically are different sizes and shapes and may not be positioned in exactly the same way or location each time they are handled. New vision-sensing technologies are enabling robots to adjust to these variations, allowing, for example, mixed-case palletizing and depalletizing to become commonplace. As robots get smarter, more refined, and safer, they will increasingly be used to handle some of the routine yet variable tasks being performed by humans today in warehouses.

In addition, the recent harmonization of U.S. and European standards for collaborative robots, which work in shared spaces with humans, will accelerate technological advancements and bring forward new applications for robots in warehousing and distribution, including working alongside humans picking and boxing items. This is not science fiction; Amazon, in fact, is currently sponsoring a robotics competition through the Institute of Electrical and Electronics Engineers (IEEE) that is focused on order picking.

As in manufacturing, the use of robots in material handling will free humans from performing routine tasks and bring greater speed and accuracy to repetitive tasks, supporting the ultimate goal of reducing material handling costs.

6. Autonomous vehicles
While sometimes used synonymously, there is an important distinction between driverless and autonomous vehicles in the warehouse. Autonomous vehicles are driverless, but not all driverless vehicles are autonomous. Autonomous vehicles are capable of making decisions in response to their environment. Driverless vehicles, such as automatic guided vehicles (AGVs), are controlled from outside the vehicle or are limited to a programmed path.

The AGVs used in warehouses today typically follow preplanned routes and can't navigate around obstacles. When obstacles are encountered, an AGV simply stops in its tracks. Human intervention is required to remove the obstacle and restart the AGV. These situations are commonplace in warehouses and distribution centers, and they cause congestion and disruption. This shortcoming has limited the use of AGVs in material handling. They currently account for less than 1 percent of forklift sales in the United States, according to sales numbers released by the Automatic Guided Vehicle Systems Industry Group of the material handling industry association MHI.

To be truly autonomous, AGVs need decision-making capability that allows them to perform tasks with a high degree of freedom from external control. When encountering obstacles, for example, they should be able to reroute themselves to complete the task at hand without human assistance. Enabling AGVs to do that will require advances in current technology. Of the disruptive technologies discussed in this article, autonomous vehicles may be the furthest from playing a significant role in warehouse operations because of the challenges that still exist in terms of sensor capability and vehicle intelligence.

Yet much is happening outside of the material handling industry that is driving the technology forward. In the automotive industry, General Motors, Audi, Mercedes-Benz, and Nissan are testing autonomous concept cars, and Google's driverless car has logged more than 700,000 road miles. Not too long ago driverless automobiles were thought to be in the distant future; manufacturers now expect commercialization by 2020.

With autonomous vehicles potentially on the road within the next six years, autonomous forklifts can't be too far behind. In the meantime, just as auto manufacturers have tapped into their research on driverless vehicles to bring new collision-avoidance systems to market, forklift manufacturers have introduced semi-autonomous capabilities that work with operators to increase productivity. As technology develops and matures, these semi-autonomous vehicles will evolve into fully autonomous vehicles that will create additional opportunities for productivity improvements and cost reduction.

7. New energy sources
Opportunities to reduce warehouse energy costs will emerge in at least three areas.

On the facility level, lighting can represent a significant amount of the total electricity cost for warehouses and distribution centers. Skylights and occupancy-sensing "smart" lighting solutions, including low-energy lighting, are becoming more commonplace in warehouses and distribution centers. The large, flat rooftop surfaces typical of warehouses and distribution centers are ideal locations for solar panels that can be used to supplement power requirements.

Within the warehouse, improvements in the energy efficiency of forklifts and automated storage and retrieval systems continue, thanks to new forms of power regeneration and new approaches to monitoring and balancing performance and energy usage.

The third opportunity is in the fuel source for warehouse vehicles. The lead-acid batteries that power forklifts have served the industry fairly well. They are emissions-free, relatively inexpensive, and provide adequate run times in many applications. But they do have their limitations.

Lead-acid batteries must be changed every six to eight hours, which can be disruptive in multi-shift operations, particularly during busy periods. In addition, they require charge times of up to eight hours followed by eight hours of cool-down time. This requires companies to have extra batteries and dedicated space for battery storage that must be ventilated. Finally, lead-acid batteries require periodic maintenance to maximize their useful life. That may require full-time staffing of the charging station.

Two energy sources have emerged as potential alternatives to lead-acid batteries: hydrogen fuel cells and lithium-ion batteries.

Hydrogen fuel cells have been piloted in a number of large warehouses, and some of those early adopters are now transitioning from government-sponsored trials to full site conversions. The technology as applied to forklifts is still relatively immature but has shown some promise in addressing the issues with lead-acid batteries. Fuel cells can be refueled in as little as three or four minutes and do not require a dedicated battery room. However, the anticipated expiration in 2016 of the U.S. government's 30 percent fuel-cell investment tax credit, together with the currently limited supplier ecosystem, could stunt further development and growth of this technology and keep costs of fuel cells high compared to lead-acid batteries.

Lithium-ion batteries are generally more efficient than lead-acid batteries, can be very quickly "opportunity charged" during lift truck operators' breaks without adversely affecting battery life, and have longer run times. Additionally, lithium-ion batteries don't emit gas during charging and therefore do not require special battery rooms.

The lighter weight of lithium-ion batteries when compared with lead-acid batteries is touted as an advantage in automobiles and airplanes; however, this is actually a disadvantage in many forklifts, where the battery's weight is needed to provide stability during lifting, turning, braking, and other operations. To meet battery weight requirements, lift truck fleets often must add extra weight to vehicles that are equipped with lithium-ion batteries. That extra weight can take away energy-storage volume from the battery and, in some cases, may eliminate lithium-ion's advantage of higher energy-storage capability. This technology is still expensive relative to lead-acid batteries, but early adopters are conducting pilot studies to better understand the benefits of the technology for their specific applications and whether those benefits could outweigh the cost differential.

Ultimately, the technology that emerges as the primary alternative fuel source for automobiles will attract the investments in research and production capacity required to make that technology affordable for material handling, creating new opportunities to increase productivity and drive costs out of the supply chain. In the interim, better monitoring of battery health and better management of battery charging can minimize the negative characteristics of lead-acid batteries. In addition, "quick charge" technologies are offsetting some of the disadvantages of lead-acid batteries in terms of the time required to fully charge them.

A connected, automated future
Each of the seven disruptive technology trends discussed in this article will ultimately work with and complement the other six to offer greater visibility and control over material handling operations. In the next 10 years, the intelligence designed into material handling equipment will grow exponentially, as will connectivity between systems and their environment. Tech-savvy workers will operate intelligent machines, working alongside robots and autonomous forklifts in highly automated operations. Every activity will leave a digital footprint that will be consolidated, aggregated, and analyzed to drive continuous improvement. The result will be supply chains that are more efficient, more reliable, and allow product to be moved at lower cost.

1. Andrew McAfee and Erik Bynjolfsson, "Big Data: The Management Revolution," Harvard Business Review, October 2012. 2. Deloitte, The 2014 MHI Annual Industry Report—Innovations That Drive Supply Chains. 3. McKinsey & Company, Disruptive technologies: Advances that will transform life, business, and the global economy, May 2013. 4. Pew Research Center, Teens and Technology 2013, March 13, 2013. 5. Pew Research Center, Internet and American Life Project. 6. Jane McGonigal, "Gaming can make a better world," TED Presentation, February 2010. 7. Matt Kapko, "How Gamification Drives Business Objectives," CIO Magazine, May 8, 2014.

Lew Manci is Vice President—Engineering at Crown Equipment Corporation, a global provider of material handling equipment and technology.

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