Automation on any scale

IF A company stands still, it will soon get left behind. However, keeping up with bigger players in the market when it comes to investment in technology has traditionally proved difficult for small and medium-sized enterprises (SMEs). They have tended to shy away from supply chain automation, regarding it as the preserve of larger organisations with deeper pockets. Increasingly, however, this reluctance to automate among SMEs is being worn away by falling tech costs and consequently faster paybacks; the availability of both scalable solutions and creative financing options; and the increasing challenge of recruiting and retaining warehouse staff.

Automate to enable growth

Many growing SMEs find that manual distribution processes can stunt their growth. As manual picking processes require a lot of space, growing order volumes mean that working areas become congested and staff spend increasing amounts of time and energy simply locating products. Installing a mezzanine floor can help to optimise available space but, if growth continues, manual processes may force a move to new premises, with all the potential disadvantages of losing valuable talent. Even if the business can find the space it needs, attracting the extra staff to deal with growth is a big issue. In research by the Chartered Institute of Logistics and Transport (CILT), 54% of logistics companies will see ‘severe’ skills and staff shortages by 2024, driven by factors including an ageing workforce and Brexit. 

The MHI Annual Report – a global materials handling survey produced by the international trade association in partnership with consulting firm, Deloitte – has consistently highlighted labour as a major problem. Identified as the top challenge facing warehouse operators for a number of years, in the 2022 report talent came a close second (54%) as the biggest problem, with supply chain disruption & shortages taking the top spot (57%). Customer demand for faster response times was the third biggest challenge (51%). 

Trickle-down automation

The previous MHI Annual Report in 2021 identified an interesting 'trickle down' effect from the trend towards digital adoption. Larger organisations have been creating efficient supplier networks that leverage digitalisation to connect data and operations seamlessly along their supply chains and shed light on any areas of risk. In this process, they need to look not only at their larger tier 1 suppliers but also at the SMEs in tiers 2 and 3 of their supplier networks. These lower-tier firms have therefore also needed to adopt digitalisation in order to keep pace with the digital ambitions of their customers. 

Barriers to adoption 

Until now, a number of factors – many of them misconceptions – have prevented SMEs from adopting supply chain automation. Perceived barriers include cost, the need to upskill employees and the view that automation technologies are not sufficiently flexible. Tackling these barriers to adoption is an important step in the path to sustainable economic growth because SMEs are the backbone of UK and European economies. According to the European Commission, SMEs represent 99% of all EU businesses, employ around 100 million people and account for more than half of Europe’s GDP.

Scalable solutions

Not only have the costs of automation fallen in recent years, there has been an explosion in the technologies available and their potential has been super-charged by intelligent software, machine learning and artificial intelligence. Recent technological developments, including autonomous mobile robots (AMRs), offer entry-level or complimentary subsystems that are flexible, scalable and relatively simple to install and are providing the first step on an automation journey for many SMEs.

Flexible financing

What is more, accessibility has been enhanced and financial risks slashed by the robotics as a service (RaaS) and software as a service (SaaS) financing models. These options allow SMEs to pay a relatively small fee to lease robots and software and the required maintenance, allowing them to scale their operations flexibly and quickly in response to market conditions. In this scenario, SMEs can actually create competitive advantage through the innate agility that results from their relatively flat organisational structure. Combined with flexible automation, this gives them the potential to pivot very rapidly.

Affordable gains

With these trends making logistics automation more accessible, SMEs can reap the rewards of robotics and automation – increased capacity, reduced labour costs, higher efficiency, faster delivery and enhanced picking accuracy – all with a return on investment (ROI) of two years or less not uncommon. With these gains now available at an affordable cost, SMEs are expected to implement automation at a staggering rate in the coming years. The 2022 MHI Annual Report found that 28% of those surveyed said their companies had adopted robotics and automation but this figure would grow to 79% over the next five years. Investment is predicted to rise sharply, with 66% of survey respondents (representing a broad cross-section of both large and small manufacturing, distribution and supply chain operations) stating that they will spend more than $1 million on supply chain technology over the next two years.

Ask the experts

As SMEs often do not have dedicated logistics expertise in-house, they need advice on how to make the optimum investment in automation. Cue AMHSA, the UK’s leading authority on automated material handling. Offering a wide range of automated equipment, software and services, AMHSA members are experienced in dealing with organisations of all sizes in diverse industries. They take the time to understand each business in order to devise the most efficient, cost-effective and future-proof solution.