Environmental Trends in Warehouse Management - Coursework Example

Table of Contents

Introduction2

Warehouse automation technology3

Risk assessment of warehouse automation:4

Contingency planning6

Conclusion:9

Introduction10

Factors Threatening Environment Friendliness:10

Green Initiative for Reducing Environmental Impacts:13

Successful Carbon Neutral Warehouses:16

Conclusion17

Reference List19

Question 1:

• • Introduction

In current warehouse management, most of the firms are dependent considerably on automated systems for functioning. According to Bossink (2008), one of the most crucial segments of the operations management processes of business houses is to manage the inventory. The inventory management is done within the warehouses of organizations and is also considered as the rot place for the database management of operations. Soteriou, Hadjinicola and Patsia (2007) noted that the accuracy in the warehouse activities result in better customer service for organizations. Although the automated functioning processes have reduced the overall time and cost consumed in the activities, there are still some risks connected to the process, such as services, cost and flexibility aspects. Slack and Lewis (2007) observed that excessive usage of automated functions have made the organizations rely on technical functions and any sort of stoppage in automated processes also brings the service delivery process to a halt. This paper set out mainly concentrates on analyze the risks linked to the automated functioning of warehouses and produce a contingency plan to deal with these risks for automated warehouse.

• Warehouse automation technology

Warehouse automation is one of the most followed trends in the contemporary operations management process. The changes in the operational process and with the development of the technological aspects, firms are trying to align their supply chain with that of the technological improvements (Kucera, 2012). Aras and Crowther (2012) noted that warehouse automation is being mainly implemented in the business processes in order to reduce the cost of operations and to accelerate the production and delivery process. New equipment such as cranes, conveyors, automated shelves and shelf carriers, shuttle cars and so on, they can be observed in almost all high production centers of businesses. Even in the basic activities of a warehouse such as inventory management, calculation of stock, logistics tracking and so on are being performed with technologies such as bar codes and scanners, Radio Frequency ID (RFID) and so on. (Goetsch and Davis, 2010). Lewis et al. (2010) noted that warehouse automation has helped the business houses in reducing the space required for their activities, time and resources also have been reduced dramatically with the help of warehouse automation. Apart from this, Barth and Wolff (2009) stated that automated warehouses functioning with digitized equipment have recorded significant decrease in the release of carbon footprint. Considering the supply chain systems of big manufacturers, (Gupta and Campbell, 2009) stated that theoretical concepts such as lean or agile functions always concentrate on connection between various functional departments of warehouse and automated technology has just simplified the process. Warehouse automation has been considered by Aras and Crowther (2012) as an inseparable part of the existing business systems based on the continuous changes in the market forces of demand and supply. Aras and Crowther further stated in order to quickly adapt to the changing customer demands and behaviors and also respond to the intense competition in the market, business houses are trying to increase the fluency in the warehouse activities and automated systems such as conveyor belts or robotics have significantly reduced the time and expenses of the concerned process. However, Dow, Samson and Ford (2007) criticized that automated functions of the warehouses has increased the energy consumption and also reduced the control of the business houses on their production processes. Crane et al. (2009) clarified that the benefits of warehouse automation relies on the usage of appropriate technology by the organization rather than the efficiency of the equipment.

• Risk assessment of warehouse automation:

Although the automated warehousing processes have numerous benefits for the organisations, there are also some demerits, which need to be attended and considered before the implementation of automation in the warehouse operations. Hartman and Werhane (2009) noted that the first and foremost consideration for implementation of automated warehouses is that of the cost of implementation. The capital requirements of automated warehouses are high mainly because automaton needs a complete restructuring of the existing systems of functioning. For instance, global E-commerce retailer Amazon.com acquired robotics supplier for operations Kiva with $775 million in order to redesign their warehousing process and also boost their service delivery process. Lopez, Garcia and Rodriguez (2011) explained that with automated systems, the cost is recurring as regular checking and updating of the equipment needs to be performed. Most of the small and medium scale organizations are not able to sustain these kinds of costs and hence have to stick with manual warehouse activities. Another cost factor pointed out by Brauchle and Evans (2008) is that of opportunity cost. The opportunity cost of implementing automated warehousing is very high as the restructuring of the warehouse also eliminates the scope of implementing other systems. Furthermore, multiple automated systems such as conveyor belts and robotics cannot be implemented together mainly because of high cost and the differences in nature of operations.

Other risks associated with the automated warehousing processes of businesses are excessive reliance on technology and standardization of activities with specific unit measurement. The first issue of excessive reliance can have extreme impact on the warehouse functioning of business (Fowler and Hope, 2010). As the complete functioning is based on technology, system failure can result in total shutdown of warehouse processes, which can be hazardous for organizations. On the other hand, in order to align the activities of a warehouse with the automated systems, random figures or incongruity in inputs cannot be expected from the supervisors. Thus, any changes in the processes need to be performed with consideration to its implications on the complete business process (Goetsch and Davis, 2010). Based on the managerial responsibilities, automation does reduces the complicacy in decision making in context of performance monitoring or quality of productions, etc but it also reduces the ability of the managers to designate the desired level of quality and reduces the flexibility in operations. Thus, implementing market changes in the operations of an automated warehouse is a barrier for the managers. Some other risks associated with the automation process include the disposal of the equipment while restructuring. As mentioned before automation needs to be continuously upgraded with changes in the technological processes and the needs of the warehouse functions. Thus, including any new hardware installation process also results in disposal of existing equipment and also creates extra burden of wastage for the organization.

• Contingency planning

Warehouse automation can give rise to many uncomfortable scenarios for businesses as can be observed from the above stated risks and threats. Although the resource requirements are reduced and the scope of performance is increased, firms have to design contingency plans for mitigating and managing the risks and their impacts on the performance. As noted, automated warehouse are reliant on technological equipments and thus equipment downtime can be one of the major issues faced by the business processes of the firms. For instance in an organization such as Amazon where the entire system is based on robotics, the failure of the robot charging units or malfunction in any rack holding unit can result in slowing down of the process and mismatch of order placement (Fowler and Hope, 2010). Contingency for equipment downtime will be to develop a fore-assessment technique where the capacity of the systems can be previously detected and the work process will be delegated accordingly. This will create time for the management to cope up with the downtime. Another issue related with equipment downtime is that of information technology downtime where the communication between various equipments or supervisors and equipments are disrupted. This is of more critical nature in comparison to that of equipment downtime. Crane et al. (2009) stated that because of standardised operations in automated systems, flaw in communication will result in mistakes in the complete system. Thus, establishing information filters and multiple channels of communications will be helpful. The filters of information will continuously check the quality of information and will have multiple operational systems via both automation and manual activities. Manual control over the information will also generate more control over the automated systems and quality factors and help in increasing the flow of information in the automated systems.

Other issues which are related with the automation of warehouses includes labor problems and demand alignment. The primary problem faced by organizations in context of labor management in automated warehouses is to delegate the roles in case of emergency situations. With most of the functions being managed with technological equipment, the responsibilities of the human resources are limited (Fowler and Hope, 2010). The human resource recruited for automated warehouses are also based on maintenance and the manual tasks, which limit the ability of the labour base. Moreover, as most of the manual work processes are being eliminated or transformed into technical processes, the human requirements are reducing (Brauchle and Evans, 2008). Thus, in situations of emergency or technological breakdown, the labour management issue becomes a serious problem. In order to handle this labor related issue with the management, the organizational processes of a company needs to continuously train their employees on handling the equipment and also to resolve any situations that arise because of equipment down time. In context of the demand problems, the challenge is to align the production process with that of the fluctuating nature of demands in the market. The automated systems are designed with specific guidelines to produce the number of units at a recurring basis (Corbett and Rastrick, 2009). However, this also results in the increase of excessive inventory for the firms, adding to their expenses. The constant changes in the production process can hamper the performance of the automation systems and hence needs to be managed.

The contingency plan for demand alignment is related to the entire supply chain activities of a firm. Most of the organizations try to restructure their automation process and connect it with controlled manufacturing concepts such as the JIDOKA of the lean management methodology (Hartman and Werhane, 2009). The JIDOKA helps the organization to gain control over the production system by increasing the information flow among the various parts of automated process. This enables the organization to align the demand of the products with their production process. The application of supply chain methodologies such as the lean or agile methods are considered to suitable for alignment of market demand and the production process as they encompass all the functional activities of the operational process and also help in increasing the knowledge transfer between the departments. The most important aspect in this process is the communication of information between various functional departments of the supply chain management process and the warehouse automation system. Communication within these processes is performed with the help of technological resources mostly related to software such as Enterprise Resource Planning or Accounting Information Systems. These methods are installed in the database of the organizations and are connected with the departments of the operational processes. Not only does this enhance the communication in the supply chain but also creates relationship between other departments such as marketing and human resource management with the operational process providing greater control and administration over the organizational activities. Goetsch and Davis (2010) stated that if managed appropriately, automated systems can reduce the hassles in the warehouse activities and also increase the performance and productivity of the department.

• • Conclusion:

The analysis of the automated systems being implemented in the warehouses for improving the productivity and performance of the firms are largely based on the technological compatibility of the business processes. Despite the numerous advantages of warehouse automation, there are also some risks associated with the process which reduces its attractiveness in the long-term scenario. Before addressing these risks, any organisation should clearly identify the specific risks for themselves. It was noted that automated warehouse functioning in the prevailing situation is reliant on technical aspects and which has increased the opportunity cost of operations. This is also reducing the options available for designing effective contingency plans. A contingency plan is inevitable for an effective automated warehouse as it can deal with the sudden shutdown or other emergencies that can cause negative impact on operations.

Question 3

• • Introduction

Although the automated functioning processes have reduced the overall time and cost consumed for the activities, there are concerns among the entrepreneurs regarding the risks connected to the process. Slack and Lewis (2007) observed that excessive usage of automated functions have made the organizations rely on technical functions and any sort of stoppage in automated processes also brings the service delivery process to a halt. On the other hand, the environmental concerns associated with the management of warehouses are also increasing among the corporate and social professionals, which are also raising the risks in managing the warehouse activities. This paper will analyze the green initiatives and environmental trends being considered by warehouses for increasing eco-friendliness.

• • Factors Threatening Environment Friendliness:

According to Roome and Bergin (2010), every supply chain process being implemented in the market place is increasing the number of warehouses in the market place. The increase in the market place is also causing subsequent increase in the supply chain aspects such as logistics and inventory management processes. Most of the warehouses are being operated remotely with the help of information technology. In such scenarios, the business generation process of the firms focus on greater resource utilization and control over the warehouse activities. In this aspect, digitization of the warehouses is the foremost option available to the firms (Dow, Samson and Ford, 2007). Corbett and Rastrick (2009) observed that most of the warehouses engaged in fuel based operations management are medium scale firms that are not able to satisfy the cost of implementing digital systems or warehouses engaged in energy products or pharmaceuticals. Roome and Bergin (2010) criticized that the utilization of energy by the warehouses depends upon the volume of activity being carried out. Organizations such as Marks & Spencer’s have reflected tremendous efficacy in managing their energy utilization and was termed as one of the most efficient carbon neural warehouses in the retail segment of Europe. However, in the current scenario the trend related to warehouses is to increase their size and also the number of warehouses. Corbett and Rastrick (2009) mentioned that the segmented operations is being practiced by firms for reducing the logistics expenses and also increasing greater control over the market demands and supply as they can cater to a larger consumer group. This has resulted in increased energy consumption of the business functions.

Focusing on the threats to environment, Brauchle and Evans (2008) noticed that as warehouses are increasing in the geographical regions, the amount of space being consumed is a serious concern. The standard size of warehouse of Amazon is equivalent to 14 football fields. In terms of social space, an Amazon warehouse occupies the space of a small village. The next threat associated with the warehouses is that of logistics. The greater the volume of work within a warehouse, the transportation activities will be more. The increasing logistic networks of warehouses are also direct contributors to the green house gases in the environment. However, Corbett and Rastrick (2009) stated that logistics is a part of the supply chain activity and not directly associated with warehouse functions. The final and most important factor causing environmental threat is the energy consumption. In order to support the automated activities or digitized control of the warehouse functions, firms have to employ constant supply of energy and thus cause shortage of energy for social usage. The natural resources being utilized for supporting warehouses are thus affecting environmental conditions. In case of the energy industry, the impact of the eco sphere is considered to be the most because of the nature of the operations the firms are engaged in. The volatile nature of the products is risky for the employees as well as the society. However, the primary concern of environmentalist is with the process of extracting the oil and gas and the process of refining them which is releasing huge amount of carbon dioxide in the air. The operations of the oil and gas industry are not performed with automated systems but they also engage automated systems for the drilling and exploration systems. Considering the benefits of managing operational activities with automated systems, firms have developed better performance level which can be observed by the growth in market demand. On the other hand this has increased the logistics activities of the business houses creating more pollution in the environment.

• • Green Initiative for Reducing Environmental Impacts:
• Reduction of energy usage
• Recycling
• Utilization of clean energy
• Reduction of wastage in process
• Change of warehouse design
• Introduction of energy-saved system

Green initiatives with supply chain management functions are common trends in the contemporary business scenario. However, the actual potential of the activities being performed to reduce the impact of warehouses on the environmental conditions are often criticized. Roome and Bergin (2010) stated that most of the firms try to engage the corporate social responsibility with their operational activities. For instance, the reduction of energy usage in the automated systems can be considered as successful green activity on the part of companies. However, the influence of the activity on the overall carbon footprint of the organizations is hardly measured. Another important aspect associated with the green initiatives being taken is the recycling. According to the reports of Aras and Crowther (2012), the recycling of warehouses in the year 2011 lead to reduction of 5.6% of carbon footnote from the atmosphere in the Euro Zone. The aspect of recycling has been within the environmental policies of warehouses for long however, it has been termed by Dow, Samson and Ford (2007) as another factor associated with the energy consumption of warehouses. In order to recycle the products, the amount of energy and water consumed is nullifying the overall impact of the process.

Changing the design and the overall setup of the warehouses is considered as a viable option for increasing the eco-friendliness of the warehouses. The changes in warehouse designs are mostly associated with the process of construction and internal architecture of the warehouses. For instance, the size of the warehouse, the ventilation systems, the drainage and waste disposal processes are included in the warehouse design process. On the other hand Aras and Crowther (2012) mentioned that restructuring of warehouses are often curved by the firms in order to maintain the level of security of the work process. The warehouse redesigning also helps the businesses to implement natural sources of energy in their work structures. Making proper accommodation for windows and ventilation systems are among the few efficient resources which can be initiated for reducing the energy consumption of the warehouses. The primary problem in developing and maintaining natural sources of energy is that in case of products that needs artificial environment. For instance food and pharmaceutical products needs to be maintained within a specific temperature level and thus requires efficient systems for maintaining the internal temperature of the warehouse. These factors are primary barriers for initiating the suggested green initiatives in automated warehouses.

In context of energy consumption, organizations such as M&S and Amazon have reflected extensive use of solar energy to perform their daily operations. The numbers of solar panels that can be observed around warehouses in the contemporary scenario are increasing (Brauchle and Evans, 2008). The utilization of clean energy has also allowed organizations to reduce their cost of operations with self-generated energy. Other green initiatives being implemented within operational processes of firms include the direct involvement of sustainable measures such as increasing use of wind turbines, reducing the wastage in the operational process and enhancing the resource utilization for optimal performance. Roome and Bergin (2010) noted that most of the organizations are trying to relate their warehouse activities in a sustainable manner by implementing environment friendly code of conducts such as the recycling and reuse of materials, monitored use of energy and so on.

In order to enhance the green initiatives within the warehouses and reduce the environmental impact of automated warehouses, Roome and Bergin (2010) suggested changes in the entire building process of warehouses. Most of the warehouses are designed in a completely closed manner for the security of the products and business processes. This reduces the inflow of natural light, heat and air into the warehouse allowing them to maintain the internal temperature as per their requirements. But designing a transparent roof or part will allow the warehouses to let natural daylight in and reduce their consumption of energy. Another green initiative being used in the building design structure is implementation of photovoltaic panels on the rooftops, which reduces the use of electricity by controlling the power supply of the entire building. A technology-based technique is that of installing motion detection based on lighting system, which will enhance the optimal utilization of electricity within the warehouse (Nichols, 2012). One of the most innovative techniques for reducing environmental impact of warehouses is being used by Marks and Spencer’s, where they have designed a system to monitor the resources being used by each team. The resources are measured in units and on reduction of the resource utilization each team is rewarded by the management. This is one of the most efficient conscious efforts made by an organization in order to reduce energy wastage and also includes the employees in the process (Nichols, 2012). Uses of Kinetic energy plates are also an efficient system of producing energy with the movement of vehicles within the warehouse premises.

• • Successful Carbon Neutral Warehouses:

Some of the renowned brands of the world have taken the concept of carbon neutral warehouse and are implementing steps to reduce their carbon footprint. One of the largest logistics service providers of the world, DHL group, has launched the GoGreen program under which the operational practices of the firm are being directed towards environmental sustainability (DPDHL, 2013). DHL is trying to reduce their energy usage and streamline their operations in a manner, which would reduce the impact of their business practices on the natural atmosphere. Another substantial example of green warehouse practices has been put forward by British apparel retailer Primark. The company has designed stores focused on green initiatives for reducing the carbon usage by 50% (Carbontrust, 2015). This is one of the largest steps taken towards carbon neutrality in the corporate world. Although the activities are not related to the warehouse of Primark, they are trying to monitor their operational activities and control the environmental effects. Marks & Spencer’s are known to be the current leaders in designing carbon neutral warehouses. They have aligned the process of warehouse management with their sustainability program to ensure the fulfillment of their responsibilities towards nature (Nichols, 2012).

British Wine Wholesaler and Importer Vintage Roots is another good example of a carbon neutral operating process. The product base of the company is mainly devoted towards production and selling of organic wines. The company has built its brand image on the basis of fair trade policies and extensive focus on their corporate social responsibilities (Vintageroots, 2015). They are using effective means such as Producer Responsibility Obligations in context of managing the packaging waste and Greenhouse Graphics for product level printing in order to reduce their carbon footprint level (Vintageroots, 2015). The company has successfully increased its recycling rates up to 84% in the year 2013 which is above the set national standards (Vintageroots, 2015).

• Conclusion

To sum up, this question is based on the impact of warehouse practices on the environmental sustainability. With the constant development and evolution of automated warehouse, both the organizations and designer of warehouse are striving to address those threats, which considerably damaged the environment and organizational reputation. These threats are currently becoming a common enemy for organizations, which are categorized into three major aspects, excessive floor area occupied, release of greenhouse gas and numerous of energy consumption. The negative impacts of these threats are broad and constant, thus there is a common view agreed between countries and organizations that constructing environmentally friendly building. Firms are trying to reduce their energy consumption by using solar power and also increasing the wastage utilization by recycling. From the point of warehouse, there are several green initiatives help organizations to reach the objective that environmentally friendly. Firstly, warehouse should reduce immoderately using energy and recycle materials, however, these two initiatives are sometimes incompatible as the recycling process might consume more energy than just disposal. Then, using clean energy to substitute traditional fuel and electricity and introduction of energy-saved system like photovoltaic panel to reduce energy consumption. From the designer’s perspectives, structure and materials of designing warehouse can also be changed to more environmentally friendly one. The use of Kinetic energy and firms are also performing changes in the warehouse architecture for better eco-friendliness. By integrating these initiatives into an automated warehouse, threats for this warehouse can be minimised effectively. DHL, M&S and Primark are excellent pioneers in constructing carbon neutral warehouses, and this is definitely the trend of the development of warehouse.

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