Automated Warehouse Functioning - Coursework Example

Table of Contents

Introduction2

Warehouse automation technology2

Risk assessment of warehouse automation:4

Contingency planning6

Conclusion:9

Reference List9

• • 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.

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