Who should “own” Smart Fulfillment in your organization? | 2022-05-06

Much has been written about artificial intelligence (AI) software and robotics in the warehouse from a technology and functionality perspective. Much less has been written about the broad question of who “owns” this type of “intelligent achievement” in an organization.

In the context of the artificial intelligence software and robotics it manages in the warehouse, everyone involved in the fulfillment operation – regardless of job title – claims ownership in one title or another. another. It is at three levels: senior management, operations and the workforce.

What are the characteristics of these three levels of ownership? And how do they fit into the larger picture of growing the e-commerce business and improving its performance and profitability?

The answer is complex and is based, among other things, on the rapid growth of e-commerce over the past three years. This growth is fueled, in large part, by the ongoing changes in consumer buying behavior caused by COVID-19. The ripple effects of the pandemic are a key driver of renewed interest in smart fulfillment platforms, which leverage AI software and robotic automation for the e-commerce fulfillment center.

Technology and digital commerce

Before the pandemic, e-commerce volumes were growing rapidly – ​​growing at a rate of 25%. COVID-19 doubled that figure to 50%. This number is an average; some retailers are experiencing much larger volume increases. Walmart, for example, has seen its e-commerce business skyrocket 170% in the past year.

Clearly, consumers are now making a significantly higher percentage of their purchases online, a trend the industry sees as a permanent shift in shopping behavior. Thus, the growth rate of more than 50% of electronic commerce should not weaken. According to Gartner Inc. State of digital commerce: outlook 202286% of companies surveyed – leaders in their respective industries with an e-commerce business – believe that digital commerce will be the primary route to market for their businesses over the next two years.

As part of this growth trend, consumers have become much more demanding in their expectations of customer service. Companies are scrambling to meet these demands and are doing so to good effect.

This is good news for e-commerce businesses. However, there is a catch. Fulfillment operations are experiencing significant labor shortages in warehouses, a fact that has been widely publicized. They stem from the effects of the pandemic, but also from the disenchantment of workers with the often grueling, monotonous, sometimes dangerous and often poorly paid nature of traditional warehouse work.

Labor statistics confirm this reality. According to the Bureau of Labor Statistics (BLS), in mid-2021, the warehouse and transportation industry had a record 490,000 job openings (BLS does not separate job openings for laborers warehouse versus truck drivers). The BLS expects that number to climb in 2022.

It is certain that all levels of the organization involved in execution – management, operations and warehouse labor – will feel the pressure not only to maintain performance and meet customer expectations, but also to deliver constantly improving results. This places extraordinary pressure on all levels of the organization, but particularly on the work of warehouse workers.

“A smart execution platform can ease the pressure at every level,” says Jim Brownell, partner at a warehouse automation company GreyOrange. “Using a platform that continuously prioritizes decisions and workflows to orchestrate tasks, people, and bots and optimize performance in a fulfillment center creates a modern fulfillment operation that uses better the resources you have.”

Current adoption rates in warehousing hover around 10%. Experts expect that number to skyrocket significantly as senior executives realize a hard truth: their company is losing customers in droves, demanding speed they can’t deliver.

Three levels of ownership

Three stakeholders have a stake in the smart warehouse management platform: senior management, operations management, and the distribution center workforce. Some of these roles overlap because serving the customer profitably requires a coordinated strategy that spans all three groups.

  • The senior management. This role strategically takes care of customers and “manages” their experience. He wears many titles, but a growing number of companies are opting for Chief Customer Officer (CCO). This person is supported by and works in conjunction with other senior executives, including the Chief Technology Officer (CTO) and Chief Supply Chain Officer (CSCO).

Pinning a CCO job description can be tricky. Duties and responsibilities may vary depending on the organization. Overall, the CCO oversees an organization’s entire relationship with its customers and strives to assess and improve experiences at every touchpoint throughout the customer journey.

Gartner describes the position as “a C-suite member who is focused on building, growing, and nurturing relationships with customers as they convert and become customers. The CCO is responsible for generating a comprehensive view of the customer, including their needs, expectations, and perceptions of their experiences with the company, and to communicate this information to other members of the C-suite. They lead the organization’s customer-centric initiatives and support employees at the forefront of providing an exceptional customer experience.”

The CCO, along with the CTO, CSCO, and other senior executives, are the stewards of technology for warehouse operations, retail store fulfillment, and other fulfillment sites. Their concerns include fair cost, speed to market, order accuracy, and customer service, all backed by real-time order information.

  • Operations management. “An intelligent fulfillment platform allows businesses to simultaneously consider order promises to customers across all channels, including which stores need restocking, as well as revenue, cost variables, and constraints such as labor, time, shipping windows and available inventory,” says Jim. Brownell. “These operating systems provide high-efficiency execution, including the ability to identify, quantify, and opportunistically act on the profits of real-time operations while minimizing negative trade-offs.”

Owners of fulfillment center operations include an array of titles, from CSCO to all facets of supply chain operations management. Within this group, a new job title began to emerge: the Chief Robotics Officer (CRO). “Industries dependent on the supply chain need a CRO to manage the mix of human and robotic workers,” said Dwight Klappich, vice president of Gartner, analyst in a recent report. He argues that this position should be elevated to the C-level executive ranks because of its strategic impact on the bottom line.

“As robots are increasingly used, the development of effective principles, processes and disciplines for managing automated workers [is] still in the very early stages,” says Klappich. The appointment of a CRO would accelerate this development.

The CRO position would combine engineering, IT and human capital management skills to develop the management structure to oversee all facets of the robotics lifecycle, Klappich says. This includes the changing role of robots as they take on more warehouse functions.

  • Distribution center workforce. The third owner of smart execution is, of course, the storekeeper. Warehouse work is not being replaced by robotics. Rather, robotics increases the job responsibilities of workers, taking over repetitive, low-level and sometimes dangerous tasks, while freeing up humans to perform higher-value activities.

This is especially important given the evolution of the warehouse workforce. Millennial workers now make up an increasingly large proportion of the warehouse workforce. For this generation, high on technology, paper-based processes and old, outdated warehouse management systems are not acceptable. Millennials are rapidly embracing mobile and wearable technologies and robotics. They see these technologies as an indication of a progressive company that values ​​its employees by providing them with the latest technologies that improve their work experience and daily performance.

The relationship between workers and robots is a symbiotic relationship ⎯ not a replacement relationship. To integrate robotics in the warehouse, the appropriate division of labor must be created. Repetitive, low-value, error-prone, or injury-prone tasks are best suited for robots.

Jim Brownell says, “Robots augment the human worker by performing repetitive, time-consuming, low-value tasks. In doing so, they free the worker for work of greater value. This improves worker job satisfaction while increasing productivity and ultimately profitability. »

Another benefit of a smart execution platform that takes advantage of robotic automation is its ability to scale e-commerce trades based on peaks and troughs in volume.

By equipping the workforce with innovative technologies such as intelligent software as well as robotic teammates, companies are signaling that they value fulfillment center employees and the tasks they perform. Thus, these technologies help warehouses recruit and retain skilled workers by making them a more attractive employer.

The essentials on the property

E-commerce businesses that take this three-tiered approach to integrating an intelligent fulfillment platform into their operations realize cost savings in several areas. In the warehouse, they come from better productivity for automated tasks, as well as higher worker satisfaction for employees working with software and robotics.

Other ROI benefits come from better plant space utilization, improved accuracy, increased throughput, and the ability to cope with surges. Taken together, these tangible and intangible benefits fuel greater profitability and customer satisfaction.

Achieving these benefits requires commitment from all three levels of ownership. Each level plays a vital role in ensuring the success of smart execution.

Aubrey L. Morgan