How is omnichannel retailing impacting supply chain operations?
New survey from MIT looks to uncover how e-commerce is reshaping supply chains, challenges faced, and the technology being used to support omnichannel strategies.
Do you have five minutes to help shape the future of retail by sharing your insights and experience? The MIT Omnichannel Supply Chain Lab has officially opened its 2024 Omnichannel Survey, and researchers want to hear from you.
This year’s survey is investigating the impact of e-commerce on the different tiers of the supply chains, the most common challenges faced when defining and implementing an omnichannel strategy, and the role of artificial intelligence and tech-related innovations supporting it.
What did we learn in 2023?
Last year’s survey unveiled some game-changing trends in omnichannel retailing, particularly around the explosive growth of artificial intelligence (AI). Here are some highlights:
AI is taking over: 70% of retailers are now leveraging AI in their operations, with a 90% adopting it within just the last three years. It’s clear: AI is no longer a luxury; it’s a necessity.
Where's AI making waves? Retailers are using AI for everything from demand forecasting (65% adoption) to pricing optimization (48%) and inventory management (43%). These tools are revolutionizing how businesses operate.
Investing in the future: Looking ahead, 83% of retailers plan to ramp up their AI investments. This commitment signals a new era for retail, driven by technology and innovation.
Be part of the change
As the 2024 survey kicks off, your voice matters more than ever. By participating, you’ll contribute to vital research that will help define the future of omnichannel retailing and technology integration. Don’t miss out on this opportunity to make your mark. Click here to take the survey.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modeling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”
Interest in warehouse robotics remains high, driven by labor pressures and a general desire to further automate distribution processes. Likewise, the number of robot makers also continues to grow. By one count, more than 50 providers exhibited at the big MODEX show in Atlanta in March 2024.
In distribution environments, there is especially strong interest in autonomous mobile robots (AMRs) for collaborative order picking. In this application, the AMR meets pickers at the right inventory location, and the workers then place picks in totes on the robot, which then moves on to another location/picker or off to packing, greatly reducing human travel time.
While the use of robots in distribution is still early in its maturity, for many, if not most, companies, the future is one of heterogeneous robots—different types of bots from different vendors operating in a given facility. With the growth in robotics, these different robots will often need to communicate with each other—either directly or indirectly through use of an integration platform—to automate the flow of information and work. This is broadly termed “interoperability,” and it is an important concept for companies planning warehouse robotics initiatives, with the ultimate goal of achieving a “plug and play” environments where new robots can easily be added to the automation mix and processes adapted over time.
Interoperability example
Why is interoperability important?
Consider the following example. A company buys perhaps 20 AMRs to support collaborative picking. A few years later, additional AMRs are needed to support growth. But now there is another AMR from a different vendor that the company prefers for cost, design, change in stock keeping unit (SKU) attributes, or other factors.
Interoperability will allow a company to keep the AMRs they have and seamlessly add the new AMRs to the mix. Beyond basic integration, a company will want to manage the robots across both vendors in terms of visibility, task assignment, performance measurement, and more, operating as if it’s a single fleet.
That’s a good example of what interoperability is all about.
Are there interoperability standards?
There are some initiatives across the robotics sector to develop cross-vendor integration protocols that will make interoperability much easier. However, these standards, such as VDA5050 (a standardized interface for automated guided vehicles) and the Mass Robotics 2.0 AMR Interoperability Standard, are either not widely used or are still under development.
Many vendors have also started offering support for what is called a “robot operating system” (ROS/ROS2). However, this is a loose, open source framework (not a full standard) that doesn’t fully address the interoperability challenge.
The robotics platform alternative
In the absence of useful standards, companies still have a few options for achieving interoperability. One is the traditional approach of manually programming interfaces between different robots and interfaces between robots and software systems such as warehouse management (WMS) or warehouse execution systems (WES).
The downsides of this approach are well understood. They include extended developing times and the high cost to get the integrations done, as well as a significant lack of flexibility down the road, with some added risk thrown into the mix as well.
A better alternative is the use of a platform strategy. Which begs the question: What is a robotics platform?
A robotics software platform is a middleware ecosystem—cloud-based or on-premise—that provides various capabilities and services from integration to fulfillment planning and execution. It also acts as a bridge between automation systems and various enterprise software applications.
The starting point for any robotic platform success is, in fact, integration. That integration capability includes advanced tools that enable flexible “no code/low code” approaches to connecting robot fleets.
The right platform can also more rapidly integrate with WMS/WES or other software applications, using AI to greatly accelerate the often time-consuming data-mapping process. Once the WMS/WES is connected to the platform, then the robots are also connected to enable real-time, bidirectional access to the WMS/WES data.
Such a platform delivers interoperability across robot types and connects different automated processes. A simple example would be a communication from the platform to a robot needed to move goods from receiving to reserve storage, where another robot is made aware via the platform that there is a new putaway task ready for completion.
Other interoperability considerations
To maximize interoperability opportunities, companies should consider the following interoperability-related capabilities that may be available from a given robotics platform:
Flexibility in integration based on robot software functionality: Different robot vendors come with software at different levels of maturity. An interoperability platform should be able to work with robotic vendors at any level of software functional capability, ensuring flexibility in robot selection.
User experience consistency: For interoperability to be functionally effective, the user interface across robotic-enabled processes should be consistent, so that users can easily interact and switch between different tasks.
Flexible communication protocols: A platform should provide support for a wide range of different protocols, such as application programming interfaces (APIs), socket communication (a two-way communication link between a server and a client program), web services, ROS/ROS2.0, and VDA5050, to name just a few.
Observability: AMRs especially will generate huge of amount of data on their movements and activities that can be used for analytics. The robotics platform should normalize data packets from different vendors to create a unified dashboard.
Safety and risk mitigation: A robotics platform can help achieve safety across different types of robots by understanding the safety protocols of different machines and coming up with a common set of rules. These rules will exist in an extended fleet manager that runs in the platform and sits on top of the fleet managers of each individual brand of AMR.
While some of these capabilities may not be relevant in a company’s early years in warehouse robotics, they could prove valuable down the road, so give them some consideration today.
Interoperability use cases
We’ve already covered a couple of common robotic interoperability use cases:
Adding new robots of the same type but from a different vendor and having all of them operate together as a single fleet.
Connecting different types of robots or automation to support multi-step process flows (for example, receiving to putaway).
Here is another: One global consumer goods company wants to heavily automate distribution processes but give individual regions or countries they operate in the flexibility to select the vendor for a specific type of robot (for example, a layer picker) and be able to easily plug that specific equipment into the larger platform infrastructure. This allows a centralized automation strategy with local execution.
The Interoperability Imperative
For a significant and growing number of companies, the future on the distribution center floor will be robotics of multiple types and vendors. To maximize flow and productivity, these heterogeneous environments must adopt interoperability strategies, enabling systems of different types to operate as if a single fleet. While standards to help with all this may arrive in future, for now a robotics integration and execution platform will provide an attractive alternative to traditional programming-heavy approaches.
Pharmaceutical groups are breathing a sigh of relief today after federal regulators granted many of them more time to come into compliance with strict track and trace rules required by the Drug Supply Chain Security Act (DSCSA).
The regulation was initially scheduled to be required by 2023, but that has been delayed due to the steep logistics and IT challenges of managing the reams of data that must be generated, stored, and retrieved. The most recent target update was November 27, but industry experts say many businesses would probably have missed that date, too.
Facing that reality, the FDA yesterday again delayed that deadline until next year, setting new deadlines for various trading partners: Manufacturers and Repackagers have until May 27, 2025; Wholesale Distributors have until August 27, 2025; and Dispensers with 26 or more full-time employees have until November 27, 2025.
Pharmaceutical businesses quickly cheered the move. “HDA and our pharmaceutical distributor members applaud the FDA’s decision to grant an exemption for the DSCSA’s enhanced drug distribution security (EDDS) requirements for eligible trading partners,” said Chester “Chip” Davis, Jr., president and CEO of the Healthcare Distribution Alliance (HDA), which is an industry group representing primary pharmaceutical distributors, who connect the nation’s pharmaceutical manufacturers with pharmacies, hospitals, long-term care facilities, and clinics.
“While many in the supply chain have made significant progress throughout the stabilization period, some are still struggling to establish data connections. Given the interdependency of the pharmaceutical supply chain, FDA’s phased-in approach will allow supply chain partners to better align their data exchange processes to ultimately achieve full implementation and also acknowledges the progress made thus far,” Davis said.
“As we continue to make progress toward full DSCSA implementation, HDA and our distributor members will remain engaged with our public- and private-sector partners to share information and education, as we move toward our shared goal: helping patients and providers safely access the medicines they need.”
The North American robotics market saw a decline in both units ordered (down 7.9% to 15,705 units) and revenue (down 6.8% to $982.83 million) during the first half of 2024 compared to the same period in 2023, as North American manufacturers faced ongoing economic headwinds, according to a report from the Association for Advancing Automation (A3).
“Rising inflation and borrowing costs have dampened spending on robotics, with many companies opting to delay major investments,” said Jeff Burnstein, president, A3. “Despite these challenges, the push for operational efficiency and workforce augmentation continues to drive demand for robotics in industries such as food and consumer goods and life sciences, among others. As companies navigate labor shortages and increased production costs, the role of automation is becoming ever more critical in maintaining global competitiveness.”
The downward trend was led by weakness in automotive manufacturing, which traditionally leads the charge in buying robots. In the first half of 2024, automotive OEMs ordered 4,159 units (up 14.4%) but generated revenue of $259.96 million (down 12.0%). The Automotive Components sector was even worse, orders 3,574 units (down 38.8%) for $191.93 million in revenue (down 27.3%). Declines also happened in the Semiconductor & Electronics/Photonics sector and the Plastics & Rubber sector.
On the positive side, Food & Consumer Goods companies ordered 1,173 units (up 85.6%) for $62.84 million in revenue (up 56.2%). This growth reflects the increasing reliance on robotics for efficiency in food processing and packaging as companies seek to address labor shortages and rising costs, A3 said. And the Life Sciences industry ordered 1,007 units (up 47.9%) for revenue of $47.29 million (up 86.7%) as it continued its reliance on robotics for efficiency and precision.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”