Logistics, Warehousing and the Factory of the Future
Brick and mortar stores are in a steep decline. Every day we hear about another chain closing down dozens of retail outlets and at the same time malls are being shut down or repurposed. Shopping patterns are changing rapidly. We no longer go out to shop. We check out products, compare prices and do a one click purchase from our cell phones. And after we click we have an expectation that the item will be delivered to us in a day or two. It is not uncommon to get an email or text saying our item has been shipped less than an hour after we place the order.
For decades, the mantra of “just in time” manufacturing has been preached. Costs were to be reduced by reducing inventories. But the demand for instant deliveries is changing this. There is nothing more disappointing when you place an order on line than to discover that your item is backordered or that is being shipped from China and you won’t see it for two weeks. The result has been the need for more warehouses and larger warehouses.
The distribution centers where manufacturers and retailers store, package and ship out products are increasing in size around the world. The biggest storage facilities have doubled in size during the last ten years. 500,000 square feet used to be considered large. Today, one million square feet warehouses are commonplace in the U.S. Europe and China. In the U.S., a push toward same-day and next-day delivery offerings is driving some large distribution centers to be opened closer to large population centers or near airports or delivery facilities.
But as rapidly as mass storage is growing, there should be a time in the future when we see it flatten out and decline. Trends in the factory of the future will make this possible. The factory of the future is touted as having functionality that includes the Internet of Things, high levels of automation, robotics and artificial intelligence. These capabilities will allow the supply demand curves to be monitored more closely and manufacturing to be done effectively so that inventory at the distribution points will be reduced. Once companies embrace the Internet of Things they will be easily able to accomplish tasks like replenishment and pick, pack and delivery being automated and completed without any human intervention. By effectively using artificial intelligence and big data they will able to predict when, where and what they need to manufacture. Inventories and waste will be reduced.
Additive manufacturing, fueled by new capabilities in 3D printing technology, will ultimately match the cost of mass production and allow cost effective short runs of specialized products to be produced. In the same way that the offset press was replaced by digital printing, machining and injection molding will be replaced with printed parts. The next-day delivery expected by the masses will be created by the factory of the future rather than inventory at the local store, or in a warehouse near an airport poised to drop ship your item in the middle of the night. Ultimately technology will catch up with human impatience.