What lies in store for the warehouse of the future and its impact on the supply chain?

Human hand holding the worldCisco believes that the future of warehousing will be steered towards automating and integrating the supply chain. However this does not necessarily include the automated handling of materials.

According to Jack Allen, the Senior Director of Logistics Manufacturing Solutions at Cisco, he says that in Cisco’s opinion, far too much emphasis is being put on mechanical technology in warehouses. Instead Cisco is of the opinion that the future lies not so much in mechanical automation, but in software.

Cisco’s focus is on the Internet of Everything

Given that Cisco supplies hardware, software and systems that link to the Internet, it is hardly therefore surprising that their focus is on the Internet of everything (IoE). The IoE encompasses a scenario whereby appliances and equipment, gadgets and machines, and the things that we use in our daily business lives will all be linked to the Internet. However, the IoE is not just about connecting things to different things; it’s also about connecting data, people, and processes in a manner can provide tangible, usable benefits.

Of course this philosophy has implications on the supply chain. For example, if the various aspects of warehousing including things like conveyors, forklift trucks, packages, and people are all in communication with each other, that then opens up a whole new world of opportunity to re-prioritize the way things get done.

Re-modelling the supply chain process

With this model firmly in mind Cisco is involved in re-modelling all of its own supply chain processes to become IoE compliant. They refer to it as the future of their connecting supply chain and logistics.

But when Mr Alan and his associates talk about the advanced automated warehouse, they are not specifically focusing on the automation of materials handling. They are actually considering ways of automating the decision making processes and the other routine day-to-day processes that are currently undertaken by humans.

Of course it’s not just about software. Futuristic warehouses will also have to incorporate sensors and other data collecting technologies, plus analytics that all key into smart interconnected machines that are able to communicate between themselves, and provide more information about every aspect involved in the supply chain.

The self aware supply chain

It’s only when you consider all of these things together that you realize we are talking about a supply chain that has the ability to automatically take action throughout the supply chain itself, which of course includes within the walls of the warehouse, in order to respond to events, wherever and whenever they happen.

Everything in the integrated supply chain of the future is what Cisco refer to as the “value at the seam.” This phrase refers to being able to access information between various areas such as manufacturing and distribution, logistics, the clients and individual silos.

The tsunami effect

Mr Allen explains this process by likening it to a Japanese tsunami, saying that when a tsunami hits you have a whole horde of people poring through hundreds of spreadsheets to establish that the components needed for building certain subassemblies that were critically needed, were in actual fact only being sourced from two suppliers, both of which were within the affected tsunami zone. It’s then all hands to the pumps in order to scrabble around to try and find an alternative source or sources.

How the fully integrated supply chin would cope

In a fully integrated supply chain the system would access data from many external sources including things like Twitter in order to conclude that the tsunami was going to be totally disrupted. The system would then be able to automatically place new purchase orders on sources outside of the affected tsunami area, or release stock that is housed in warehouses at various points around the globe. Shipments in transit may need to be sped-up; shipments that are not yet in transit may need to be held in abeyance while purchase orders for alternative sources of supply will need to be expedited perhaps by sending them air freight. The point about all this is that it will happen automatically. Human input will not be required unless the system meets exceptions it cannot address.

The movement of data

To deal with this sort of complexity it will be necessary to have sensing technology to establish where inventory, vehicles and orders are to be found, plus we will need the wherewithal to accelerate or decelerate any order fulfilment processes. The vast majority of this information is not about mechanical movement. This demonstrates why Cisco believes that the future will focus as much on the movement of data as it will the physical movement of product.

Existing products – innovative solutions

This is not necessarily a new revelation. The supply chain industry has been contemplating global visibility for collaboration and managing events for some time now. In actual fact many of the products are of Cisco’s manufacture, including RFID, sensors, data collection, and supply chain software and they are already available and on the shelf. It’s more about the way that these tools can be integrated to create innovative new processes. Mr Allen likened this process to Apple and their original iPhone, saying that the touch-screens and the new user interfaces that they use were not new inventions; they were already in existence. The key was how Apple managed to assemble it altogether. Cisco are looking to do a similar thing, but in the supply chain.

The new 3 layer supply chain technology

In order to bring this about a new layer technology model for the supply chain will be needed. The first layer is one that comprises of sensing devices that will gather both structured and unstructured data from the entire supply chain. The structured information will include data provided by purchase orders, receipts of shipments, or picking orders raised by warehouse management systems.

The unstructured data will include things like news reports, weather events, and social media; events that could have an outcome and that could be seen to possibly disrupt supply chain operations. In practice this data could include anything from a tsunami to a particular supplier going bankrupt.

The second layer is one which analyses the information and then makes decisions on what to do next based on existing rules and protocols that are built into the software. By doing this it is only the exceptions that are not covered by the rules and protocols that will need human attention.

The third layer houses the execution programs such as transportation and warehousing; programs that action plans and direct orders to where it is they are needed. These decisions and protocols would be supplied by intelligence on a machine to machine basis.

The brave new supply chain world and the humble pallet

In this brave new world of the futuristic supply chain, Cisco is even considering the humble pallet as a device that can collect, store, and communicate to other machines on its movements. Each pallet would have to be outfitted with a particular sensing device that can be loaded with the information about the product it is carrying. This would then be automatically amended and accessed as the pallet moves through the various stages of its journey through the supply chain, from manufacturing to transportation and warehouse. Similar devices could be attached to other assets such as the forklift trucks or heavy goods vehicles on the road. This would also allow them to be tracked and the supply chain updated with the latest movements. According to Mr Alan, Cisco is trying to establish whether this type of technology could be incorporated within some sort of bar-code.

However in the global scheme of things we are not just talking about the location of the pallet truck;we are talking about the interaction of all of these technologies to enable warehouses and logistics to communicate in innovative ways.

The Lufthansa advanced automated distribution centre in Germany

The truth of the matter is that some of this technology is already in place. In Germany, Lufthansa Technik Logistic Services (LTSL) already has an advanced automated distribution centre in place which can speed up the delivery of spare parts and components that are necessary in order to repair aircraft that have been grounded. The distribution centre stores over 30,000 parts and components, and courtesy of automated storage and retrieval systems, can deliver them to an appropriate packing station. It is being said that the components can be picked and packed ready to ship within just 15 minutes of receipt.

This advanced system relies on a unique set of software solutions including enterprise resource planning, logistics planning, and a window through which clients and logistics providers can communicate. Previously, when clients placed an urgent order it involved teams of people to establish by phone whether or not the part was in stock, find out when the next flight will be available to take the part to the airport where the repair would be effected, and confirm the availability of couriers to collect and deliver the part at the right time. This process could take as long as 48 hours from the time of the original phone order to the part arriving with the repair technician.

Today however all of these stages have been automated. Once a customer order has been logged, the supply chain system then takes over to check if the parts are in stock. It then examines all the possible transport alternatives to find the right solution to get the part to its destination as soon as possible. Once the order is confirmed the system then creates a transport order using the most economical option to meet the client’s needs; schedules it and sends it through to the warehouse which then organises the picking. All through the order process the supply chain system communicates with the clients keeping them up to date with the current status of the order and monitoring for any potential disruptions.

The end result is that LTSL can get parts to any airport in mainland Europe within 12 hours of an order being received.

The Cisco blueprint for the warehouse of the future

The Cisco blueprint for the warehouse of the future uses similar automatic data collecting technology. Using the cloud it can change the way that it manufactures and delivers set-top boxes to its cable customers. Every individual box is allocated a unique key which allows the client’s to unlock the box after it’s been installed at the consumer’s residents. Without the key, the box is merely a chest that can’t be unlocked.

Previously, set top box information had to be manually collected and collated which was a time-consuming process. Now however it’s all done automatically and the unique information is stored in the cloud. When Cisco pick and distribute an order for a specific client, the license plate is automatically processed onto the pallet and this provides a link to the information in the cloud. If the pallet contains multiple set-top boxes, the critical information that each box is coded into pellets barcode.

When the set top box arrives with the client all they have to do is to scan the barcode and all of the information that is required is downloaded from the portion of the supply chain in the cloud, and goes directly into their billing system.

Bar-coding itself is of course old hat, but what is new is the way that the information is being used and what it can achieve.

New innovative solutions

In tomorrow’s warehouse in tomorrow’s supply chain Cisco predicts that data taken from pallets will be used in other new and innovative ways. For example a warehouse might be given information by a carrier regarding the pallet it is transporting for urgent order. The warehouse then collects all other items needed to complete the order and puts them in locations that are equipped with lights and IP address.

When the urgent pallet is received and scanned, a forklift is dispatched to go and collect the pallets. The driver then picks up the other order items using the IP address provided. As this is all going on, the client will be automatically updated and kept up to speed with the progress of his order. What bar-coding will be able to do, puts things into a totally new light.

Cisco is of the opinion that the supply chain is at another major turning point in terms of the wealth of information and productivity that can be disseminated to warehouses. In the new connected world, intelligent automation will be everything.


What other applications do you see the fully integrated supply chain being able to handle, and how can this best be brought about?

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