Tech solutions enabling better use of small, urban spaces

Automation and robotics are already in use in the logistics industry and rapid technological advancements and improving affordability are driving occupiers to adopt robotics solutions for more tasks and across more aspects of the supply chain. Automation has been an important enabler of improvements in scalability, agility, and visibility for logistics operations in urban areas.

Technological improvements are enabling the rise of small, highly automated fulfilment centres in urban areas. Low-cost, scalable automation solutions allow faster response times, quicker turnarounds, and by locating close to consumers, retailers can offer rapid delivery options. Micro-fulfilment technology is set to accelerate as it can be easily replicated and deployed across a network of locations.

The growth in adoption is expected to be fastest in small warehouse facilities and amongst SMEs. At present, restricted budgets and floor space limit the ability of operators to fully automate operations. However, technological advancements and competition is driving down costs, thus improving the flexibility and modularity of automation solutions. This will enable operators of smaller facilities and SMEs to adopt automation solutions and services in greater number in the near future.

What is driving the need for smarter warehouses?

Shortage of space: Strong growth in e-commerce is driving demand for warehouse space.

Supply of new space, particularly in urban areas is limited and therefore, getting the maximum use of the cubic area will be essential. Smarter inventory management and the use of automation and robotics could offer ways to improve capacity utilisation rates in warehouses.

Utilising existing retail footprint: Automation in small, urban warehouses known as micro-fulfilment centres (MFCs) is enabling retailers to expand their click & collect offering, utilising part of their existing retail footprint and supply chains, and converting or extending their stores to accommodate MFCs to cater for increased online orders.

Availability of labour: Automation can help unlock urban locations where limited and costly labour pools exist. Issues of labour cost and availability are generally more acute in urban areas. As the UK economy recovers and expands, urban locations are forecast to see the strongest growth in GDP and job creation. Over the next five years (2021 – 2026), employment in the UK is forecast to rise by 6.6%, while in London it is forecast to grow by 8.6% (Source: Oxford Economics). Cities such as Manchester and Bristol are also forecast to see strong growth. Companies must look at ways to enhance their operational efficiencies through the adoption of mechanisation and automation and thus reduce their workforce requirements. 

Building resilience: Covid-19 has heightened the interest of organisations in the use of automation technology, as a tool to improve operational resilience and the means to rapidly flex-up capacity in a cost-effective manner, while also reducing their reliance on human labour. Retailers are turning to automation to improve productivity and to smooth out peaks.

What are the typical components of a smart warehouse?

Warehouse Management Systems (WMS): A WMS solution gathers valuable, real-time data, helping operators manage warehousing processes, monitor efficiency levels, and detect deficiencies. Warehouse Management Systems can be used to plan order processing and calculate requirements in terms of labour, vehicles, and picking sequences. This will reduce the need for dock staging space, by having orders arrive at the shipping dock in trailer load sequence and enable faster more efficient throughput. It can also be used to assign tasks to staff members.

A WMS can utilise IoT (Internet of Things) technology to connect to a variety of communication technologies and automatic identification technologies such as sensors and RFID (Radio Frequency Identification) tags. Sensors can be utilised to help track goods at all stages throughout the supply-chain and to ensure correct storage conditions are used, both in the warehouse and inside trucks. Inventory data can be collected using RFID tags or sensors, stored on a cloud-based platform, then processed and analysed. IoT technology is also utilised by Amazon, DHL, and Alibaba to improve and streamline their inventory management.

Automated parcel handling equipment: Automated parcel sorters can significantly improve parcel processing times. Parcel carriers are facing increasing demand for parcel handling due to the rise in e-commerce and technological developments are enabling accurate checking of parcel dimensions and weight, automated label application and scanning for verification and routing. These systems will utilise conveyors along with IoT technology and may incorporate robotics.

Automated Guided Vehicles (AGVs) / Autonomous Mobile Robots (AMRs): AGVs may include automated forklift trucks for loading and unloading, robotic palletizing solutions, or the transportation of inventory. These vehicles typically follow magnetic strips, or a track laid in the warehouse. AMRs are mobile robots that create their own routes based on information from sensors such as cameras or lasers and will reroute when necessary to avoid obstacles on the warehouse floor, such as other AMRs. They offer flexibility, speed and performance allowing for efficient goods-to-person automation.

They can manoeuvre in small spaces enabling better use of space and operate in extreme temperatures that would be difficult for humans. They can increase safety, with IoT warehouse devices enabling operators to track and monitor the vehicles in real-time and use sensors to avoid collisions. Amazon employs over 100,000 robot workers in a smart warehouse using IoT.

Importantly, they offer scalability and modularity, which is critical for firms who may not be able to make the large-scale capital investment required for fully automated solutions. Firms can purchase one or two at a time and slowly increase the automation within their facilities.

Automated Storage and Retrieval Systems (ASRS): These are automated systems that can retrieve or store items in specific locations. The system relies upon predefined storage locations where machines can follow established routes to locate items. They are used to process large volumes of throughput when speed and accuracy are important. Ocado’s “hive-grid-machine” is one such example, they may also operate as cranes, retrieving or storing goods vertically in high-bay facilities.

What do these “smart” components mean for urban logistics facilities, building design and occupier requirements?

In urban areas, the scarcity of sites or developable land means that occupiers need to look to older buildings, that will typically not have the eaves height, or other optimal characteristics suited to last-mile fulfilment or have the potential to accommodate automation processes and technology.

The risk of obsolescence for older buildings will increase, though strong land value growth, and demand for logistics space is likely to support robust rental growth in urban locations over the next five years.

Power: Increasing automation and technology within a facility leads to greater power consumption. While automation can improve cost-efficiencies, energy efficiencies are also an important consideration. Securing sufficient electricity from the grid can be a challenge, particularly within urban areas, given the pressures on the local network from competing uses such as new residential developments.

Building height: As competition for land drives up pricing in urban areas, the use of vertical space will become more important. Advances in automation are enabling better use of vertical space. Urban logistics facilities tend to have a much lower eaves height compared with the big box market, but as cubic volume becomes increasingly important over floor area, there is likely to be a divergence in rental value growth (based on sq ft. area). While forklifts are limited to a maximum operational height of 18 metres, automated systems can be embedded into multi-level mezzanines. This is driving increased demand for taller buildings.

There are often less restrictions on building height in urban centres (compared with suburban or rural areas), and this may propel the adoption and development of taller urban logistics facilities, particularly where falling automation costs mean better cost-efficiencies for operators.

Floor specification: As advances in technology and automation enable operators to make better use of vertical space, and mezzanine floors are installed, the floor loading requirements will increase. Heavy, large-scale automation equipment such as ASRSs will have major considerations for floor loading requirements. While the use of AMRs and AGVs will have implications for the floor finish and serviceability.

Design & build: Operators that utilise highly automated systems tend to opt for design and build solutions, or seek to modify and optimise an existing building or speculative build.

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