Transformation of warehouses along with the trend
Many warehouses depend on human resources for most of their processes. The fact that they are so dependent on human resources makes them vulnerable to larger risks as these people are often exposed to extreme fatigue and workplace accidents. The risks that these warehouses face include hikes in labor costs, mass infection (considering how many people work together), and the exponential growth in online shopping.
Meanwhile, robotics, AI, and smart mobility technologies are becoming ever more sophisticated and the costs needed for implementation are becoming lower. Despite concerns over logistics jobs being lost due to technology, considering the latest trends, it is only natural for the transformation of warehouses to pick up more steam. The growth in the demand for e-Commerce services brought forward the transformation of warehouses and implementation of fulfillment systems, which are becoming the mainstream of supplier logistics. The concept of fulfillment systems was first launched by Amazon in 2006, when it became practically impossible to deal with the increasing demand for delivery using the old way of simply piling stuff up in warehouses.
When Amazon first adopted the system back in 1999, it drew little interest and was not considered as innovative. However, in an era where e-Commerce is at the core of logistics, fulfillment systems drove innovation and completely changed the existing paradigm. Warehouses, together with fulfillment systems, now go beyond their original purpose of storing different types of items to function as a logistics hub, sorting small quantity batch-produced items via various cutting-edge technologies and shipping them out to end customers.
Warehouses, becoming sophisticated with Smart Logistics
Warehouses are becoming increasingly sophisticated on the back of Smart Logistics. In particular, warehouses now stand at the center of Logistics 4.0 with the integration of various technologies that make up the Fourth Industrial Revolution. What we call Smart Logistics is formed by a combination of intangible technologies like AI, IoT, AR, VR, and Big Data and smart mobility such as self-driving trucks and autonomous robots.
Robots and mobility come together to realize logistics automation; and AR and VR technologies help collect and analyze logistics trends. In addition, Big Data and AI analyze information related to logistics volume and help prepare for forecasted demand. All of this is what enabled smart warehouses to achieve over 70% more efficiency and optimization of space and an 80% reduction in labor force compared to the past.
However, not all warehouses are actively rolling out Smart Logistics infrastructure, because doing so comes with tremendous costs. Depending on the volume, some warehouses are better off using human labor in terms of both profitability and efficiency. These warehouses rely on manpower, but at the same time, they have the workers use smart devices such as wearable suits to prevent musculoskeletal injury and to enhance work efficiency.
A new aspect beyond being smart
Right now, it is ecommerce that is driving the growth of Smart Logistics, but there is something else that actively adopted the concept before e-Commerce, and that is the manufacturing industry. This is because it was difficult for human workers to store, move, load and unload the items as most of them were heavy and large in size, considering the nature of the industry. However, the manufacturing industry was unable to take warehouses to the next level because explosive growth in demand and convergence of state-of-the-art technologies were mostly concentrated in wholesale and retail distribution, such as online shopping. Then, along with the spread of various ICT technologies and the trend we call Logistics 4.0; the manufacturing industry began to become "smart," albeit relatively late, by introducing unmanned technologies and real-time information consolidation.
In other parts of the world, warehouses of the manufacturing industry go beyond merely becoming smart and are now being combined with logistics to take new shapes and forms. Now, I cannot help but present Amazon as an example again. Amazon is transforming into a platform on which online and offline distribution, logistics, and manufacturing are all integrated. The company currently has over 200 smart warehouses across the United States, after its aggressive initiative to introduce more and more warehouses with fulfillment systems. With these warehouses that are served by 40 cargo planes and around 6,000 trucks, Amazon delivers its private brand products to consumers all around the world. Korea's Coupang and China's Alibaba are quickly gaining more dominance in the market, with their aim to replicate Amazon's success with similar models.
Utilization of idle space
As warehouses are combined with Smart Logistics, space can now be utilized more efficiently, which means that idle space can now be secured even with the same volume. Smart Farms, a combination of agriculture and ICT technologies is a prime example of the various attempts that are being made to utilize idle spaces.
As an increasing number of countries around the world are suffering from severe food shortages caused by global warming led extreme weather and abnormal climate, the USA, the EU, and China have put much focus on introducing Smart Farms. Enabling the stable growth of crops throughout the year, regardless of climate and weather, Smart Farms will help them enhance their agricultural competitiveness and secure stable food supply. Here, warehouses contributed to the advancement of such Smart Farms. This was because it was easier to use warehouses to grow and sell crops on the market as they are part of the logistics supply chain.
Even Korea, despite its relatively small size, needed to find a way to productively utilize the idle spaces of warehouses that were acquired as a result of adopting Smart Logistics. Kyowon Group found a great way to use the space, and rolled out what is called an "indoor vegetable cultivator." Smart Farms are now not only being integrated with warehouses, but also with urban idle spaces.
The so-called urban Smart Farms, such as buildings, abandoned plants, subway stations, and tunnels, are being introduced in many corners of our cities in line with the advancement of ICT technologies and agricultural competitiveness. The future of smart farms is quite rosy as they can be used to grow eco-friendly crops without having to be concerned about fine dust and soil pollution and also because the yield is pretty high.
As can be seen, not only have warehouses been transformed, but they also evolved into something else through integration and convergence. Warehouses are clearly set to metamorphose into something beyond our expectations down the road. With space, demand, and technologies, anything is possible.