Workers piloting a drone in a warehouse
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Logistics experts say increased automation of supply chains offers an opportunity to upskill workers to maintain human jobs.
Technology from Norwegian robotics company AutoStore allows warehouses to operate at speeds up to four times as fast as manual operated warehouses.
Because of his work, Insider named Karl Johan Lier, AutoStore CEO and cofounder, to our annual list of the 10 leaders transforming supply chain in Europe.
Visit Insider’s Transforming Business homepage for more stories.
If there have been any winners in the disruption of the year 2020, it’s been automation and digitalization.
“We are seeing a significant shift within retail and grocery specifically towards automated systems, both in store and across supply chains,” said James Smith, UK managing director of AutoStore, a Norwegian robotics company whose CEO, Karl Johan Lier, was featured in Insider’s Transforming Business series “This poses quite a challenge for businesses and existing workforces which operate in a more traditional fashion,” Smith said.
It is predicted that 22% of all retail business will be conducted online by 2023 and this rise in e-commerce across the world is creating a significant change in the way businesses engage with customers – models and tactics must evolve in line with this.
While the pandemic has certainly accelerated this transition to robotics and automation, some business leaders think this does not necessarily pose a huge threat to employees. “With the introduction of robotics, there is also a need for increased maintenance of the core elements of these systems.”
Smith added that he thinks there’s a huge opportunity for businesses to upskill the existing and future workforce to protect jobs, provide more rewarding career paths and support business growth.
“Whether we like it or not, demand for businesses to be able to operate on multiple channels and platforms is increasing dramatically, and traditional ways of working and fulfilling demand can no longer keep up with this growth,” he said, adding that upskilling is central to this. “You can either follow the inevitable growth and evolution of technology or you risk becoming redundant as a business and as a professional.”
Within the AutoStore network, the likes of Puma are thriving as a result of automation. Automation has allowed the business to move from separate wholesale, retail and e-commerce facilities to a consolidated multiple distribution center which fulfilled demand across all three of these
Fronts. According to Smith, Puma has seen a three-times productivity gain as a result of automation and is now able to ship 97% of orders within 24 hours. This is in line with a 50% increase in e-commerce orders and 50% year-on-year growth since adopting automation in 2015, before extending its automated operation in 2017.
“At AutoStore we have seen first-hand those who are implementing this technology successfully and also reskilling workforces in line with this,” Smith said. “Puma is a prime example of a business which has managed to do this on a global scale and transform the way they do business, taking their employees with them in doing this as well.”
Education and training by definition are always behind technology adoption, said Terence Tse, professor of Entrepreneurship at ESCP Business School. “This is particularly the case when it is difficult to understand how automation works. While it is much easier to see how robots can replace human beings in the production/manufacturing settings, it is much harder to do so in the back office.”
For technologies to be used in a business, two types of workers are needed, said Professor Tse, technical and business. “Those who are in technical including engineers and developers are usually a great deal more interested in dealing with the IT stack. This means that for any companies to succeed with deploying technologies, they will have to bring up the technology skills of the people on the business side, who are the ones designing the processes and workflows as well as the business models to make the engaged technologies work.”
“There’s an understandable anxiety that jobs will just disappear,” said Catalina Stefanescu-Cuntze, professor of management science at ESMT Berlin. “While previous manufacturing roles may indeed become obsolete as new technology becomes available and processes are automated, new roles will also be created.” But, she adds, “Technology does not exist and operate in a vacuum. Human agents are necessary to operate and supervise the machines, particularly when manufacturing processes themselves become more complex. Upskilling the workforce for the transition to automated manufacturing is an imperative that many companies will invest in.”
Change, particularly in the nature of jobs, can be challenging to manage. Professor Stefanescu-Cuntze said, “I expect we shall witness an increasing awareness among corporate leaders of the need for a successful upskilling strategy, including an assessment of skills definition, effective corporate communication and alignment around the strategy, as well as investment in customised programs tailored to their workforce needs for transitioning to automation.”
This goes hand in hand with increasing recognition by industry leaders that workers upskilling for deploying the technology is just as important to a company as the technology development in the first place. “From this perspective, upskilling is not a one-stage process but a continuous development journey. As technology continues to develop and adapt, lifelong learning will become the norm,” Stefanescu-Cuntze said.
According to the International Federation of Robots (IFR), around 21,700 industrial robots are operating in UK factories, which is less than a tenth of the amount in operation in Germany (221,500). The annual number of new installations stands at a similarly low level: 2000 units in the UK, compared with 20,500 in Germany, 11,100 in Italy, and 6,700 in France.
“One of the key challenges that we face in delivering automation into manufacturing processes is that of skills and training,” said Tom Bouchier, managing director at FANUC UK. “First and foremost, we have to ensure that the workforce of tomorrow is in a position to take advantage of the automation capabilities that exist. Key to this is a production line of high-quality apprentices.”
Encouraging a greater focus on automation from graduate engineers, Bouchier said, will enable them to enter industry with the correct mindset to take advantage of developing technology. “It will help to ensure a blend of skills, from hands-on, practical expertise, through to a more theoretical approach. FANUC’s involvement in the pioneering Cranfield post-grad course in robotics and automation is an example of how OEMs can contribute to this.”
Bouchier agrees that there can be a fear factor among many working in manufacturing when it comes to automation and robotics, however this is something that can be addressed through training. He adds, “A less tangible benefit of upskilling the workforce, but one that is equally critical to the successful implementation of automation, is the seed change in perceptions it will ultimately instigate. Ensuring that employees understand the benefits of automation will help to generate buy-in, and facilitate wider adoption by getting everyone pulling in the same direction.”
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