Saturday, June 23, 2012

Sweating the Physical Book Warehouse

In today’s world of constant digital bombardment I often forget the physical world and the need to constantly recalibrate its logistics capacity and resource, to react to the growing influence of digital content and new technology.

It was good to hear David Smith’s views on the state of physical logistics and fulfilment in today book supply chain. David is the Distribution Director at Macmillan (MDL) and someone I have long held in high regard.

As I expected the sector is under increased pressure on compliance, standards, service efficiency and international trade demands and volume and David duly explained these and the constant need to react to the ever raising bar. It was with great pride, as the architect that I saw some of those PubEasy screens that I had first visualised in what seems an age ago and a different lifetime!

However, the eye opener was with respect to warehousing and management of that warehouse itself. One would expect that space would be shrinking and heavy investment would be seriously capped whilst the digital market stabilised. Wrong. Not only are MDL expanding their square footage they are also considering significant robotic investment.

Is this wise I ask?

David explained the expansion footage at Swansea and their new High Bay units. MDL is not alone in investing in the automated high bay environment, where the books come to the picker and handling is minimised. But they are now considering radical robotic systems.

The KIVA system is such a system and works on a traditional aisle layout but with the pick face being transported via defined runs to the picker and then finding its new pick dynamically allocated location. Is this better than a high bay and does it provide the slot density and is it suited to books? I then find out that Amazon has recently bought not just the system but also the company that was founded in 2003 for just $775 million! So they obviously like it.

He then talked about the Auotstore system from Swisslock. This did away with the traditional aisles, pallet bays and layout and instead creates a cube of tote boxes each containing unique stock and again works on a dynamic pick slot basis. When the stock is required the cube opens up and releases the appropriate box, feeds it to the picker and then returns to an empty slot in the cube. Space optimisation is obviously maximised and the faces are constantly being replenished and picked and handling is again minimised.   Asda are going live on this system using 70,000 bins and 160 robots!

The big question with robotics is the obvious significant investment needed and the return it would generate and whether this can be justified within a publishing distribution business.  Automation isn’t just about single, cartoon picks or bulk movement it’s about all these demands in an environment that is also being impacted by constant changes in the market. The investment challenge for the physical book chain is the forecasting the impact that digital and the realignment of physical retail and distribution will cause.  What is certain is that further consolidation is needed and some will still say that there are too many players out there today and too many not able to make the investment needed. Further consolidation is almost demanded if the physical supply chain is to maximise its   economies of scale and scope to work deliver greater efficiency.

I always remember visiting a large publisher’s distribution facility only some 15 years ago. I watched  with amazement as it was just closing down on early Friday afternoon and wondering if they Ire seriously in the business of logistics or merely playing at it. It’s great that the likes of MDL clearly understand logistics and distribution and how to sweat the asset.

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