Why So Many Warehouse Automation Projects Fail
It’s a nightmare scenario: a company invests more than $150 million in warehouse automation, only to see the project fail.
Too many ambitious projects launched by forward-looking warehouses are experiencing this fate, leading to widespread layoffs in the autonomous mobile robots (AMR) industry, and putting the future of organizations at risk.
McKinsey & Company recently wrote about the consumer-goods company that blew over $150 million on a failed automation project. It had bought into the promise of improved efficiencies from consolidating several warehouses into one completely automated facility that would be used for satisfying orders both placed online and in conventional stores. But the ambitious claims of the logistics planners didn’t materialize, leading to inaccurate forecasts of inventory and shipments. Automation funded by the investment ended up being largely unused.
That didn’t have to happen. Creative strategies for warehouse automation aren’t necessarily destined for failure, as long as executives are willing to change how they think about such efforts.
Four core concepts, interconnected and of equal importance, must be front and center of any plan for transforming warehouse logistics:
Don’t rely on pilots. Automation projects take time to pay their dividends, and rarely are able to truly illustrate the benefits of a scaled solution. When a warehouse automates a small percentage of its operations in the name of “testing it out,” the impact will be negligible. To see results, a substantial chunk of work needs to be automated.
Align your organization. The executives at your organization all agree on a warehouse automation overhaul: So what? Just because a plan might have backing in the C-suite doesn’t mean it will work, unless you have support from lower-level leadership and warehouse operators. Appointing a change-management leader to manage the transition will make all the difference.
Empower middle management. Lower leadership requires awareness, alignment and the opportunity to provide feedback. These are the people who possess the awareness of roadblocks, and they can address them before they become a delay or a cost.
Find the right partner. Many robotics companies can deliver a clear value proposition, but the average customer lacks the lens to determine its viability. A lot of vendors lack extensive experience integrating their technology into real-world warehouse changes. Take time to see what’s out there, then seek the partner with the right product fit, or bring in a third-party consultant to help bridge the gap.
A typical warehouse automation project consists of many moving parts, and managers need to be proactive in seeing it through. It’s a collective effort, involving everyone from warehouse workers to top executives, and all need to visualize, learn and adapt to the changes.
Pilots by and large aren’t a wise strategy; too often a company thinks it’s a bright idea to spend time and resources automating and upgrading just one section of warehouse operations, only to see little buy-in from workers. This may lead to a custom workflow situation that leaves technology sitting idle. What’s more, warehouse operators aren’t motivated to do the extra work required to try out a new technology.
Such an outcome makes it harder to convince the C-suite to back future projects, causing the company to fall behind in its modernization quest. Unsatisfied clients also make it harder for robotics companies to turn a profit.
It’s not all doom and gloom — the promise of better operations is truly there with automation and warehouse logistics planning. Yet executives need to be more open in communicating with warehouse workers. Can they be certain that an employee close to retirement age will have any interest in learning about AI and automation? How can a company motivate its workers to ensure the success of changes?
This is one of the biggest obstacles to implementing automated warehouse improvements, and it’s why having a change-management leader in place to execute the strategy can be the difference between failure and long-term success.
That $150-million price tag incurred by the consumer goods company serves as a reminder of the seriousness of the issue. To navigate the challenge, companies need effective strategies. From point solutions to fully automated networks, the choices are vast. But with great ambition comes greater complexity, and that’s why executives and robotics companies need to plan carefully when working together to achieve their goals.
Ryan Chesterfield is the founder of Auto-FC.