I interviewed Ding Lim Yeang who discussed Disruption Technology in Supply Chain and Warehousing.
It's good to speak with you today, Ding. I'm looking forward to hearing your views today on disruption technology in supply chain and warehousing. My first question is what disruptions are taking place with technology in supply chain and warehousing?
I think we look at it from various perspectives in logistics and warehousing today. A lot of people are focusing on automation. In fact, that's most common topics that people are exploring now.Talking about automation that take place in this industry, what that actually means for automation should be split into two parts. The first part, I call it the robotics and automation. But another part that is more crucial and often been neglected is called artificial intelligence. It's quite confusing, but these two terms actually work together.
From my own perspective, automation and artificial intelligence is two very different items that work together. The first part is automation. Automation means that some of the routine works that your laborers are doing, you actually try to automate it to save the labor costs. But on artificial intelligence, this is not only replacing the labor, it's the algorithms that you build based on your understanding of the operation strategy that you're going to implement in the warehouse. Sothe program build, is to support the operation managers or the warehouse manager to make quick decisions when they're running the operations.
When you implement automation and robotics system, you are reducing your labors.But as you implement artificial intelligence, you make the impact even higher in terms of your saving and your productivity, it can be in exponential. So this is the difference between automation and artificial intelligence. And these are the first things that I would say are the first things that take place in the disruption technology that currently is impacting a lot in the logistic and warehousing.
The second part is the big data. Big data -- all of us know that big data today is already in the industry. In fact, since more than twenty years ago, people have started collecting data. But a lot of times, people sit on the data and do nothing with it. Personally, I believe that this is something that we should explore and investigate and use it properly, especially when you are exploring artificial intelligence. If you are collecting the data, you should build the artificial intelligence and leverage on the big data that you have. Then your decisions will be pretty much been made quick, accurate and respond to the markets in a very sensitive way.
In the past we build system or sub-system in an isolated way that have limited communication between each other. Now with the development of information technology and Internet of Things that has took place. The linkage between each system and sub-system is much more complete. Because when you have Internet of Things, then you actually link everything to the cloud system. So now everything is under one single roof. We have less risk and more resilience against the fast pace of development in information technology. In fact, most of the technologies are linked to each other, and they are starting to taking over the conventional way of warehouse and logistic operation. So this is what my personal opinion the disruption technology in logistics and warehousing.
What's the significance of these changes?
When you mean significance, means the impact of it to the market. Right?
The impact depends on which regions or which markets we're looking at. For example, places like Singapore and Japan, the impact of automation, robotics and artificial intelligence is quite significant, mainly due to the aging populations in the markets. Furthermore, the youth generation tends to be choosy in jobs selection as well. To be fair, the education level of the social is higher than the past. And frankly it is not easy to get labors in the market now, sometimes even you offer a higher salary.
In the past, Industry always try to replace humans with automation. But often when you're replacing the human with robots, it may not be practical from financial evaluation.You will find that the cost impact of investing in the capital expenditure of the automations, may not make sense from IRR or NPV. Thatwhy youyou have to explore in artificial intelligence to magnify the productivity, then you actually will be able to make every single centsof your investment more valuable because the development of software algorithms is much cheaper than the hardware. So the impact that it can bring will bemore severe.
If you take a tour to the warehouses today, you will find that most of the operation team start to reduce the laborers in their operations and moving the operation to become human independent. In the old days, for example, even in Eastern Malaysia today, you can easily find that the warehouse operations is very human dependent where the warehouse operation have a single guy that has to remember where he puts all the SKUs, where he located the products. And he is the only one that can take the goods out from the warehouse.
I remember there is once I asked the owners, "If this guy comes and asks you, I want a 50% percent increment of salary or I will leave, will you want to keep him?" In this c,ase you have no choice because he is indispensable to the warehouse operation.You should have all operation manage by a system rather than an individual, hence the operationof the warehouse doesn't depend on a single person. This is an impact of the revolution of Logistics & Warehousing 4.0. A lot of the warehouse now is starting to make the changes. There are no needsfor all the way to become a fully automated warehouse, but we should embrace the revolution to take place.I believe a lot of semi-automated and the combinations of certain kind of the artificial intelligence will help the people to make a lot of decisions faster, response to critical issues in a better manner. The combination will also give a lot more sense in doia ng thing in a more productive way. It can bring a better impact in terms of economic evaluation as well.
How should we face these disruptions? Is there any more you can say about how to face these challenges?
I think the first of all we need to embrace the revolution that it is happening in the market. There is no way we can avoid it,if we are against it, we will be eliminated in the process. But we need to be very careful in making the decision in the level of acceptance should take place.Everyone should be awarewhen we discussed about automation, it doesn't mean that we need to go all the way fully automated as spoken earlier.
Let’s take a case in a conventional warehouse, we may have around 10,000 or 15,000 pallets in the warehouse that occupy in a very huge area. If we want to increase the space utilization, we can easily increase the volume by 100% with either mobile rack or AS/RS. For mobile rack, AGV cab be implemented together to help reduce the dependency on labors.But in both type of operationsit is not necessary to go fully automated for every single process. When we retrieve the pallets, most of the retrieving of the SKU can be done by AS/RS or the AGV. But there is no necessity to make every single piece picking, every single operation become automated which incur a lot of investment. Let’sgo back to the old days where we talk about the 80/20 rules. We should focus to automate the 80% of picking activities that is maybe involving around 20% of the A type of SKUs. The then rest of the 80% of B & C SKUs which involving around20% percent of activities,we can keep it in the selective racking and operate it manually or conventionally. The categorization of SKU A,B & C can be managed dynamically across season through artificial intelligence build in the system. This will help to keep the overall system and material handling equipment much simpler. And it will reduce the investment of the capital investments that is needed to be put in. So that is one way we should actually considered, rather than just do whatever we can to make it fully automated and cool.This is what I believe will take place in the market.
Another thing, collect the data and utilize the data.A lot of people are sitting on a big data, but actually not using it in a smart way that brings the impact to their own business in terms of business development. If we really explore into the data analysis and investigate, probablywe can find some seasoning trends or pattern is happened over and over.This is where we can find a complement plan or find a partner thatcan work together to complement each other during the peak seasons and the low seasons.There is not always a peak season for every product in the supply chain. An up-stream product/ raw materials may hit the peak earlier and subsequently the final manufacturing products.Beside that if you have heard about AirBnB Warehouse, we can also leverage on that to find the suitable partners for the low season. The supply chain can be synchronized, a lot of synergies can be generated. Personally, I believe this is wherea “one stop network systems”that everybody shares the same information can actually help the supply chain to further optimized.
Can you provide a brief background of yourself?
My background is actually mechanical engineering. I used to be anR&D engineers that specializedin statistics and mechanical design and product development. However around 12 or 13 years ago, by chance, a Swiss company has hired me from the R&D centers. There is whereI started my career in supply chain, logistics and warehousing design. From there onwards, I've designed a lot of warehouses and distribution center across ASIA Pacific from China, Japan to South East Asia. From F&B manufacturing plant’s warehouse, temperature controlled or cold chain warehouse to groceries & retails’ distribution center. I really appreciate the chances and knowledge given by my coach to me in my early career. The more I involved, discussed and the more I see, the better understanding about this industry. The better understand I have, the more involvement and discussion I have. Frankly, as I mentioned just earlier, there are seldom a fully 100% automated warehouse, but normally a combination.
And recently I have seen the opportunity in the market where a lot of the local corporate or SME in SEA particularly in Singapore started to explore the potential revolution in logistics and warehousing. I seen this as an opportunity as well as my personal passion in the industry. Hence I have started my own consulting firm AccTran Solutions. This will enable me to support the industry in a different and better ways as I have my own free hand to explore together with the clients.
Thank you for sharing today, Ding.
About Mohamed Ali Eldabaa
Ding Lim Yeang
Supply Chain & Warehousing Automation Consultant