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    With IoT, warehouse efficiency is as easy as ABC

    How connected systems help e-retailers keep pace with new levels of demand

    In the COVID-19 era, warehouse efficiency has emerged as a crucial economic factor. E-commerce has massively scaled up since retail stores closed and the world entered lockdown, and logistics facilities that function optimally are key to success in the “new normal.” 


    It doesn’t look like the e-commerce boom will fade when the pandemic does, either. The health crisis has intensified a macro-trend toward online shopping that has been gaining momentum for some time now. That trend should continue to redefine retail even after the virus is a bad memory.


    Luckily, a variety of technical solutions and common-sense methods can help warehouses process challenging workloads. Barcode and radio frequency identification (RFI) technology can improve the accuracy of workers picking items. Warehouse management systems can send “pick lists” to staffers’ devices and guide them through facilities. Regular cycle counts can ensure that no part of a warehouse falls into disorder. Building enough cross aisles into a facility can make it faster to navigate. Good planning can eliminate empty-handed “deadhead” employee trips around a site.


    And then there’s ABC analysis, one of the best methods for boosting warehouse productivity.


    In ABC analysis, managers inspect a warehouse in terms of how frequently items move out the door. The items that go the fastest are labelled “A” and are slotted accordingly—in the warehouse’s most accessible bays, for example, and close to its shipping stations. “C” items, those that see the least demand, are slotted in areas that are relatively harder to access. “B” items go somewhere in the middle.


    ABC analysis is an effective way for managers to reduce operational friction. Workers will no longer waste time moving pallets of a low-demand item out of the way so that they can access the high-demand items behind them. They will avoid too much travel around warehouses. Order-picking can account for 55% of a warehouse’s operations budget, so simple optimizations like these can have a major impact on an organization’s bottom line.


    While ABC analysis is straightforward in theory, it can be hard to pull off in practice. Getting a complete picture of what is located exactly where is time-consuming. Forty-five percent of the operations managers MetrixLab consulted in a recent survey said that analysis at their sites lasts for between one and four hours. Another 40% said that it lasts between four hours and a full day. In a busy warehouse, that can be prohibitive.


    So it’s no wonder why managers tend to avoid ABC checks. More than half of managers perform ABC analyses only once a month, according to MetrixLab. Twenty-seven percent perform them once a quarter, and 7% just once a year.

    A tech fix for a time-consuming process

    Here’s where Internet of Things (IoT) technology—space management tech in particular—enters the picture. It can make ABC analysis as easy in practice as it is in theory. 


    Interact Industry software from Signify works with connected LED luminaires to distribute IoT capabilities throughout a warehouse or other space. Two-way data communications built into the luminaires support motion and other types of sensors that can collect data on activities in the environment that the fixtures illuminate. Intelligence gathered in this way can help answer questions about how warehouse workers are using the space. Which bays attract the most forklift traffic? Which attract the least? Which aisles often remain empty, indicating the relative “unpopularity” of the items stored there?


    Interact Industry feeds the information it collects to applications in the cloud. Managers can use these applications to evaluate data in easy-to-digest forms, such as occupancy heat maps accessed via personal devices. A heat map offers a quick look at how a warehouse is being used, ensuring that ABC analysis takes place only when really needed. It makes the labor- and time-intensive business of ABC analysis a lot more efficient. 

    Toward the high-volume future

    The numbers associated with e-commerce are startling. At one point in 2020, e-commerce orders had posted 129% year over year growth in the United States and Canada. In Europe, e-commerce is expected to have grown by almost 13% over 2019.
    With the strain such growth will continue to put on supply chains—warehouse vacancy rates, to cite just one statistic, are plummeting—finding ways to make logistical systems work better is important. IoT tech can ease the logistics sector’s progress into the high-volume reality that has now arrived, and that shows no signs of going away.

    About the author

    Ton van de Wiel, Global Segment Lead for Industry, Signify
    Ton van de Wiel is the global segment lead for industrial end-users within Signify and co-founder of Interact. With over twenty years of business experience, he now works to shape tomorrow’s world of smart manufacturing and warehousing as enabled via connected lighting.

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