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Full Speed Ahead: Automated Supply Chains Proliferate in the Global Pandemic

April 20, 2020
Fast-tracked by COVID-19, automation could make an even bigger mark on the world’s supply chains in 2020.

Long before the words coronavirus and COVID-19 became a part of our everyday vocabulary, companies were investing in automation that promised to improve efficiencies and speed up processes. Whether that meant adding “cobots” to distribution center floors, using artificial intelligence (AI) for better decision-making, or deploying automated storage and retrieval systems (AS/RS) in fulfillment centers, the adoption of automated systems was already growing year-over-year.

Rewind the clock back to 2016, for example, and more than 10% of U.S. warehouses were already using sophisticated automation technologies. “Imagine shuttles driving through racks, retrieving products and putting them on conveyor belts, while autonomous vehicles roam the warehouse with pallets of bulk products,” Westernacher Consulting writes. “Could this be the warehouse of the 22nd Century? No, it’s the modern warehouse of today.”

That modern warehouse continues to take shape and play an important role in the world’s supply chains. According to MarketWatch, the logistics automation market totaled $49.2 billion in 2018 and is expected to reach $96.2 billion by 2024, It’s growing at a compound annual growth rate (CAGR) of 12.1%, and being driven by the emergence of the Industrial Internet of Things (IIoT) and the advent of a network of connected systems.

Fast-Track Automation

The automation that’s been under development for years—and the connected systems that bring everything onto a single network—are in hot demand right now. With 2020 bringing with it a global pandemic that’s driven new social distancing rules, the push to get work done with fewer human employees (at least until the danger passes and things return to normal) is growing.

“Broad unease about losing jobs to machines could dissipate as people focus on the benefits of minimizing close human contact,” Michael Corkery writes in The New York Times’ “Robots Welcome to Take Over, as Pandemic Accelerates Automation.” “Before the pandemic, automation had been gradually replacing human work in a range of jobs, from call centers to warehouses and grocery stores, as companies looked to cut labor costs and improve profit.”

Now social distancing directives, which are likely to persist even after the crisis itself subsides, could prompt more industries to accelerate their use of automation. At the same time, worries about job losses or unease about having machines control vital aspects of daily life could dissipate. For example, supermarkets like Giant Eagle are using robots to free up employees who used to take inventory, The New York Times reports. Now, they can focus on disinfecting and sanitizing surfaces and processing deliveries to keep shelves stocked.

In another example, the publication says that with closed offices keeping many of its workers away, PayPal has turned to chatbots, using them for a record 65% of message-based customer inquiries in recent weeks. The company is also using automated translation services so that its English-speaking representatives can help customers who don’t speak English.

Sailing in Uncharted Territory

As the coronavirus pandemic continues to push the world into uncharted territory, an automation boom is either already happening or ready to start. “Crisis can be sort of a catalyst or can speed up changes that are on the way—it almost can serve as an accelerant,” NYU’s Arun Sundararajan told protocol.

In the logistics and supply chain space, for example, experts expect the crisis to “catalyze more investment in automating the supply chain,” the publication reports. “Long term, the future got brighter for us; short term, it's a challenge," Attabotics’ Scott Gravelle told protocol. The key challenges include having to demonstrate automated products virtually rather than in person, as well as waiting out clients’ and investors’ pandemic-driven financial uncertainty.

More Automation Ahead

According to a recent Oxford Economics report, 12.5 million manufacturing jobs will be automated in China by 2030. “In the aftermath of the pandemic, it could be many more,” Shahin Farschi writes in “Expect More Jobs and More Automation In The Post-COVID-19 Economy.”

Prior to the COVID-19 outbreak, estimates on the specific impact automation will have on jobs varied, with McKinsey projecting that up to 30% of jobs in the U.S. would be automated by 2030, and the World Economic Forum (WEF) estimating that emerging professions resulting from automation could account for 6.1 million jobs globally between 2020 to 2022, Forbes reports.

“We have yet to see how the global pandemic will impact jobs in the long term,” Farschi writes, “but it’s safe to assume that we will see acceleration in automation where it keeps human workers, and consumers, safer.”
About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.

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