It’s well known that Australia can prove an expensive base for many manufacturers and retailers who are impacted by high wages, energy costs and expensive property pricing when compared to other regions around the world. This puts pressure on the entire business, including the supply chain, to find solutions that ensure their operations are as efficient as possible.
Michael Dyson, Managing Director at SOTI, looks at the impact of Australia’s high operating costs on a business’ supply chain and how they might overcome this challenge through warehouse automation and increased use of mobile devices.
The pressure of higher costs
Australia currently has the highest minimum wage in the world, at $18.93 per hour, which compared to countries such as the US, whose average minimum wage is $10.24 (AUD), is quite high. While this may be good news for workers, it puts pressure on local businesses, particularly manufacturing and retail, who are struggling to remain competitive in an increasingly global market.
If a business is not able to keep up with the high operating costs in Australia, the result could be that they move their manufacturing overseas. This has been the case with the car manufacturing industry lately, with companies like Toyota and Holden closing their manufacturing doors in recent years.
As well as high minimum wage, Australian businesses also need to deal with real estate prices and running costs, which can be prohibitively expensive, especially in the major cities. These factors can limit a company’s expansion plans and force businesses to setup and operate DC’s in less desirable locations, further away from main transportation hubs like shipping ports and airports, all of which adds to key transportation costs.
These issues can leave supply chain businesses looking for solutions to increase their competitiveness and reduce the high operating costs they face.
Automation in the warehouse
The supply chain, and particularly the warehouse, is one area of a business where costs can be reduced through increased automation.
Automation provides many benefits around the reduction of labour costs, including being able to operate for 24 hours, seven days a week without breaks. This means businesses can reduce expensive overtime shifts. Automated machines can continue working through weekends and public holidays, so businesses also do not have to slow down their operations during the common downtime periods.
Automation can also help address the challenge of real estate, as it allows warehouses to operate more smartly by optimising use of the facility they operate, to ensure that no space is wasted. High density warehouses may help overcome limitations of real estate.
There are also additional gains to be made in a reduction in electricity costs with no need for lights and heating in an automated warehouse. And as lighting can typically account for 30 per cent of a warehouse’s energy bill, the savings could be quite substantial.
Many supply chains have already embraced automation to differing degrees, but the continuing rise in operating costs is sure to make automation a bigger part of supply chains.
Dark warehouses – or fully automated warehouses – are beginning to spring up in Australia, with a number of them having been developed in Brisbane, Sydney and Melbourne recently. They are already a well-established concept in other countries such as the US, the UK and China, but at the moment are still rather uncommon in Australia. That is set to rapidly change, however, as retailers and consumer goods companies seek extra economic advantage.
Mobility and device management
One area of automation that is currently well-used within Australian supply chains to increase the productivity and efficiency of available workers, is mobile devices. IT systems and solutions, including the increasing use of wireless networks to support mobile access and a wide array of mobile devices, are increasingly integral to supply chains, to support the management of workflow and assure optimal productivity.
IoT integrates these enterprise mobile devices with the supply chain’s back-end system to automatically track and gain insights from a wealth of available information without the need for any direct human action. This automatically provides the business, and sometimes also the customer, with key information such as package tracking and logistics monitoring to ensure the right item is available in the right location at precisely the right time. This level of mobility brings information to where it’s needed efficiently and reliably, which is vital to supply chains that can’t afford any interruptions or downtime to operations.
To ensure an efficient mobility solution, businesses may be faced with the need for an integrated platform approach to manage all endpoints seamlessly – from purpose built devices for inventory management to apps to automate paper based processes, to business intelligence and real time analytics all crucial to business critical operations within the supply chain.
Effective mobility solutions also offer remote support to solve problems quickly, to further minimise downtime and secure critical business information.
A wide variety of cost reductions can be achieved from enterprise mobility, due to the optimisation of both worker productivity and efficiency, as well as the increasing integration IT-centric automation that arms a business with the information it needs to improve and succeed.
The SOTI ONE Platform delivers on these requirements and can help supply chains reduce the cost of business-critical mobility, as well as minimise any downtime.
IoT vital to success
There is no doubt that automation is set to continue increasing in importance for the supply chain in Australia, as further pressure comes from high operating costs, as well as a very competitive global market. However, it is crucial that automated warehouses are managed and connected to IoT to ensure smooth, uninterrupted operations, because if this isn’t assured, there will be no competitive gain for these businesses.
For more information on ensuring your supply chain has effective mobility solutions, please visit: http://www.soti.net
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