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April 5, 2012

UW-Madison professors make case for warehouse automation

Kyle Henderson UWEBC Communications Director

Recent advances in warehouse automation are enabling companies to fundamentally transform their distribution strategy and operations. Achieving the maximum ROI from these systems requires a comprehensive understanding of how automation systems can enhance a company's overall supply chain capabilities.

UW-Madison Professor Raj Veeramani (top) and Associate Professor Ananth Krishnamurthy presented their research on "Strategic Implications and Business Case for Warehouse Automation" at the recent Supply Chain and Productivity Conference, hosted by the Food Marketing Institute and Grocery Manufacturers Association.

Dr. Veeramani is Executive Director of the UW E-Business Consortium and the UW E-Business Institute. Dr. Krishnamurthy is Director of the UW Center for Quick Response Manufacturing. Their research was conducted in collaboration with the Kohl's Department Stores Center for Retailing Excellence at UW-Madison.

Drs. Veeramani and Krishnamurthy examined in-depth industry drivers and trends, as well as a multi-tier analysis framework. Their key takeways included:

  • Warehouse/DC automation will impact not only DC operations but also upstream (suppliers) and downstream (stores).
  • Both marketing and SCM should focus on the common goal of fulfilling the customer value proposition, rather than the different functions' traditional foci, increasing sales and reducing cost respectively.
  • A comprehensive analysis framework with respect to costs and benefits is needed.
  • Because automation systems are unforgiving, manufacturers and retailers need to be partners. Small mistakes make a big difference.

The bottom line, the researchers found, is that warehouse/DC automation has a significant positive impact on labor shortages and high labor costs, operational complexity, inventory issues, carbon footprint and energy costs and ever-increasing transportation costs.

View the presentation slides»

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