Warehouse and distribution center Robotics case study

Warehouse and Distribution Center Robotics Rack and Shelving Manufacturing (RSM) is an 85-year-old U.S. niche pallet rack and shelving manufacturer. RSM sells to volume resellers, direct to manufacturers with warehousing, warehouse distribution centers, and to small end users through B2B ecommerce. Major fluctuations of steel pricing, poor inventory management, and labor issues with a local union at its largest manufacturing facility have put RSM at a financial crossroad. RSM, recognized as a high-quality manufacturer with a limited product line, has small market share in the growing storage equipment industry sector. Recently, the shelving lines have been updated to accommodate innovations in the pick, pack, and ship fulfillment centers. The pallet rack line (Pallets Plus) is a standard selective rack system featuring two upright frames and shelf beams inserted between the frames. Their high-quality rack is one of the most flexible (easy-to-configure racking to all layouts) and compared to more complex pallet rack systems including drive through racking and roller racks is economical with quick access to pallets. The Pallets Plus rack system is ideal for manufacturing or warehouse storage with a broad array of items but moderate-to-low turnover volume. Innovation of the Pallets Plus line has not been introduced to the market for over ten years. The growth in the rack storage sector is intently focused on optimizing warehouse cubic feet with high density racking systems that facilitate high number of items and high turnover volume. These rack systems, while significantly more expensive than the selective Pallets Plus rack system, increase the productive use of warehouse floor space by 6075 percent more than selective systems.

Rack and Shelving Manufacturing attended the most recent ProMat tradeshow in Chicago, organized by the Material Handling Industry of America. The ProMat tradeshow is an international showcase of material handling, supply chain and logistics solutions in North America. The industry event offers productivity solutions and information by highlighting the products and services of leading material handling and logistics providers. At the ProMat show RSM was looking for direction relative to their next new product in pallet systems. They decided to leapfrog the existing highdensity pallet systems (i.e., drive through, roller racks, and pallet flows) and partner with a technology firm that manufactures warehouse-specific automated guided vehicles (AGVs). RSM is now focusing on building a new pallet rack and shelving product line that will meet all the specifications for automated storage technologys (AST) warehouse robotics line. Rack and Shelving Manufacturings new technology partner Automated Storage Technology is a leader in automated storage and retrieval systems (AS/RS). They were one of the first to test AGVs and with several generations of innovations now have a prototype for a fully robotic forklift. Similar to RSM, automated storage technology has evolved from systems associated with large pallet racks to automation and robotics associated with pick, pack, and ship fulfillment centers. ASTs AGV technology supports pick up, carry, and drop-off loads for manufacturing plants, warehouses, and distribution centers. The guidance technologies and navigation technologies are laser-guided for self-driving material handling vehicles similar to selfdriving cars. AST uses a laser and light-based navigation that scans the facility to gather data to construct a detailed map of the facility floor. The reference map can then be used to navigate any route. The AGV system is a smart technology that can plan and follow its own route similar to how an auto GPS will re-route the map once the car deviates from the original mapped route. Operators can drag and drop instructions to direct the vehicles pickups and drop-offs. AST is developing a navigation system that will allow warehouse/inventory management to control a fleet of AGVs using apps on mobile devices such as tablets, phones, and laptops. Rack and Shelving Manufacturing is investing in a strategy where they identify and occupy a niche in the future of warehouse storage and retrieval. They must position themselves as the first to control this niche with their partnership with AST that positions the new RSM pallet and storage systems as essential to the process of automated storage and retrieval (AGV and AS/RS). The pricing strategy for the premium price of the new pallet and shelving products is based on the very small percentage of cost of the entire automated (i.e., self-guided pallet trucks) warehouse system and design. The niche is small enough and unattractive to rivals at first and Rack and Shelving Manufacturing can grow along with the projected growth of the high-tech warehouse.

1. Defend Rack and Shelving Manufacturings new product development strategy of tying new rack and shelving products to automated storage technologys AGV/robotic innovation cycles.

2. How will product manufacturers and supply chain partners benefit in their efforts to adopt high-performance supply chain measures by using RSM and AST AGV equipment and storage racks?

3. What risks do RSM and AST face that may alter (quicken or slow down) the pace of the adoption of warehouse robotics in the warehouse, storage, and logistics sectors?