Insights

Industry 4.0 and distribution centers

Transforming distribution operations through innovation

Recent years have seen the rise of connected technologies throughout the manufacturing and distribution value chain. This marriage of digital and physical systems—known as Industry 4.0—has paved the way for increasingly connected experiences that impact everything from product design and planning to supply chain and production. Beyond the processes of designing and producing goods, however, the technologies inherent in Industry 4.0 can also impact the manner in which finished goods are moved, warehoused, and distributed.

Industry 4.0 technologies enable warehousing facilities to adapt to significant changes in their business. The last several years have seen the migration away from warehouse-based stockpiling of inventory to high-velocity operations, pushing more products through the same physical assets while bringing down overall costs. Known as distribution centers (DCs) rather than warehouses, they are an important component of the supply chain infrastructure and are increasingly treated no longer as cost centers, but rather as strategic facilities to provide competitive advantage. As the need for greater order customization, shorter lead times, better quality control, reduced labor costs, and higher production output is increasing, adaptable advanced technologies are emerging as a solution to achieve these goals.

The use of advanced, connected technologies in DCs is not new. In the past, these technologies were mainly limited to automated systems used to increase material-handling productivity—systems that had to be kept separate from workers for safety, and that required high standardization of processes and products due to their lack of adaptability. This lack of adaptability—or “smartness”—meant that a great deal of upfront customization and programming was required to ensure proper functioning, as systems could not adapt easily to changing demands.

Industry 4.0 technologies can help pave the way for the evolving DC, enabling automated systems to adapt to their environment and tackle tasks more efficiently, while working with humans. Technologies such as lowcost sensors, computer vision, augmented reality (AR), wearables, Internet of Things, robotic prehensility, human-robot safety, analytics, and high-performance computing—all inherent in Industry 4.0—are being used to enhance existing automation. At the same time, they are also enabling new types of smart automation that can help transform DC operations.

In this paper, we examine the evolution in DC functionality and explore applications of emerging Industry 4.0–driven technologies to enable a more flexible, adaptive, and productive DC. Finally, we consider the ways in which these new technologies will impact talent needs, business strategies, and data management for DCs.

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