January 2012             Event Driven Warehousing Trends:                  Voice Users Speak OutIn November and December o...
Voice Technology Meets the eCommerce Distribution ChallengePage 2Table 1: Years of Voice Hardware Usage and % Refreshed  Y...
Voice Technology Meets the eCommerce Distribution ChallengePage 3software would be upgraded and integrated with any proces...
Voice Technology Meets the eCommerce Distribution ChallengePage 442% batch updates and 37% avoid altogether, so this is a ...
Voice Technology Meets the eCommerce Distribution ChallengePage 5companies make hardware refreshes they need to reengineer...
Voice Technology Meets the eCommerce Distribution ChallengePage 6  replenishment trigger points or reactive replenishments...
Voice Technology Meets the eCommerce Distribution ChallengePage 7those operations with lots of each-picking and a variety ...
Voice Technology Meets the eCommerce Distribution ChallengePage 837% try not to change voice systems due to cost” from abo...
Voice Technology Meets the eCommerce Distribution ChallengePage 9        impediments to change found in the sidebar to the...
Voice Technology Meets the eCommerce Distribution ChallengePage 10                                            Related Rese...
Voice Technology Meets the eCommerce Distribution ChallengePage 11                Appendix A:    Investment Popularity & R...
Voice Technology Meets the eCommerce Distribution ChallengePage 12to invest, and ending in 3PL at 31% of respondents (38 c...
Voice Technology Meets the eCommerce Distribution ChallengePage 13        pressure, the "need to manage multiple logistics...
Voice Technology Meets the eCommerce Distribution ChallengePage 14        company does not possess in-house. The sidebar t...
Upcoming SlideShare
Loading in …5
×

Aberdeen Survey Of Voice Users

582 views

Published on

If you are interested in using voice for your warehouse operations, you should hear what current users are saying...

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
582
On SlideShare
0
From Embeds
0
Number of Embeds
5
Actions
Shares
0
Downloads
18
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Aberdeen Survey Of Voice Users

  1. 1. January 2012 Event Driven Warehousing Trends: Voice Users Speak OutIn November and December of 2011, Aberdeen surveyed 134 warehousing Sector Insightprofessionals for a benchmark report (Fulfillment Excellence and Dynamic Aberdeen’s Sector InsightsEvent Warehousing Come of Age) that explores the pressures these provide strategic perspectivecompanies are facing and what plans they have for the coming months. This and analysis of primarySector Insight focuses on one specific segment of warehouse professionals - research results by industry,voice users. To learn more from this segment in December 2011 we sent market segment, or geographyout a detailed follow-on survey to obtain a larger sample of current voiceusers so we could compare them with their peers. Based on the new surveywe obtained 65 qualified responses. This insight compares the 32 voicesusers to the remaining 33 companies. What can we learn from the 32 voice Sector Definitioncompanies versus the others? How are the voice companies coping with This document is focused onpresent economic conditions, what capabilities do they have, and what the current voice users - atechnologies do they rely on to ensure efficient operations and provide total of 32 companies out of 65value to their customers? enterprises from the detailed follow-up survey report.Event Driven Warehousing Trends: The Advantage of Both voice and no voiceVoice Explored companies have virtually equalIn todays environment a predominant pressure companies are experiencing percentages by organizationis a need to reduce warehouse operating expenses while maximizing type:utilization of resources. In order to achieve this goal, over 94% of all  44% - Original manufacturercompanies are looking to enhance or acquire more dynamic and interactivewarehouse processes. Across a broad spectrum of options ranging from  30% - DistributorAuto ID and RF or mobility and including voice technologies (see Appendix /WholesalerA) they are willing to invest in more real-time, hands-free interactive  19% - 3PLprocesses. The goal is both to increase efficiency of software andautomation across the entire distribution network and to improve alliances  15% - Otherwith internal and outside parties to allow for better planning of physical  10% - Retailerspace/locations and labor, and to justify and prepare for the future, in termsof potential investments and ROI expectations.  10% - Freight Forwarder, Customs brokerThe Current and Future State of Voice Technology  6% - Supplier Manufacturer / SupplierIn our recent survey we get a better idea of the level of technologyadoption and integration by the Voice Users and better understand their Note: 30 or more users yieldsplans for integrating voice solutions into their future warehouse strategies. a 95% statistical confidence levelWe also uncover the connection between warehouse complexity andvolume and a need (or desire) to balance tasks or labor and more mobile /interactive technology with voice capability into picking or replenishmentoperations.This document is the result of primary research performed by Aberdeen Group. Aberdeen Groups methodologies provide for objective fact-based research andrepresent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.
  2. 2. Voice Technology Meets the eCommerce Distribution ChallengePage 2Table 1: Years of Voice Hardware Usage and % Refreshed Years of Current Voice When % Refreshed Hardware Usage, n = 32 Acquired 0 months - 11 months 44% new or 2011= 24% refreshed units 1 - 2 years 17% 2010 = 17% 3 - 4 years 33% 2008-2009 = 29% 5 + years 22% 2007 and prior = 17% Never = 17% Source: Aberdeen Group, December 2011Current State -Past Hardware Upgrades and Refreshes –Largest Single Surge Occurred in Last 12 monthsIf past history serves us, from the above table we can see that in the averageyear about 20% of voice users refresh or acquire current hardware in anygiven year in a five-year cycle. It is interesting to note that the mostsignificant amount of hardware upgrade or refresh for voice technologyoccurred in the past 12 months (cited by 44%, Table 1). We can breakdown that group into two subgroups: 1. 20% acquired New Voice Units in 2011 and have yet to refresh 2. 24% refreshed/switched older units in 2011The point to be made is that (based on what is considered to be a qualifiedsample at the 95% confidence level) we have seen a full 20% of the VoiceUsers acquired new voice equipment for the first time in 2011 and they didso with an average ROI of 18.9 months (see Appendix A). This represents ahuge overall vote of confidence for the coming of age of voice technologyand the benefits that the move to voice technology can deliver in thecurrent, highly interactive, event-driven warehouse.Future State - Plans for Voice Hardware / SoftwareGoing forward the current users will be continuing to utilize their voicetechnologies and over 80% will be updating, or refreshing their hardware inthe future – with at least 50% of all users, including those that have justacquired voice in the last 12 months, citing they will refresh in the nextthree years. As we see from the past (Table 1) and from what the usershave cited as the year of next refresh we can safely state that hardwareupdates plans are continuous with 20% or more of companiesrefreshing each year for the foreseeable future.Of the Voice Users 90% will upgrade software at the same time as theirnext hardware upgrade or refresh and 76% will consider a new devicemanufacturer when they upgrade or refresh. It makes sense that© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  3. 3. Voice Technology Meets the eCommerce Distribution ChallengePage 3software would be upgraded and integrated with any process and hardwarechange that a company has planned and, with the superior return oninvestment that most voice users say they have obtained, it also makessense that 80% of them plan on continuing to utilize and enhance their voicetechnologies. But it is instructive to understand why 76% are looking atalternative manufacturers on their next upgrade or refresh.For the 76% willing to consider a different hardware manufacturerreasons cited include:  36% We want a “multi-modal” device that has a screen, scanner, and/or keyboard in addition to being voice-capable  35% Our present device requires the use of expensive, proprietary accessories - so we want to get a more standard device  34% We believe that the pricing of our voice units is just too high, and want to look at other optionsMany current voice users (35%) want to get out from under theproprietary, high-cost voice devices that were common a number of yearsago. Back then, these pioneering companies had no choice but to acquiresuch devices. But these are sophisticated buyers with continuing refreshplans, and the market has now evolved to where major manufacturers areoffering open, lower-cost voice-capable units that are also multi-modaldevices (36% cited this as the top reason to switch). These stats show thatcurrent voice users are eager to jettison proprietary, single-mode devicesand move to alternatives that offer more flexibility and lower TCO.Regarding Software experience, 40% of current users cited high cost andtime required for changes by vendors … 1) to develop changes we want to our voice processes and also 2) to make changes relating to the voice-WMS interaction.The experience of Voice Users to get changes made to the way thevoice application works include:  42% Due to cost considerations, we “batch” a number of changes together so that we can justify the time and money to get the changes done  37% We don’t consider changes because the cost to have the vendor modify the application is just too high  26% We’ve paid too much for changes that seemed trivial to us  16% We never need changesThe remarkable thing here is that cost is the top concern. Majority of allcurrent voice users have a major issue when changes to voice apps areneeded. They either delay change until they can justify paying toopen/update the code, or they avoid change altogether. Of current users© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  4. 4. Voice Technology Meets the eCommerce Distribution ChallengePage 442% batch updates and 37% avoid altogether, so this is a remarkably largenumber and it speaks to the problems inherent to an existing, custom-coded voice solution. One valid observation is that if these companies whoare committed to voice could find a way to make their softwareinfrastructure more flexible then they could gain a further competitiveadvantage over companies that continue to live with closed, proprietarycustom solutions.Experienced voice users are committed to voice because of its operationalbenefits, but they need to find a way to bring down this high cost of changein order to be more agile. Hardware refresh is an ideal time to investigateways to make the voice system more flexible and move to a lower TCOarchitecture.Regardless of the impetus, whether hardware or software improvement orenhancement is driving the change, the voice users are continuing to investin the technology. Hardware tends to lead the way closely coupled with theassociated process and software changes required to move from currentstate operations to a more event-driven warehouse. Both within picking andreplenishment many tasks require interactive processing. Across all users,both Voice and Non-Voice, there is a trend to adopt more dynamic eventcapabilities. In Table 2 we compare areas where Voice Users aredemonstrating more advanced Dynamic Event Capability. In each instancethe likelihood that a Voice User has some capability today, the Voice GAP(ranging from 1.6 –times to 4.2 times), reflects the number of times morelikely that a Voice User has the indicated capability versus a Non-VoiceUser.Table 2: Dynamic Event Performance Gaps- Voice versus Other Voice Dynamic Events: Non- GAP Users Have or Have and Plan to Enhance Voice Voice 92% Direct order-picking with mobile devices 41% 2.24 75% Hold replenishment tasks and release 18% 4.17 replenishment to coincide with picking 71% Task interleaving dynamically (switching 45% 1.58 employees between functions - picking, replenishment) 51% Dynamic real time order dispatch (i.e., ability 25% 2.04 to interleave order adds or quantity changes) 42% Event management (automatically notifying 18% 2.33 personnel when certain warehousing events take place) Source: Aberdeen Group, December 2011So we see from Table 2 both the relevance/popularity of process change bythe specific areas of interactive dynamic event processing that is fueling thecontinued deployment and enhancement of voice technology. However, as© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  5. 5. Voice Technology Meets the eCommerce Distribution ChallengePage 5companies make hardware refreshes they need to reengineer the softwareprocesses as well. For current voice users the following are reasons they Voice Users are Refreshingare considering upgrading their voice application upon refresh: Hardware  50% We want something that is easier to coordinate with our  (A substantial number of WMS voice users (over 50%) will refresh their current voice  33% We want a solution that doesn’t cost so much to change devices over the next 3  33% Our IT group wants us to get more modern technology years.  22% We want to change hardware vendors and our current  A total of 76% of all voice users are willing to consider solution either does not support the new vendor’s device or the a new hardware cost to move it to that device is higher than what we want to pay manufacturer on their nextIn summary both hardware and software architecture refreshes and refreshupgrades are on the horizon for up to 76% of the voice pioneers. Currentvoice users have the opportunity to leverage the cost benefits of voicefurther if they can improve their software infrastructure to be moreamenable to change. Finally, the majority of those converting/enhancing arewilling to consider aggressive “rip and replace” strategies to be moreflexible with the interactive processing needs they plan to embrace.Current Voice Users Speak OutThe experiences of current users as illustrated in the quotes that followindicate that complexity and volume increases within the warehouse arefueling change. There is a need for more dynamic and flexible processesand more real-time technologies within the warehouse. The move fromlabel-based picking to voice-directed picking is a technology option thatcompanies should explore (or continue to explore) as they look into manyof the areas mentioned below.Quotes from Users “I believe voice directed picking will improve our pick accuracy and picking efficiency. Past examination of the piece volume of the business did not support such a large hardware/software/implementation cost. If costs/savings and voice technology have improved we are foolish not to reassess it.” ~Vice President, Operations Large Retailer “Would like to enable task interleaving in the split case picking module - to be able to dynamically float across picking, stocking, cycle-counting, etc.” ~General Manager / Managing Director, Office Depot “Voice wins in picking of high piece count or high value product. Voice wins in improving pick rates and accuracy in highly structured flows. Voice loses when we need to modify functionality or tweak commands flows and syntax.” ~Director, Information Technology, Large Global Manufacturer “With regard to replenishment working towards better handle on demand based replenishment - filling forward pick locations directly with what our ERP demand plan determines should be the daily need (not average weekly or monthly) to better utilize and turn pick locations. This is significantly different than© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  6. 6. Voice Technology Meets the eCommerce Distribution ChallengePage 6 replenishment trigger points or reactive replenishments driven by allocation.” “Voice justification comes in to play with process efficiency due to hands free (no holstering, reading, re-holstering, scanning, entering data) accuracy as a result of picking and confirming at point of grab along with the ability to dynamically shift/ push work to user groups. Training is also much more efficient as well.” ~Director, Logistics / Supply Chain, Midsized Wholesaler “We are already using RF for putaway and replenishment - we see no operational improvement in moving these to voice - in fact, we have had our industrial engineers look at it, and they have not seen any operational improvements in moving these functions to voice. We believe the market voice technology is changing and have recently built a solid business case for voice and multi-modal.” ~Manager, Logistics / Supply Chain, Large Non-Voice ManufacturerVoice User Strategic Capability AssessmentFrom our companion study (the December warehouse management report)with findings across 134 investing companies, 17% of companies havealready deployed voice enabled warehouse management technology to driveimprovements in operational efficiency. And in aggregate about 20% (a totalof 37% of companies which we will call the voice users) have and /or plan toinvest in voice technology in the next 12 months (see Appendix A). Overall,across all companies on the topic of warehouse management, Aberdeenfound that two of the top three business pressures centered on efficiencyand resource management "doing more with less." With respect to the toppressures for the voice users alone we see that they exactly mirror the fullsample across all companies with regards to "doing more with less."Specifically both voice and no voice groups have identical percentages on orneed the top- ranked pressures to: 1. Support increased sales without increasing staff or space (46% of voice and all companies) 2. The need for better utilization of underutilized resources (31% of voice and all companies)From the top-ranked strategic actions they are taking (Figure 1, below)lets focus on the three where voice users have the highest priority gaps andare more focused than the others:  3.1-times as likely to better leverage part-time / full-time mix and / or realign shift volumes  1.7-times as likely to reduce staff and / or eliminate idle resources  1.3-times as likely to improve perfect order rate by improving pick accuracy and on-time shipmentsIt is clear that the voice users are more event-driven and balanced, placingfrom 1.3-times to 3-times the level of focus in balancing and optimizing laborto address volumes and mix, to reduce waste, and to balance that withpicking and shipping accuracy. Since labor comprises over 35% of the fulloperating budget, labor is a clear focus for all respondents but is highest for© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  7. 7. Voice Technology Meets the eCommerce Distribution ChallengePage 7those operations with lots of each-picking and a variety of order types tohandle within their warehouse operations. To further illustrate thechallenges and opportunities of labor optimization under large growth andcomplex operations it is interesting to note that on average the voice useroperated 6-7 DCs in their network.Figure 1: Top Actions for Voice Users "Actual results to date have No Voice, n=127 Voice, n=31 resulted in overall productivity levels that can result in a Offload some products or volume to a 46% payback within 1.5 years. 3PL or satellite facility 37% However, it should be noted that the voice functionality Reduce staff and / or elimination of idle 46% 27% component yielded a payback resources of less than a year. The Add new, or enlarge existing, warehouse 38% workers have been very space 46% receptive to the change, and have embraced it in a fashion Improve perfect order rate by improving 38% pick accuracy and on-time shipment 29% capable of the quick ramp-up we needed in advance of the Better leverage part-time / full-time mix 31% 2010 holiday season. We also and / or realign shift volumes 10% estimate that, operating under the old system, this additional 0% 10% 20% 30% 40% 50% volume would have incurred an Percent of Respondents, n = 158 additional cost of $400,000 during the holiday season Source: Aberdeen Group, December 2011 alone."Again, we can see from a ranking of current capabilities that voice ~ VP Supply Chain, Largecompanies are more aware and more prepared to address the labor and Specialty Ecommerce Retailerprocess complexities across order pick and replenishment types where theyare 1.2-times to 3-times as likely as their peers to have capabilities in placeto handle the various order replenishment processes required of theiroperations such as task-interleaving and hot replenishments.The number of order and process flows required increases dramatically asthe complexity, number of DC sites, and volume increases and can justify amove to more real-time, dynamic and flexible technologies such as voice.These technologies are more advanced than they have ever been and up to39% of all respondents from the Voice Users in our follow-on study indicatethat these technologies produce benefits allowing them to self fund in oneyear. One caution for companies as they explore these options is todiligently explore their volumes and process flows by SKU, channel andorder type. Voice technology alone is not always the answer: companiesmust look to process first and, as in our interviews indicate, devise anoverall automated solution complete with layout or sizing of new zones,introduction of "put areas," conveyors, printers and a variety of supportinginvestments.In addition to process reengineering and hardware upgrades there must beconjoint focus on flexibility in software architecture. With the softwarechangeover cost challenges cited by voice pioneers (“42% batch changes and© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  8. 8. Voice Technology Meets the eCommerce Distribution ChallengePage 837% try not to change voice systems due to cost” from above) softwarearchitecture must likewise be more adaptable and interoperable. Voice canbe flexible but, to adjust to multi-modal devices and more highly interactiveevents, software must be simplified. This current focus is and should givepriority to a software solution architecture is that is “open and flexible asopposed to closed and hard coded.” For the users we interviewed it wasonly when the streamlined process and integrated hardware/softwareautomation solution had been carefully planned that it was it possible tolayer in the voice components to bolster efficiency and accuracy. Planning anintegrated solution and embracing these technologies allows companies tomove off of constrictive label-based processes and to move picking,replenishment and other functions within the warehouse to new levels ofefficiency and agility. Regarding Software Experience,Required Actions Current Voice Users Speak UpWhether a company is trying to move its performance in warehouse  40% of current users citedmanagement and resource utilization to new levels or simply wants to high cost and time requiredreduce its labor costs or increase its order flow, the following actions will for changes by vendors …help to spur the necessary program success: 1) to develop changes we want to our voice processes  Debunking the High Cost Perception. Picking activities in our and also survey encompass over 50% of the direct labor and 35% of the operating budget. The interactive processing of interleaved order 2) to make changes volume and movement of staff can yield superior costs/efficiencies. relating to the voice-WMS interaction. Costs for voice are coming down and ROIs within the first year are possible with the benefits that innovative voice solutions can The experience of Voice provide. For Voice and Non-Voice users alike there is a need to Users to get application look anew at today’s costs and technologies for voice - unhampered changes include: with yesterday’s perception of high cost. Remember 31% of non-  42% Due to cost voice users are reevaluating the voice option for their future considerations, we “batch” a investment strategies and up to 39% of Current Voice Users expect number of changes together a payback of less than 1 year. With costs down and savings up the so that we can justify the rewards can be healthy. time and money to get the changes done  Move toward multi-modal, easily-adaptable technology. Most of the barriers identified by current voice users indicate a  37% We don’t consider desire to move toward multimodal easily adapted technologies. changes because the cost to When it comes to mobility within the warehouse being able to have the vendor modify the interact with order and processing flows at the device level application is just too high becomes more important and the ability to have multiple ways to  26% We’ve paid too much confirm events is central to success in todays dynamic warehouse for changes that seemed environment. Learn from leading companies and current voice users trivial to us and avoid single technology devices and proprietary technologies which tend to decrease flexibility and are not easily changed.  Investigate configurable and flexible software solutions. In today’s dynamic warehousing environment change is a given and yesterday’s batch and static requirements are under pressure to be highly flexible. Both voice and non-voice user should review their voice software and modernize it if they are experiencing the kind of© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  9. 9. Voice Technology Meets the eCommerce Distribution ChallengePage 9 impediments to change found in the sidebar to the right. Learn to avoid high cost and time for software changes by investigating configurable software solutions that can more readily support process change. In this way the ability to quickly adapt processes becomes a competitive weapon instead of an impediment to operational evolution.  Address complexity with automation. While it is not always the answer automation can lead to improved efficiency and allow a company to grow into multiple order and process flows within its operation. As we saw in this study, voice users are anywhere from 1.5-times to 2.2-times as likely to handle order flows like task interleaving or employee switching dynamically in real time ( Table 2). Additionally, the voice users were 4.17 –times as likely to support their picking operations across with “hot replenishment” that is timed to picking activities. These automation gaps are significant to support extended dynamic picking zones and “I believe voice directed operations. picking will improve our pick accuracy and picking efficiency.  Apply rigor to the ROI justifications. As we indicated earlier Past examination of the piece complex operations require diligence in preparing a rigorous volume of the business did not reengineering and ROI justification plan. Companies do not simply support such a large address volume and complexity by rolling automation into the mix. hardware/software/implementa A successful business transformation requires careful volume, tion cost. If costs/savings and channel, and order level analysis and planning. Focus should be voice technology have placed on streamlining processes first, applying appropriate improved we our foolish not to reassess it.” technologies in an integrated fashion (don’t overlook the voice option based on yesterdays costs/technology), and final putting ~Vice President, Operations together a detailed multi-year year ROI justification that is Large Retailer conservative but consistent with company requirements. A proper plan should demonstrate payback within two years with some components yielding less than a one year payback.For more information on this or other research topics, please visitwww.aberdeen.com.© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  10. 10. Voice Technology Meets the eCommerce Distribution ChallengePage 10 Related Research Fulfillment Excellence and Dynamic Event Labor Management: Instill Accuracy, Warehousing Come of Age, January Efficiency, and Productivity in the 2012 Warehouse and Retail Store; March Warehouse Management Excellence: 2010 Maximizing Resources and Efficiency, On-Time and Under Budget: Maximizing November 2010 Profits with Efficient Warehouse Robotics going Mainstream: Improve Management; December 2009 Warehouse Productivity and Safety; Warehouse Operations: Increase September 2010 Responsiveness through Automation; July International Transportation: Optimize 2009 Cost and Service in a Global Market; July Five Key Steps to Optimizing Warehouse 2010 Management; February 2009 Author: Bob Heaney, Senior Research Analyst, Supply Chain Management (bob.heaney@aberdeen.com)For more than two decades, Aberdeens research has been helping corporations worldwide become Best-in-Class.Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provideorganizations with the facts that matter — the facts that enable companies to get ahead and drive results. Thats whyour research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% ofthe Technology 500.As a Harte-Hanks Company, Aberdeen’s research provides insight and analysis to the Harte-Hanks community oflocal, regional, national and international marketing executives. Combined, we help our customers leverage the powerof insight to deliver innovative multichannel marketing programs that drive business-changing results. For additionalinformation, visit Aberdeen http://www.aberdeen.com or call (617) 854-5200, or to learn more about Harte-Hanks, call(800) 456-9748 or go to http://www.harte-hanks.com.This document is the result of primary research performed by Aberdeen Group. Aberdeen Groups methodologiesprovide for objective fact-based research and represent the best analysis available at the time of publication. Unlessotherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not bereproduced, distributed, archived, or transmitted in any form or by any means without prior written consent byAberdeen Group, Inc. (2012a)© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  11. 11. Voice Technology Meets the eCommerce Distribution ChallengePage 11 Appendix A: Investment Popularity & ROI GuidelinesFrom January Warehousing 2012 report (Fulfillment Excellence and Dynamic Event Warehousing Come of Age)Technology - Meeting the Event Driven Fulfillment Fast FactsChallenge  94% of respondents will beWhen it comes to bringing together best-practices in process improvements exploring process orwith the technology available in the market today, investment in WMS / LMS technology solutions tosoftware, auto-ID and mobility, and material handling equipment has largely become more Event Drivenmatured, and is poised to match business need in virtually every aspect of and Real-time in fulfillmentwarehousing. One trend is clear from the data: real-time processing andevent driven warehousing has arrived and is growing. According to our  78% of respondents expect full payback on process orstudy there is Best-in-Class distinction in capabilities that include: technology investments  85% of the Best-in-Class confirm transactions with automatic data within 2 years capture barcoding, speech, RFID  26% of respondents expect  78% of the Best-in-Class utilize direct order-picking with mobile devices full payback on process or technology investments  72% of the Best-in-Class utilize commercial warehouse management within 1 year or less. software (WMS). These solutions all offer advanced dynamic event management  Over 50% of even Laggard companies utilize the preceding key Dynamic Event Processing featuresWith the exception of voice and robotics (which are just now emerging asoptions for all companies to explore) most companies have alreadydeployed most technology/automation options. Companies in each classneed to select the right options from all that compete for the companyscontinuous improvement dollar.We asked the respondents planning to invest in one or more technologyareas to indicate their interest in investment / improvement by technologytype. Table A provides a decision matrix to assist in developing the cost /benefit and ROI factors.Out of 134 survey takers 123 are interested in options ranging fromsoftware, equipment, logistics service providers, or 3PLs to help themupgrade their current capabilities or handle portions of their volume. Thereal challenge in selection is aligning the right technology / solution to eachoperations-specific need or operating profile, then sorting through a cost /benefit analysis of all competing options.Across the top of the matrix are the various technology types, ranging fromEvent Driven Processing (which includes all real-time interactive activities inpicking, replenishment), in which 94% of respondents (116 companies) plan© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  12. 12. Voice Technology Meets the eCommerce Distribution ChallengePage 12to invest, and ending in 3PL at 31% of respondents (38 companies). In themiddle section of the matrix are the ROI required financial payback hurdlesmandated for each solution type and company.Table A: Technological Investment Hurdles and ROI Guidelines Expected ROI All Event WMS Auto Mat LMS Voice 3PL Types Driven ID HdlingPercent of Companies 94% 88% 83% 62% 59% 37% 31% Planning 0 - 6 months 6 4 5 2 2 2 2 - 7 - 12 months 26 35 17 29 10 20 8 4 13 - 18 months 45 33 45 29 31 17 15 16 19 months - 2 years 21 21 18 20 15 16 10 10 2 - 3 years 18 16 16 15 14 12 8 5 3 - 5 years 6 6 6 6 4 4 2 3 More than 5 years 1 1 1 1 - 1 - - Total Companies … 123 116 108 102 76 72 45 38 Months to ROI…. 18.3 18.0 18.9 18.7 19.6 19.2 18.9 20.5Percent expecting less 26% 34% 20% 30% 16% 31% 22% 11% than 1 year ROI Source: Aberdeen Group, December 2011Note: while none of the companies in the study have internal ROI financial paybacks set at beyond five years this does not imply that these solutions have been used for less than 5 years. In many instances these solutions have been in place at these companies for 7 -10 years and more. Automation and equipment are depreciated on schedules of 7 years plus, but the ROI plan is still 2 years or lessOverall there is an average ROI expectation of 18.3 months to payback.Some companies target paybacks in less than one year, and the last rowsummarizes the percent of companies expecting that rapid return. In theROI matrix, we observe:  The popularity of a given investment choice is ranked from left to right, and the first three items (Event Driven, Auto ID and WMS) are in the 80% plus range. Auto ID has a very high current adoption rate (Table 3 shows adoption levels ranging from 85% to 73% respectively depending on maturity class).  The most popular choice for investment, Event Driven technology (94%), includes several other categories of investment across Auto ID and WMS / LMS. It also integrates Material Handling systems and mobility devices, RF, and mobility devices and Voice. It relies on real-time data capture and employee / task tracking, and hence must be coupled with WMS / LMS features and employee labor. The pressures / actions from the survey, including the top action "the need to integrate order and operating delivery flows" and the top© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  13. 13. Voice Technology Meets the eCommerce Distribution ChallengePage 13 pressure, the "need to manage multiple logistics channels" such as Current Software Usage All cross-docking, depend on real-time event processing. Hence WMS /  68% - Commercially OMS / LMS systems need to be able to process dynamically in developed warehouse response to a growing number of real-time events. Event Driven management software Technology by nature requires concurrent change across people, (WMS) process and technology. As such, it can involve significant capital outlays, and yet, because it yields benefits in labor productivity and  56% - Transportation management resource efficiency, it can produce significant ROI (34% of respondents say it can self-fund within one year). Each area Event  55% - Spreadsheets or Driven Technology touches can provide unique benefits, but these manual system to manage are complementary solutions, meaning that if one can take time out the warehouse or to report of a process with mobility or voice, then one can plan, measure, metrics schedule, and allocate labor to the new process under LMS.  48% - Home-grown or  The system choices, WMS at 88% and LMS at 59%, benefit from legacy WMS that is no high levels of current adoption already (see sidebar, even though longer commercially supported many are using home grown and manual systems). Many opt to replace or upgrade the system they have in place to move from  46% - Distributed order batched and paper-based operations to dynamic real-time event management software processing. The commercial systems that exist today are robust in  42% - Labor management their capabilities to handle high volume real-time interactions with software RF, mobility and high speed tracking / confirmation, and can support task interleaving.  39% - Mobile computer software for ruggedized  The most common automation choices, at 62%, are material warehouse applications handling solutions like conveyors, unit sortation, and so on. While these solutions require a steeper investment, they can be very  33% - Commercially beneficial and can sustain considerable growth in throughput volume developed warehouse without the need to add headcount. Some companies which are control software (WCS) capital rich but hiring shy can benefit from the opportunity these  18% - Home-grown or solutions provide. It is also apparent from our research that many of legacy WCS that is no longer these solutions are in use by the Best-in-Class, which are two to commercially supported three-times as likely to have many of them as their peers (see Warehouse Management Excellence: Maximizing Resources and Efficiency, November 2010 for a detailed comparison).  Finally, at 37%, voice technologies are becoming more accepted and more capable (this is a significant uptick in planned investment given that only about 20% of companies have voice today). The current state of the technology has benefited from the smartphone revolution. Devices have become more free-ranging, and are being bundled with Auto ID and mobile device technology. Both of these technologies are being applied in non-traditional warehouse areas like put away, replenishment, and support. The new event-driven needs of the modern warehouse, coupled with lower costs are fueling renewed interest in this technology.  The final choice, 3PLs or logistics service providers (31%), is a growing option for handling overflow volume, strategically balancing the supply network, or offering extended capabilities (value added services and multi-channel logistics, Figure1, for example) that a© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897
  14. 14. Voice Technology Meets the eCommerce Distribution ChallengePage 14 company does not possess in-house. The sidebar to the right provides more details on the current levels of adoption of this solution.Again, each company has different operating profiles and requirementswhich should always be matched to the solutions that best fit.Future Investments to Increase 35% over 12 months Outsourced Services (3PL/LSP):Current utilization of technologies, some of which are referenced in the  23% to 31% off alltechnology section of Table 3, range from a low of 11% for robotics (newer companies seek to expandtechnologies), to the 60% to 80% range for WMS, and the 80%+ range for outsourced services forsome applications of barcodes and auto ID or Real-time Event Processing. logisticsYet virtually all companies using Auto ID today (83% from Table A) are Beyond these levels:upgrading to newer equipment and expanding to non-traditional aspects oftheir operations (see the case study of the Specialty Retailer, for example).  49% to 60% of all companies currently utilize outsourcedThe same is true for WMS / LMS, which are extending into advanced or managed services forfeatures like slotting, yard management, incentive based pay, and pay for components of theirperformance in new and existing warehouse sites. warehouse managementThe big story is in enhancements or extensions of functionality to software /  29% to 41% of all companiesequipment and tools already in use. Nearly 50% of current users, those currently outsource to morerepresented by the ROI solutions matrix in Table A, plan enhancements. than one 3PL or logistics service providers for  Virtually all companies using Auto ID today (83% from Table A) are components of their upgrading to newer equipment and expanding to non-traditional warehousing or logistics operations (see the case study quote of the eCommerce Retailer, for example).  The same is true for WMS / LMS, which are extending into advanced picking and replenishment methods like task interleaving, mobility solutions, slotting, replenishment, yard management, incentive based pay, and pay for performance in new and existing warehouse sites.  Many companies which have made sizable investments in technology plan to extend their investment, or at least deploy untapped features in solutions they already have, resulting in an average overall 35% increase in usage in the next 12 months and beyond.In general terms, regardless of class, periodic ROI assessment and focus canimprove on-time delivery and throughput, bolster productivity, and reducewarehousing and labor cost year-over-year. Best-in-Class companies havebeen able to affect a 3% to 9% percentage point advantage in cost metrics,while sustaining the high 97% perfect order metric.© 2011 Aberdeen Group. Telephone: 617 854 5200www.aberdeen.com Fax: 617 723 7897

×