Canadian Retailer - The Supply Chain & Logistics Issue - 30

WAREHOUSE ROBOTICS

"But since the '80s, labour has increased and the
cost of the equipment is pretty much the same. It
keeps getting miniaturized and made better, less
steel goes into it because there's more engineering in how it's built, and other things like that.
So, the equipment is actually becoming cheaper
while labour is becoming more expensive."
This development is having a profound impact on
the way retailers see their business, Taliaferro says.
"What's happening to the retail business is that
it's changing from an operating cost-based business-to a capital-based business, where a lot of
capital is being invested into these things."
He adds: "I think the industry structurally is
changing. Now retailers need capital, so it's more
of a financial problem that can be solved through
either borrowing or issuing stock, or whatever the
financial strategy of the retailer is."

The impact on HR

The robotics revolution carries big implications
for human resources, too, Stephens says.
"When I talk to groups of retailers and we talk
about technology, not just on the backend of the
operation but also now creeping into the front end
of the retail store, it seems almost inevitable that
there's going to be significant, widespread displacement of people here. So, I think companies would be
well advised to start thinking about that now.
"How can we potentially retrain people? How
can we redeploy them? Where could these people,
who are loyal, hard-working brand ambassadors,
be of the most value? Maybe a sizable proportion
of those people can be redeployed."
That comes with a caveat, however

"The old adage was that new technologies come
along and create new jobs that we can't
now foresee," Stephens says. "That was
"THIS IS NO LESS IMPACTFUL THAN THE MOVEtrue in the Industrial Age where one
MENT OF ROBOTS INTO THE AUTO INDUSTRY
machine might come in and replace
IN THE 1970S AND '80S. IT WILL HAVE AS
three men or women. But we're now
DRAMATIC AN EFFECT. THE COST SAVINGS ARE
talking about robotics and Artificial
MASSIVE. AND IN A RETAIL MARKET WHERE
Intelligence in some cases, wiping out
RETAILERS FIND THAT TOP-LINE GROWTH
entire categories of work."
IS ELUSIVE, THE BACKEND POTENTIAL FOR
He adds: "This isn't just about the
SAVINGS IS EXTRAORDINARY."
person walking bin to bin picking mer- DOUG STEPHENS
chandise. This is potentially about the
Retail Prophet
white collar manager whose responsibility is the overall warehouse operChanging mindset
ation. It's going to have a significant toll on the in "Ultimately, the retailer will be better off, but it's dustry, and I think we have to be prepared for that."
a change in thinking," he says. "I guess you could
say there's a wake-up call that all of a sudden A new kind of manager
we need to invest a lot more capital in our oper- Deloitte's Taliaferro argues that "we need a difations for all these reasons that everyone's talk- ferent kind of manager" to step up to the challenge.
ing about-[rising] minimum wage, not enough "It's got to be somebody that's technically caskilled labour available, those types of things.
pable of managing the operations of the machines
"We're going to get the payback, so we've got to and their various capacities, along with the operfigure out how to find that capital and prioritize it ations of the humans that are feeding them or
to get that piece done."
working alongside them. It's a much more sophisti Stephens agrees that economic considerations cated manager of the future than a lot of the wareare playing a major role.
house managers that are out there now."
"Some of this has to do with how you please There are other considerations as well, Taliayour shareholders in a world where you're not ferro says.
growing your top line and your stores look less "I think it [robotics] is the way to go forward,
productive each year, as is the case with some but that doesn't mean there are no drawbacks. If
major chains, particularly in the U.S. but also in your business is highly volatile, if you a retailer in
Canada," he says.
Chapter 11, I don't think you would be able to go
"And so you have to look at backend costs, out and make a huge capital investment in this
and when you're using conventional warehous- stuff unless you are pretty sure that your plan going methods there's a minimum threshold in the ing forward was going to keep you in business.
number of people you can cut before that ware- "Because it's a long-term investment that you're
house simply won't work."
making in these systems."
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