Dragging the warehouse into the 21st Century

Retailers and logistics companies worldwide now have to squeeze profits from ever-tighter margins. Competition is fiercer than ever and customers are more fickle. Behind the shopfloor, technology is playing a key role in making warehouses and distribution centres more efficient and connecting different parts of a business and its workers.

However, any new investment in technology now has to deliver a quicker return in investment than during the boom years of the 1990s. Corporate IT spending appears to be staging a recovery but for many retailers and logistics companies budgets are still tight.

Company boards are also more sceptical over the promises made by IT suppliers, whose so-called solutions can often create more problems than they solve. So what are the key technologies in the retail and logistics industries? And can they live up to their hype?

Radio Frequency Identification (RFID) is widely viewed as the hottest technology on the block at the moment. The tags, attached to goods to track their progress along the supply chain, will allow companies to make significant efficiency savings and will revolutionise the way retailers and logistics companies operate, according to many analysts.

RFID technology has received a boost after being adopted and tested by retail giants including WalMart and Tesco. Meanwhile, suppliers are starting to come under pressure from large retailers to start using RFID technology if they want to continue trading with them.

But despite a handful of household names using RFID and acres of publicity in press the technology is far from widespread. Barriers to the ubiquity for RFID include the relatively high cost of the technology, currently around 50 cents per tag but will reduce, and a lack of common technical standards to ensure systems and products can talk to each other. And for most cost-conscious small or medium-sized companies in the logistics or retail industry RFID technology is just not cheap enough yet to deliver an acceptable return on investment.

Nor is it precise enough for the needs of warehouse pickers. Currently RFID readers cannot pick out one case being picked from a pallet at the point of pick something that voice technology devices have no problem in doing.

However, for companies looking to improve productivity in the warehouses there are technologies in addition to RFID. Take voice technology, which is already widely used in the US and has been around for more than 15 years.

The speech recognition software is programmed to create a voice template based upon around 40 key sounds, such as numbers and types of product, that are spoken to the device by the worker. And because the device recognises voice patterns and sounds it can recognise any language or dialect. Instructions for the days picking are sent over the RF network by the host system to the workers voice device. Responses from the worker can ensure that stock records, in the central warehouse management system, are updated instantly.

This can reduce the time it takes to train new staff but more importantly voice technology has been proven to improve productivity by an average of 15% for the companies using it. The accuracy rate for recognising speech can be as high 99.99%, which significantly reduces the number of picking errors. In addition, voice technology can also help improve safety in the warehouse because workers are able to keep their hands and eyes free, unlike when using a handheld scanner.

The third hot technology in the retail/logistics industry is Voice Over IP (VoIP). VoIP is revolutionising communications around the globe and companies have experimented for a number of years using VoIP to communicate picking information in the warehouse -- based on mobile-phone type devices to communicate over a small wireless network however, like RFID, this technology currently has significant limitations when used in the warehouse. Typically the accuracy rate for VoIP systems used for warehouse picking is around 85% compared to 99.99% for some voice technology products.

Of course all three of the above technologies are evolving and becoming better suited to the needs of customers. Voice technology is starting to tap into new technologies such as Bluetooth, the wireless communication standard. Portable wireless printers that are Bluetooth compatible will allow a worker to print off labels by speaking a command.

And as printing technology becomes more sophisticated it will also become possible to print off high-quality labels from a voice activated device. It would be a mistake to see RFID, voice technology and VoIP as competing and incompatible technologies. All are capable of delivering a big return on investment and all help companies either track, locate or move items more efficiently.

Some retailers and IT suppliers, including WalMart and Vocollect, manufacturer of Talkman the worlds leading voice device, are beginning to look at how voice and RFID technology can work together. This will not be easy the IT industry has a track record in promising products that can talk to each other, only to produce a hotch potch of proprietary systems that are often a nightmare to integrate.

RFID and VoIP have a huge potential but companies will also want to invest in better established technology such as voice that can deliver benefits more quickly. The challenge is to learn from mistakes of previous IT investment and drag the warehouse into the 21st century.

David Stanhope is CEO of VoiteQ, a leading expert in the delivery of voice-directed supply chain solutions for the distribution sector with extensive knowledge of the food services and grocery industries.