aberdeen survey of voice users

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent 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.

January 2012

Event Driven Warehousing Trends:

Voice Users Speak Out

In November and December of 2011, Aberdeen surveyed 134 warehousing

professionals for a benchmark report (Fulfillment Excellence and Dynamic

Event Warehousing Come of Age) that explores the pressures these

companies are facing and what plans they have for the coming months. This

Sector Insight focuses on one specific segment of warehouse professionals -

voice users. To learn more from this segment in December 2011 we sent

out a detailed follow-on survey to obtain a larger sample of current voice

users so we could compare them with their peers. Based on the new survey

we obtained 65 qualified responses. This insight compares the 32 voices

users to the remaining 33 companies. What can we learn from the 32 voice

companies versus the others? How are the voice companies coping with

present economic conditions, what capabilities do they have, and what

technologies do they rely on to ensure efficient operations and provide

value to their customers?

Event Driven Warehousing Trends: The Advantage of

Voice Explored

In today's environment a predominant pressure companies are experiencing

is a need to reduce warehouse operating expenses while maximizing

utilization of resources. In order to achieve this goal, over 94% of all

companies are looking to enhance or acquire more dynamic and interactive

warehouse processes. Across a broad spectrum of options ranging from

Auto ID and RF or mobility and including voice technologies (see Appendix

A) they are willing to invest in more real-time, hands-free interactive

processes. The goal is both to increase efficiency of software and

automation across the entire distribution network and to improve alliances

with internal and outside parties to allow for better planning of physical

space/locations and labor, and to justify and prepare for the future, in terms

of potential investments and ROI expectations.

The Current and Future State of Voice Technology

In our recent survey we get a better idea of the level of technology

adoption and integration by the Voice Users and better understand their

plans for integrating voice solutions into their future warehouse strategies.

We also uncover the connection between warehouse complexity and

volume and a need (or desire) to balance tasks or labor and more mobile /

interactive technology with voice capability into picking or replenishment

operations.

Sector Insight

Aberdeen’s Sector Insights

provide strategic perspective

and analysis of primary

research results by industry,

market segment, or geography

Sector Definition

This document is focused on

the current voice users - a

total of 32 companies out of 65

enterprises from the detailed

follow-up survey report.

Both voice and no voice

companies have virtually equal

percentages by organization

type:

44% - Original manufacturer

30% - Distributor

/Wholesaler

19% - 3PL

15% - Other

10% - Retailer

10% - Freight Forwarder,

Customs broker

6% - Supplier Manufacturer /

Supplier

Note: 30 or more users yields

a 95% statistical confidence

level

http://aberdeen.com/Aberdeen-Library/6386/RA-warehouse-labor-management.aspx


Voice Technology Meets the eCommerce Distribution Challenge

© 2011 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897

Table 1: Years of Voice Hardware Usage and % Refreshed

Years of Current Voice

Hardware Usage, n = 32

When

Acquired % Refreshed

0 months - 11 months 44% new or

refreshed units

2011= 24%

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 2011

Current State -Past Hardware Upgrades and Refreshes –

Largest Single Surge Occurred in Last 12 months

If past history serves us, from the above table we can see that in the average

year about 20% of voice users refresh or acquire current hardware in any

given year in a five-year cycle. It is interesting to note that the most

significant amount of hardware upgrade or refresh for voice technology

occurred in the past 12 months (cited by 44%, Table 1). We can break

down 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 2011

The point to be made is that (based on what is considered to be a qualified

sample at the 95% confidence level) we have seen a full 20% of the Voice

Users acquired new voice equipment for the first time in 2011 and they did

so with an average ROI of 18.9 months (see Appendix A). This represents a

huge overall vote of confidence for the coming of age of voice technology

and the benefits that the move to voice technology can deliver in the

current, highly interactive, event-driven warehouse.

Future State - Plans for Voice Hardware / Software

Going forward the current users will be continuing to utilize their voice

technologies and over 80% will be updating, or refreshing their hardware in

the future – with at least 50% of all users, including those that have just

acquired voice in the last 12 months, citing they will refresh in the next

three years. As we see from the past (Table 1) and from what the users

have cited as the year of next refresh we can safely state that hardware

updates plans are continuous with 20% or more of companies

refreshing each year for the foreseeable future.

Of the Voice Users 90% will upgrade software at the same time as their

next hardware upgrade or refresh and 76% will consider a new device

manufacturer when they upgrade or refresh. It makes sense that




software would be upgraded and integrated with any process and hardware

change that a company has planned and, with the superior return on

investment that most voice users say they have obtained, it also makes

sense that 80% of them plan on continuing to utilize and enhance their voice

technologies. But it is instructive to understand why 76% are looking at

alternative manufacturers on their next upgrade or refresh.

For the 76% willing to consider a different hardware manufacturer

reasons 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 options

Many current voice users (35%) want to get out from under the

proprietary, high-cost voice devices that were common a number of years

ago. Back then, these pioneering companies had no choice but to acquire

such devices. But these are sophisticated buyers with continuing refresh

plans, and the market has now evolved to where major manufacturers are

offering open, lower-cost voice-capable units that are also multi-modal

devices (36% cited this as the top reason to switch). These stats show that

current voice users are eager to jettison proprietary, single-mode devices

and move to alternatives that offer more flexibility and lower TCO.

Regarding Software experience, 40% of current users cited high cost and

time 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 the

voice 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 changes

The remarkable thing here is that cost is the top concern. Majority of all

current voice users have a major issue when changes to voice apps are

needed. They either delay change until they can justify paying to

open/update the code, or they avoid change altogether. Of current users




42% batch updates and 37% avoid altogether, so this is a remarkably large

number and it speaks to the problems inherent to an existing, custom-

coded voice solution. One valid observation is that if these companies who

are committed to voice could find a way to make their software

infrastructure more flexible then they could gain a further competitive

advantage over companies that continue to live with closed, proprietary

custom solutions.

Experienced voice users are committed to voice because of its operational

benefits, but they need to find a way to bring down this high cost of change

in order to be more agile. Hardware refresh is an ideal time to investigate

ways to make the voice system more flexible and move to a lower TCO

architecture.

Regardless of the impetus, whether hardware or software improvement or

enhancement is driving the change, the voice users are continuing to invest

in the technology. Hardware tends to lead the way closely coupled with the

associated process and software changes required to move from current

state operations to a more event-driven warehouse. Both within picking and

replenishment many tasks require interactive processing. Across all users,

both Voice and Non-Voice, there is a trend to adopt more dynamic event

capabilities. In Table 2 we compare areas where Voice Users are

demonstrating more advanced Dynamic Event Capability. In each instance

the 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 more

likely that a Voice User has the indicated capability versus a Non-Voice

User.

Table 2: Dynamic Event Performance Gaps- Voice versus Other

Voice

Users

Dynamic Events:

Have or Have and Plan to Enhance

Non-

Voice

GAP

Voice

92% Direct order-picking with mobile devices 41% 2.24

75% Hold replenishment tasks and release

replenishment to coincide with picking

18% 4.17

71% Task interleaving dynamically (switching

employees between functions - picking,

replenishment)

45% 1.58

51% Dynamic real time order dispatch (i.e., ability

to interleave order adds or quantity changes)

25% 2.04

42% Event management (automatically notifying

personnel when certain warehousing events

take place)

18% 2.33


So we see from Table 2 both the relevance/popularity of process change by

the specific areas of interactive dynamic event processing that is fueling the

continued deployment and enhancement of voice technology. However, as




companies make hardware refreshes they need to reengineer the software

processes as well. For current voice users the following are reasons they

are considering upgrading their voice application upon refresh:

50% We want something that is easier to coordinate with our WMS

33% We want a solution that doesn’t cost so much to change

33% Our IT group wants us to get more modern technology

22% We want to change hardware vendors and our current

solution either does not support the new vendor’s device or the cost to move it to that device is higher than what we want to pay

In summary both hardware and software architecture refreshes and

upgrades are on the horizon for up to 76% of the voice pioneers. Current

voice users have the opportunity to leverage the cost benefits of voice

further if they can improve their software infrastructure to be more

amenable to change. Finally, the majority of those converting/enhancing are

willing to consider aggressive “rip and replace” strategies to be more

flexible with the interactive processing needs they plan to embrace.

Current Voice Users Speak Out

The experiences of current users as illustrated in the quotes that follow

indicate that complexity and volume increases within the warehouse are

fueling change. There is a need for more dynamic and flexible processes

and more real-time technologies within the warehouse. The move from

label-based picking to voice-directed picking is a technology option that

companies should explore (or continue to explore) as they look into many

of 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

Voice Users are Refreshing

Hardware

(A substantial number of

voice users (over 50%) will

refresh their current voice

devices over the next 3

years.

A total of 76% of all voice

users are willing to consider

a new hardware

manufacturer on their next

refresh




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 Manufacturer

Voice User Strategic Capability Assessment

From our companion study (the December warehouse management report)

with findings across 134 investing companies, 17% of companies have

already deployed voice enabled warehouse management technology to drive

improvements in operational efficiency. And in aggregate about 20% (a total

of 37% of companies which we will call the voice users) have and /or plan to

invest in voice technology in the next 12 months (see Appendix A). Overall,

across all companies on the topic of warehouse management, Aberdeen

found that two of the top three business pressures centered on efficiency

and resource management "doing more with less." With respect to the top

pressures for the voice users alone we see that they exactly mirror the full

sample across all companies with regards to "doing more with less."

Specifically both voice and no voice groups have identical percentages on or

need 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)

let's focus on the three where voice users have the highest priority gaps and

are 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 shipments

It is clear that the voice users are more event-driven and balanced, placing

from 1.3-times to 3-times the level of focus in balancing and optimizing labor

to address volumes and mix, to reduce waste, and to balance that with

picking and shipping accuracy. Since labor comprises over 35% of the full

operating budget, labor is a clear focus for all respondents but is highest for




those operations with lots of each-picking and a variety of order types to

handle within their warehouse operations. To further illustrate the

challenges and opportunities of labor optimization under large growth and

complex operations it is interesting to note that on average the voice user

operated 6-7 DCs in their network.

Figure 1: Top Actions for Voice Users

10%

29%

46%

27%

37%

31%

38%

38%

46%

46%

0% 10% 20% 30% 40% 50%

Better leverage part-time / full-time mix

and / or realign shift volumes

Improve perfect order rate by improving

pick accuracy and on-time shipment

Add new, or enlarge existing, warehouse

space

Reduce staff and / or elimination of idle

resources

Offload some products or volume to a

3PL or satellite facility

Percent of Respondents, n = 158

No Voice, n=127 Voice, n=31


Again, we can see from a ranking of current capabilities that voice

companies are more aware and more prepared to address the labor and

process complexities across order pick and replenishment types where they

are 1.2-times to 3-times as likely as their peers to have capabilities in place

to handle the various order replenishment processes required of their

operations such as task-interleaving and hot replenishments.

The number of order and process flows required increases dramatically as

the complexity, number of DC sites, and volume increases and can justify a

move to more real-time, dynamic and flexible technologies such as voice.

These technologies are more advanced than they have ever been and up to

39% of all respondents from the Voice Users in our follow-on study indicate

that these technologies produce benefits allowing them to self fund in one

year. One caution for companies as they explore these options is to

diligently explore their volumes and process flows by SKU, channel and

order type. Voice technology alone is not always the answer: companies

must look to process first and, as in our interviews indicate, devise an

overall automated solution complete with layout or sizing of new zones,

introduction of "put areas," conveyors, printers and a variety of supporting

investments.

In addition to process reengineering and hardware upgrades there must be

conjoint focus on flexibility in software architecture. With the software

changeover cost challenges cited by voice pioneers (“42% batch changes and

"Actual results to date have

resulted in overall productivity

levels that can result in a

payback within 1.5 years.

However, it should be noted

that the voice functionality

component yielded a payback

of less than a year. The

workers have been very

receptive to the change, and

have embraced it in a fashion

capable of the quick ramp-up

we needed in advance of the

2010 holiday season. We also

estimate that, operating under

the old system, this additional

volume would have incurred an

additional cost of $400,000

during the holiday season

alone."

~ VP Supply Chain, Large

Specialty Ecommerce Retailer




37% try not to change voice systems due to cost” from above) software

architecture must likewise be more adaptable and interoperable. Voice can

be flexible but, to adjust to multi-modal devices and more highly interactive

events, software must be simplified. This current focus is and should give

priority to a software solution architecture is that is “open and flexible as

opposed to closed and hard coded.” For the users we interviewed it was

only when the streamlined process and integrated hardware/software

automation solution had been carefully planned that it was it possible to

layer in the voice components to bolster efficiency and accuracy. Planning an

integrated solution and embracing these technologies allows companies to

move off of constrictive label-based processes and to move picking,

replenishment and other functions within the warehouse to new levels of

efficiency and agility.

Required Actions

Whether a company is trying to move its performance in warehouse

management and resource utilization to new levels or simply wants to

reduce its labor costs or increase its order flow, the following actions will

help to spur the necessary program success:

Debunking the High Cost Perception. Picking activities in our

survey encompass over 50% of the direct labor and 35% of the

operating budget. The interactive processing of interleaved order

volume and movement of staff can yield superior costs/efficiencies.

Costs for voice are coming down and ROIs within the first year are

possible with the benefits that innovative voice solutions can

provide. For Voice and Non-Voice users alike there is a need to

look anew at today’s costs and technologies for voice - unhampered

with yesterday’s perception of high cost. Remember 31% of non-

voice users are reevaluating the voice option for their future

investment strategies and up to 39% of Current Voice Users expect

a payback of less than 1 year. With costs down and savings up the rewards can be healthy.

Move toward multi-modal, easily-adaptable technology.

Most of the barriers identified by current voice users indicate a

desire to move toward multimodal easily adapted technologies.

When it comes to mobility within the warehouse being able to

interact with order and processing flows at the device level

becomes more important and the ability to have multiple ways to

confirm events is central to success in today's dynamic warehouse

environment. Learn from leading companies and current voice users

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

Regarding Software Experience,

Current Voice Users Speak Up

40% of current users cited

high cost and time 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 application

changes 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




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 operations.

Apply rigor to the ROI justifications. As we indicated earlier

complex operations require diligence in preparing a rigorous

reengineering and ROI justification plan. Companies do not simply

address volume and complexity by rolling automation into the mix.

A successful business transformation requires careful volume,

channel, and order level analysis and planning. Focus should be

placed on streamlining processes first, applying appropriate

technologies in an integrated fashion (don’t overlook the voice

option based on yesterdays costs/technology), and final putting

together a detailed multi-year year ROI justification that is

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 visit

www.aberdeen.com.

“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/implementa

tion cost. If costs/savings and

voice technology have

improved we our foolish not to

reassess it.”

~Vice President, Operations

Large Retailer

http://www.aberdeen.com/




Related Research

Fulfillment Excellence and Dynamic Event

Warehousing Come of Age, January

2012

Warehouse Management Excellence:

Maximizing Resources and Efficiency,

November 2010

Robotics going Mainstream: Improve

Warehouse Productivity and Safety;

September 2010

International Transportation: Optimize

Cost and Service in a Global Market; July

2010

Labor Management: Instill Accuracy,

Efficiency, and Productivity in the

Warehouse and Retail Store; March

2010

On-Time and Under Budget: Maximizing

Profits with Efficient Warehouse

Management; December 2009

Warehouse Operations: Increase

Responsiveness through Automation; July

2009

Five Key Steps to Optimizing Warehouse

Management; February 2009

Author: Bob Heaney, Senior Research Analyst, Supply Chain Management

([email protected])

For more than two decades, Aberdeen's 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 provide organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500.

As a Harte-Hanks Company, Aberdeen’s research provides insight and analysis to the Harte-Hanks community of local, regional, national and international marketing executives. Combined, we help our customers leverage the power of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional information, 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 Group's methodologies provide for objective fact-based research and represent 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. (2012a)



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Appendix A:

Investment Popularity & ROI Guidelines

From January Warehousing 2012 report (Fulfillment Excellence and Dynamic Event

Warehousing Come of Age)

Technology - Meeting the Event Driven Fulfillment

Challenge

When it comes to bringing together best-practices in process improvements

with the technology available in the market today, investment in WMS / LMS

software, auto-ID and mobility, and material handling equipment has largely

matured, and is poised to match business need in virtually every aspect of

warehousing. One trend is clear from the data: real-time processing and

event driven warehousing has arrived and is growing. According to our

study there is Best-in-Class distinction in capabilities that include:

85% of the Best-in-Class confirm transactions with automatic data capture barcoding, speech, RFID

78% of the Best-in-Class utilize direct order-picking with mobile devices

72% of the Best-in-Class utilize commercial warehouse management

software (WMS). These solutions all offer advanced dynamic event

management

Over 50% of even Laggard companies utilize the preceding key Dynamic Event Processing features

With the exception of voice and robotics (which are just now emerging as

options for all companies to explore) most companies have already

deployed most technology/automation options. Companies in each class

need to select the right options from all that compete for the company's

continuous improvement dollar.

We asked the respondents planning to invest in one or more technology

areas to indicate their interest in investment / improvement by technology

type. 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 from

software, equipment, logistics service providers, or 3PLs to help them

upgrade their current capabilities or handle portions of their volume. The

real challenge in selection is aligning the right technology / solution to each

operations-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 from

Event Driven Processing (which includes all real-time interactive activities in

picking, replenishment), in which 94% of respondents (116 companies) plan

Fast Facts

94% of respondents will be

exploring process or

technology solutions to

become more Event Driven

and Real-time in fulfillment

78% of respondents expect

full payback on process or

technology investments

within 2 years

26% of respondents expect

full payback on process or

technology investments

within 1 year or less.






to invest, and ending in 3PL at 31% of respondents (38 companies). In the

middle section of the matrix are the ROI required financial payback hurdles

mandated for each solution type and company.

Table A: Technological Investment Hurdles and ROI Guidelines

Expected ROI All

Types

Event

Driven

WMS Auto

ID

Mat

Hdling

LMS Voice 3PL

Percent of Companies

Planning

94% 88% 83% 62% 59% 37% 31%

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 20.5

Percent expecting less

than 1 year ROI

26% 34% 20% 30% 16% 31% 22% 11%


Note: 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 less

Overall there is an average ROI expectation of 18.3 months to payback.

Some companies target paybacks in less than one year, and the last row

summarizes the percent of companies expecting that rapid return. In the

ROI 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




pressure, the "need to manage multiple logistics channels" such as

cross-docking, depend on real-time event processing. Hence WMS /

OMS / LMS systems need to be able to process dynamically in

response to a growing number of real-time events. Event Driven

Technology by nature requires concurrent change across people,

process and technology. As such, it can involve significant capital

outlays, and yet, because it yields benefits in labor productivity and

resource efficiency, it can produce significant ROI (34% of

respondents say it can self-fund within one year). Each area Event

Driven Technology touches can provide unique benefits, but these

are complementary solutions, meaning that if one can take time out

of a process with mobility or voice, then one can plan, measure,

schedule, and allocate labor to the new process under LMS.

The system choices, WMS at 88% and LMS at 59%, benefit from

high levels of current adoption already (see sidebar, even though

many are using home grown and manual systems). Many opt to

replace or upgrade the system they have in place to move from

batched and paper-based operations to dynamic real-time event

processing. The commercial systems that exist today are robust in

their capabilities to handle high volume real-time interactions with

RF, mobility and high speed tracking / confirmation, and can support task interleaving.

The most common automation choices, at 62%, are material

handling solutions like conveyors, unit sortation, and so on. While

these solutions require a steeper investment, they can be very

beneficial and can sustain considerable growth in throughput volume

without the need to add headcount. Some companies which are

capital rich but hiring shy can benefit from the opportunity these

solutions provide. It is also apparent from our research that many of

these solutions are in use by the Best-in-Class, which are two to

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

Current Software Usage All

68% - Commercially

developed warehouse

management software

(WMS)

56% - Transportation

management

55% - Spreadsheets or

manual system to manage

the warehouse or to report

metrics

48% - Home-grown or

legacy WMS that is no

longer commercially

supported

46% - Distributed order

management software

42% - Labor management

software

39% - Mobile computer

software for ruggedized

warehouse applications

33% - Commercially

developed warehouse

control software (WCS)

18% - Home-grown or

legacy WCS that is no longer

commercially supported

http://www.aberdeen.com/aberdeen-library/6887/RP-warehouse-fulfillment-management.aspx

http://www.aberdeen.com/aberdeen-library/6887/RP-warehouse-fulfillment-management.aspx




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 requirements

which should always be matched to the solutions that best fit.

Future Investments to Increase 35% over 12 months

Current utilization of technologies, some of which are referenced in the

technology section of Table 3, range from a low of 11% for robotics (newer

technologies), to the 60% to 80% range for WMS, and the 80%+ range for

some applications of barcodes and auto ID or Real-time Event Processing.

Yet virtually all companies using Auto ID today (83% from Table A) are

upgrading to newer equipment and expanding to non-traditional aspects of

their operations (see the case study of the Specialty Retailer, for example).

The same is true for WMS / LMS, which are extending into advanced

features like slotting, yard management, incentive based pay, and pay for

performance in new and existing warehouse sites.

The big story is in enhancements or extensions of functionality to software /

equipment and tools already in use. Nearly 50% of current users, those

represented by the ROI solutions matrix in Table A, plan enhancements.

Virtually all companies using Auto ID today (83% from Table A) are

upgrading to newer equipment and expanding to non-traditional

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 can

improve on-time delivery and throughput, bolster productivity, and reduce

warehousing and labor cost year-over-year. Best-in-Class companies have

been able to affect a 3% to 9% percentage point advantage in cost metrics,

while sustaining the high 97% perfect order metric.

Outsourced Services (3PL/LSP):

23% to 31% off all

companies seek to expand

outsourced services for

logistics

Beyond these levels:

49% to 60% of all companies

currently utilize outsourced

or managed services for

components of their

warehouse management

29% to 41% of all companies

currently outsource to more

than one 3PL or logistics

service providers for

components of their

warehousing or logistics

aberdeen survey of voice users

Documents