Four Trends Shaping Material Handling in 2022 and Beyond

Colman Roche December 9, 2021

Reading Time: 4 min.

Will 2022 be another busy and dynamic year for warehouse operators and their automation partners?

Industry 4.0 logistics in the digital age and Internet of Things IoT

With the coronavirus still shadowing everyday life, a great deal of uncertainty hangs over the material handling industry as we move into 2022. Yet, the industry can’t wait for that uncertainty to clear before making the investments required to enable supply chains to adapt to the changes occurring in the market. That should make 2022 another busy and dynamic year for warehouse operators and their automation partners. Here are four macro trends that we expect in the coming year.

1. Item picking moves upstream

There has been a general trend toward smaller order sizes in recent years and, in 2022, that trend continues as centralized pallet and case warehouses begin to integrate individual item picking into their operations. This trend will be driven by the continuing evolution of the retail landscape and the move into direct-to-consumer sales by manufacturers.

On the retail front, SKU growth and smaller store formats are limiting shelf space and forcing retailers to carry less inventory per SKU. Some will be challenged to accept cases of slower moving products and will have to push for single item replenishment of those products. Simultaneously, manufacturers recognize the opportunity in e-commerce and will need to support their entry into this market from their centralized warehouses by adding item handling capabilities to these facilities.

The result will be the transformation of many warehouses as they integrate new processes and technologies to enable efficient item picking. Goods-to-person technologies, such as cube-based automated storage and retrieval systems and mobile autonomous robots will find a home in warehouses that had previously only supported pallet and case handling.

This trend will also accelerate the adoption of robotic item picking systems. This technology offers compelling benefits for material handling operations as it has the potential to fully automate the picking process, helping operators adapt to labor shortages and cost pressures. Previous generation systems, however, were limited in the range of products they could pick, making them impractical in broad SKU applications. With more advanced gripping and vision systems, newer generation robotic picking solutions are expanding the range of products that can be picked while also offering the highest operational reliability. The central or regional warehouse provides an ideal environment for introducing robotic item picking due to the technical support infrastructure available at those sites.

2. Grocery retailers crystallize their MFC strategies

The impact of the coronavirus pandemic on e-grocery adoption has been well documented. Demand for e-grocery services has leveled since the hectic early days of the pandemic but is still much higher than grocers expected it to be just two years ago. We are also now seeing the same trend in e-grocery as we previously saw in other e-commerce markets: growing consumer expectations for faster order fulfillment. The difference is that fulfillment times for online grocery orders are measured in minutes or hours rather than days as in other e-commerce applications. As consumers integrate online grocery shopping into their daily and weekly routines, tolerance for longer fulfillment times has disappeared.

For large volume retailers this has made in-store, manual fulfillment impractical in many locations. Picking in-store is inefficient, expensive, and creates congestion that can alienate in-store shoppers. While a few large grocers, such as H-E-B and GIANT, have made the leap to automated micro-fulfillment centers (MFCs) and e-fulfillment centers (EFCs) to enable efficient order fulfillment close to customers, the majority of the market used 2021 to gain a better understanding of the complexities of e-grocery fulfillment and begin to implement the organizational changes required to support an MFC strategy in the future.

Moving into 2022, those organizations are benefitting from the experience of early adopters and gaining confidence in the MFC concepts that have been deployed. They now have answers to the key questions that were holding back broader adoption, such as what distribution strategy makes the most sense in certain environments; the e-grocery volumes required to make MFCs cost-effective; and the automation technology that delivers the balance of density, throughput, and reliability MFCs require.

As a result, 2022 will mark the year when virtually every major grocer finalizes their e-grocery strategy, and many will move into the execution phase using MFC automation. At the same time, early adopters will begin to scale their use of MFCs, benefitting from streamlined implementation as solutions that have been refined through pilot programs are replicated across the distribution network.

3. Supply chain connectivity begins to deliver global inventory visibility

One of the gaps that exists in many supply chains is the inability to gain a comprehensive view of inventory across global distribution and retail locations. This is a problem in today’s fast-paced and ever-changing distribution landscape as it limits the ability to react to both individual customer requirements and broader market shifts.

With the digitalization that has already occurred in warehouses and retail stores, this data is readily available at each site. But creating interfaces across the various software platforms in any given distribution network is challenging for individual organizations. There is a significant market opportunity for software platforms that can connect disparate systems across a global enterprise and deliver a consolidated view of inventory and its status. We won’t be so bold as to predict that these platforms will be perfect in 2022, but there is no doubt that easy connectivity and the creation of customer intelligence portals it enables is on its way and is unstoppable.

Material Handling Equipment for warehouse logistics

4. Flexibility drives warehouse automation decisions

The common thread across the first three trends is the need for distribution systems to remain agile and respond to change. That’s only possible when the automation systems that are deployed can flex in size and performance over time.

Flexible and scalable robotic automation technology first gained a foothold in e-commerce fulfillment as those systems enabled e-tailers to adapt to fluctuating demand and rapid growth in ways the traditional automation simply couldn’t. Now, we are seeing continued expansion of those systems to new applications.

In applications that range from pallet handling to item picking, these solutions are giving warehouse operators the ability to scale throughput and inventory independently. They are fundamentally capable of driving higher performance with the same inventory or expanding inventory without requiring higher performance. This capability, combined with unprecedented redundancy, makes them an easy automation choice even for the hesitant.

They also offer the ability to adapt to the shape of the building where they are deployed, supporting the trend of increasing distribution capacity by upgrading older warehouses or repurposing unneeded or underutilized facilities such as closed retail outlets. While not new to the market, flexible robotic automation technologies have moved from an alternative to fixed and inflexible technologies to becoming the first choice for operators across virtually every industry.

The material handling industry has seen unprecedented change over the last several years. Responding to those changes in real time was often an all-consuming task that delayed longer term planning. Now, as we enter 2022, many organizations will find they simply can’t stretch their available resources and systems any further. New distribution strategies and technologies are required to meet the challenges of today and to adapt to the unforeseen changes of the future.