Automated Guided Vehicles (AGVs): Key to Effective Warehouse Management.

Material Handling is an expensive process in both manufacturing and distribution centers. An inadequate material handling operation causes the loss to operators in two ways: idle time, thereby reducing the operation efficiency in a warehouse or manufacturing unit and labor costs that in the recent times are up surging due to high rates of inflation. As the technology advanced for material handling, several automated systems were introduced in the market that has been crucial in slashing the operational costs related to material handling in both distribution and manufacturing centers.
 
Automated Guided Vehicle (AGV), one of the successors of Pallet Trucks are defined as battery-driven contactless steering trucks that are being guided either through laser, inductive (wire), magnetic spot or magnetic tape techniques throughout a facility.

The basic dynamics that are influential in shaping the demand of AGV’s in warehouses include: Omni-Channel Strategy of Warehouse Operators; Advanced Machine Vision Systems and Labor Cost & Productive Time.

The Omni-Channel Supply Chain Strategy is an increasing trend in the current times, particularly among the retail sector. Under this strategy, the companies are aiming at creating an “in-house” distribution facility or a warehouse for order fulfillment operations instead of outsourcing it to third part logistics (3PL). The rise of retail sector facilitated by E-commerce has already witnessed major changes in the retail distribution centers which have led to an exponential growth in the Stock Keeping Units (SKUs). As the global economy progresses gradually, the retail sector will observe a boost in the demand of goods that will require proper integration of new automation technologies to maintain demand and supply balance. This will be notable for the emergence of Automated Guided Vehicles in the warehouses.

Another pressing issue for warehouse operators is Labor Cost which is quite significant in overall warehouse operation costs. In majority of the cases, warehouses jobs typically consist of two categories of staff: Direct and Indirect Staff where warehouses cover an area of more than 2, 00,000 square feet. Direct staff is responsible for executing the process while indirect staff is responsible for providing back-end support.


The above chart represents the trend of increasing hourly wages in warehouse and storage facilities between 2010 and 2014. The average growth rate for the mentioned years was 5.6%, thus resulting rise in the hourly wages from $17.42 in 2010 to $18.41 in 2014. Moreover, the average weekly hours has declined from 42.2 in 2010 to 41 in 2014 that has relatively created stagnant warehouse productivity. As average hourly earnings will hike further amidst the rising global inflation with weekly hours to remain constant or decline in the coming years, the warehouse operating costs are bound to advance.

As the technology for navigation is advancing, the guidance systems in AGV’s are being developed with Computer-Based Vision Systems, thereby, being called as Autonomous Mobile Robots (AMR’s). These vision systems are notable for bringing the overall price of a vehicle down by 30%-40%. Additionally, utilization of AGV’s involve the costs for laying down the guidance techniques including magnetic and inductive strips which is absent in AMR as guidance is carried out with the help of assembled CMOS image sensors or by storing a 3D map of the environment. This is still a developing area with Seegrid and Adept Technology being some of the notable players who have launched AMR’s, particularly for distribution centers.