The explosion of warehouse logistics and fulfillment sectors have brought unheralded attention to the Last Mile, that crucial link where products finally reach customers. And why not? Amazon has built the world's most efficient business by reinventing that Last Mile.
But when it comes to the supply chain, which is undergoing perhaps the most transformative moment in the history of consumer products since the Model T rolled out of Henry Ford's factory on October 1st 1908, the First Mile can make or break your operations. And yet, it's a piece of the puzzle that doesn't get nearly enough attention.
That's the insight of Matthew Rendall, CEO of OTTO Motors, which makes Autonomous Mobile Robots (AMRs) automate common material handling tasks and help manufacturers tackle labor shortages and scale their operations quickly. Automation, which is a furious driver of Last Mile efficiency, can also help solve crucial First Mile problems.
To find out how, I reached out to Rendall, whose insights below will be eye-opening to operators keen on growing their business and beating out the competition.
GN: A lot of talk in automation has focused on Last Mile deliveries, which is where customers receive their goods. Can you explain what the First Mile means and what stakeholders are involved?
There's not nearly enough attention given to the first mile for all the interest in last-mile automation. The First Mile is the flow of materials within the supply chain to create a product before it's delivered to the customer. If the Last Mile is delivering one thing to one person, the First Mile represents the delivery of one component to one worker on an assembly line.
There's a logistical elegance to a book arriving on your doorstep less than twenty-four hours after your purchase. That book will leave the closest distribution center by truck and arrive at a distribution hub, picked up and delivered by a driver (or perhaps a robot). But that first book had to be manufactured. The logistics of moving the paper, ink, and glue through the manufacturing process is just as important, if not more important, than the logistics of moving the book from the distribution center to your front door.
As far as manufacturing goes, books are relatively simple. Now imagine your favorite electronic device or an automobile comprising tens of thousands of parts. It's a vastly more complex manufacturing process, with vastly greater First Mile requirements. But it is also an opportunity to create more efficiency through First Mile automation.
A car door, for example, is made up of a number of components and sub-assemblies that stop multiple times throughout the assembly process to make their way lineside eventually. In an ideal operation, this happens in the most efficient way possible. The car door is made of metal stampings, glass, paint, fasteners, sound dampers, electronics, and wiring. The door panel and door frame are stamped out of steel rolls in the stamping shop and, once complete, are considered work-in-process materials and moved through fabrication and paint before arriving at the final assembly. An industrial manipulator welds the frame and panel together, creating a subassembly, which is then put into a reservoir for further processing down the line. Meanwhile, in another part of the plant, a rack of windows enters from the loading dock, as does the electronics panel for the interior of the door and the side-view mirrors. All components are moved to a staging reservoir.
All of these materials must be brought together to one centralized location just in time to be assembled into a finished product. But even a completed door is considered a work in process because it must wait for its final installation on the car further down the line. The parts that make the door has passed through many employees' hands and travelled over a mile to get to this point, hence the term First Mile delivery.
GN: Why does placing greater emphasis on the First Mile have the potential to improve overall production processes and address challenges related to providing shorter lead times?
A manufacturing process is only as strong as its weakest link. If that issue exists early on, inefficiencies can cascade throughout a system. Solving that First Mile bottleneck, therefore, can lead to massive benefits.
One example is Ontario, Canada-based printing company Cober Solutions. The printing industry has significantly changed in recent years, moving from a small number of large jobs to many more small jobs. Instead of twenty jobs a day, Cober is now doing approximately seven hundred. This resulted in new inefficiencies in their established process.
Prior to OTTO Motors AMRs' being on hand, Cober's print operators would have to idle their machine and take their finished goods from that machine onto the next station, taking away ten to fifteen minutes for every trip. With an AMR in place, the downtime is now thirty seconds. Cober's highly skilled technicians now simply load the printed material onto the OTTO AMR, send it off, and are able to keep the machines running a lot longer. Cober calculated that they cut cycle time by 97%.
An idle printing press is less than ideal, which was the case when print operators shifted from production to material handling. Removing material transport from the equation meant more work accomplished, more units out the door faster, and the means to speed up delivery to end-users.
This First-Mile process at Cober went from a job taking a few hours to one that took only a few minutes. This, in turn, means Cober can take on more work and get units out the door faster.
The Last Mile will always exist, but placing greater emphasis on the First Mile has the potential to improve overall production processes and address challenges related to providing shorter lead times and manufacturing custom products. Optimizing the First Mile enables operators to turn their cost center into a growth center.
GN: How does optimizing First Mile enable operators to grow?
Danfoss Power Solutions is in the business of engineering and manufacturing mobile hydraulics. They were tasked with finding emerging technologies that would add flexibility in their supply chain and solve for near-miss incidents, historic unemployment rates, and minimum floor space due to static monumental equipment. By deploying OTTO AMRs in their mission-critical material handling operations, Danfoss built a flexible supply chain and achieved results such as five fewer material handlers needing to be hired, a 40% internal rate of return, and an ROI of fewer than three years. Of equal significance was the fact that workers no longer had to hoist these heavy items. Some 70 000 hoist touches were removed from the material handling flow as a result of this First Mile innovation.
When you minimize non-value-add processes, companies can offer products at a more competitive price and larger profit margin. First Mile material handling is one of the single biggest opportunities for efficiencies to manufacturers.
GN: We often hear about labor challenges related to Last Mile delivery. Is this a consideration in the First Mile as well?
Absolutely. Labor scarcity is a challenge in every stage of the supply chain, whether hiring truck drivers for Last Mile or forklift drivers for First Mile - the problem is the same. A recent Material Handling Industry report cites "hiring and retaining qualified workers" as the top challenge to their member companies. Availability of skilled labor was a top-three concern even before the COVID-19 pandemic. Even pre-pandemic, the U.S. had more open jobs than workers. There were eight million open jobs in the United States as of March, according to the U.S. Bureau of Labor Statistics, so it's hard to find an industry that isn't affected by labor scarcity.
There's also the fact that many manufacturing facilities are located outside of large population centers to keep overhead costs low, which has the increasingly adverse effect of a smaller population available for the workforce. One of our customers has a manufacturing facility in Ames, Iowa, which has one of the lowest unemployment rates in the country. Hiring and retaining workers is tough enough when there's a large pool of workers, but even more difficult in cases like this one.
GN: What First Mile automation technologies can address the above challenges and opportunities? Can you give some examples of this in practice?
The biggest challenge and opportunities lie not with a single technology but with the orchestration of a larger agile material handling strategy. Think of your first mile supply chain as the world's most interesting marching band, composed of precise formations and lots of variabilities, as opposed to a traditional symphony where the cellos are always on the right and the symbols always in the back.
Our customer Danfoss implemented pallet-sized AMRs to transport large payload material from end-of-assembly to the paint lines that operate three shifts, 24/7 for lights-out engineering. The AMRs let their workers focus on high-value production tasks while at the same time improving safety and reducing transportation waste to utilize robots to move products throughout the production facility.
Within that agile framework will be AMRs ranging from small cart-sized to larger pallet-sized vehicles. Today's AMRs can serve the same purpose as traditional conveyors in one scenario but then also serve as a cart in a different scenario or replace a forklift in yet another. This doesn't necessarily mean there's no further need for fixed automation, forklifts, AGVs and other existing material handling solutions; it only means manufacturers have more sophisticated and more agile options now at their disposal.