The time is ripe to embrace Industry 4.0

We have entered a time where, seemingly, interconnectedness is the new enemy, staying in is the new going out, and antisocial is the new social. COVID-19 has brought us on the cusp of growing accustomed to new norms and sounded a wake-up call in terms of how we live.

Traditional brick-and-mortar retail has suffered tremendously, as countries have been implementing effective stay-at-home and social distancing policies to mitigate virus spread, while those worst hit have enacted strict draconian lockdowns. Inevitably, increased reliance on e-commerce has brought about a surge in online sales and tectonic shift in consumer behaviour, with the logistics sector, consequently, playing a crucial role.

Against this backdrop, and in the context of a severe and ubiquitous threat to public health, it is critical to assess the efficacy of e-commerce logistics and the supply chain. Developers, landlords and tenants may look to re-evaluate their operational models, focusing on how best to mitigate or at least minimise transmission in the event of another contagion scenario. Considering the extent of China’s supply chain disruption in February and March, such exercises could prove invaluable to future-proof operations.

Looking to Industry 4.0

Historically, e-commerce logistics has been labour-intensive. However, new technologies such as AI, machine learning, and the Internet of Things, collectively known as Industry 4.0, have allowed for greater automation of tasks, increased productivity, better utilisation of space, and as a by-product, reduced human physical interaction, which is a proxy for reducing viral transmission. This builds even greater impetus to embrace Industry 4.0 innovations.

Warehouse robotics

In recent times, the sector has been progressively using robots for routine or high-volume tasks, especially to sort, process, select and package items, independently and efficiently. In some cases, collaborative robots or ‘cobots’ are deployed to work alongside humans; some have goods-to-person functions that reduce human movement within facilities. Collaborations can be more flexible and more productive, especially in cases of inventory unpredictability, where the objective is to optimise throughput whilst minimising avenues for transmission. Besides processual enhancements, robots can be utilised directly to screen for temperatures, sanitise areas and even monitor social distancing.

Beyond the warehouse

China has faced vast disruptions to its supply chains due to factory closures, which subsequently affected deliveries. Delivery automation through autonomous vehicles such as self-driving robots and drones can provide an effective end-to-end supply chain solution, with such benefits as increased parcel volume and expedited deliveries, whilst at a reduced cost; and automated vehicles would likely be exempt from transport and distribution restrictions. Furthermore, packages with built-in digital capabilities could control their own dispatch and book their own transport once ready for delivery. By reducing the human factor, products are less likely to be contaminated upon leaving the warehouse.

Future-proof design

With many of today’s facilities facing obsolescence with the breakneck pace of technological change, the time is ripe for stakeholders to redevelop and upgrade assets to withstand the pace of disruption. A pressing need has emerged to turn labour-intensive and low-tech warehouses into high-tech and highly automated facilities.

To future-proof facilities, landlords may look into industry specifications and requirements for spatial configurations to render them more conducive for technology adoption, future modifications, along with a healthy workplace environment that would adhere to social distancing policies and minimise transmission. Therefore, there is a need to engineer sufficient flexibility into building design.

With rising pressure on delivery speed, developers should look to eye strategic locations in close proximity to population centres (urban logistics) with efficient transport links, and advanced infrastructure favourable to autonomous vehicles. Future-proof location and building specs that minimise disruption would maximise asset value.

The current level of demand for e-commerce could sustain over the long term. Consumers, driven online due to the inaccessibility of physical retail, and for prolonged periods, would likely be habituated to the ease and convenience of online shopping. Even before COVID-19, millennials comprised the majority of e-commerce end-users, but now, broader demographics have been driven online.

Despite high costs associated with technology adoption, wage growth around the region, particularly in China, means that automation initiatives would make sense in the long term. In the event of a future contagion scenario, in which mode of transmission and virulence are characteristically similar – if not worse – the advantages of pre-emptively adopting technology to increase preparedness and future-proof operations seems ever more pertinent.

For more insights, check out our Q1 2020 APAC Property Digest

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