How time flies. We are approaching the end of yet another year. I like to pause to reflect on the past – where we were and how we have developed since as an industry in Asia.
I came to Singapore in 1984 when the Asian miracle was unfolding. Fuelled by strong exports and rapid industrialisation, Hong Kong, Singapore, South Korea and Taiwan, powered ahead at unprecedented growth rates, earning them the nickname the Asian Tigers. China, Indonesia, Malaysia and Thailand joined their ranks a little later. It was a heady time for the region.
As warehousing is dictated by population size and income, the industry we are in benefitted immensely. With higher income comes the need to eat well and live well, generating the demand for storage facilities for food, clothes, household appliances, healthcare products, etc.
From conventional warehouses to purpose designed storage facilities
As the economy expanded, purpose designed warehouses were built to replace old conventional warehouses with their low ceilings and narrow doors. When I first arrived, the first generation of ‘modern’ warehouses were being phased in. They were about eight metres high, equipped with pallet racks six to seven metres high, and bolt free shelving system was considered state of the art.
Over the years as Reach Trucks become more sophisticated and are capable of going even higher, warehouse heights and pallet racks have increased correspondingly to allow operators to maximise the use of available land. With few exceptions, warehouse operation in the region outside Japan has remained largely manual. Automation is seen to be expensive and inflexible. With easy access to low cost manpower, there is also little incentive for companies to automate.
Some early attempts at automation also served as a deterrent. Twenty years ago, automated storage and retrieval systems (ASRS) were installed in Singapore’s push for better efficiency. Singapore had set its sights on being a logistics hub and the ASRS, which optimises the use of available land and manpower, was considered the preferred system for third party logistics operators (3PLs). The first ASRSs were poorly conceived, they were designed to handle pallets but had very slow cycle times. As the market changed with more customers requiring case deliveries, the systems simply could not handle the throughputs. Others were treated as a static racking systems, with no proper linkages to other systems within the warehouse. Many were scrapped after they failed to deliver on the promise of improved efficiency, and companies reverted back to manual handling. Smitten by that experience, many were to steer clear of automation for the next 10-15 years, with Automation gaining a reputation of being expensive and inflexible.
But things are beginning to change. Faced with the increasing need to drive costs out of the warehouse operation and improve operational efficiency, companies are asking themselves: How can we take cost out of a supply chain? How can we speed up the supply chain?
In my next post, I will look at Asia’s transition from a largely manual system – man to goods – to goods to man.