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A decision-making framework for automating distribution centers in the Retail supply.
Vivek Kumar Dubey1,2, Dharmaraj Veeramani1
1Department of Industrial & Systems Engineering, University of Wisconsin-Madison, Madison, WI, 53706, USA.
Heliyon
|May 29, 2024
Summary
Investing in automated warehouse technology requires a comprehensive framework for decision-making and risk management. This study provides an integrated model to analyze automated distribution centers (DCs) at multiple levels, ensuring operational and financial viability.
Area of Science:
- Operations Research
- Supply Chain Management
- Industrial Engineering
Background:
- Warehouse/distribution center (DC) automation offers significant benefits for retail omni/multichannel (OC/MC) operations, including cost reduction and improved customer responsiveness.
- High investment costs necessitate a thorough operational and financial evaluation, considering the network-wide impact and risks associated with automated DCs.
- Existing research lacks a comprehensive decision-making framework and integrated sub-frameworks for managing automated DCs within the OC/MC value chain.
Purpose of the Study:
- To address the gap in decision-making frameworks for automated distribution centers in retail.
- To provide a generalized, integrated three-part framework and corresponding sub-frameworks for evaluating DC automation investments.
- To develop analytical tools for rapid sizing and analysis at DC, network, economic, and contract levels.
Main Methods:
- Development of discrete event, economic, and mathematical programming models.
- Creation of rapid-sizing/analysis tools for DC, network, economic, and contract levels.
- Empirical data collection through interviews, on-site observations, and secondary data analysis.
Main Results:
- A generalized and integrated framework for decision-making and safeguarding automated DCs.
- Insights into strategic trade-offs, including automation extent, labor vs. capital investment, and response vs. efficiency.
- An illustrative real-life application/case study demonstrating the framework's utility.
Conclusions:
- The proposed framework provides a comprehensive approach to investment decisions for automated DCs.
- The study highlights the importance of considering network-wide impacts and safeguarding strategies for expensive automated assets.
- The research informs strategic decision-making for retailers implementing warehouse automation in OC/MC environments.
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