The Future of Warehousing:

Warehouse Digitalization
A comprehensive analysis of the different warehouse technologies that, we believe, will impact the
future of warehousing. This guide will explain each technology’s definition, value in the warehouse,
current state in the industry, and best time to adopt.
 Index

Introduction 03

The Era of Warehouse Digitalization 05

Warehouse Technology Summary 06

Objective & Methodology 09

Internet of Things 13

Business Intelligence & Predictive Analytics 19

Robotics and Automation 26

Automated Guided Vehicles 33

Mobile and Wareable Technologies 40

Blockchain 47

Artificial Intelligence 54

Conclusion 61

About Cyzerg 64

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 Introduction
Situation of the Market
The market is experiencing a transition of sales from brick-and-mortar to e-commerce, as

evidently shown in the annual compounding growth of online sales. And by looking at the success

of one of the biggest e-commerce platforms, Amazon, the future of the market is likely to shift on

platforms that are easily accessible and open 24/7/365.

Retail E-commerce Sales in the United States from 2016-2022

800 000
REVENUE (IN MILLIONS)

600 000

400 000

200 000

2016 2017 2018 2019 2020 2021 2022

TIME

Source: www.statista.com

This market transition presents an opportunity for the warehousing industry to grow. Compared to

traditional brick-and-mortar stores, e-commerce requires an average of three times the size of

distribution space to operate, according to Prologis, a real estate investment trust

Although, this opportunity is met with a challenge for the warehouse. E-commerce demands

fulfillment that is more accurate, faster, and lower cost than traditional retail. These are the

qualities that have led e-commerce to its success in the market space we have today. A possible

solution to meeting these qualities is hiring more workers. But for consecutive years, hiring workers

is one of the industry’s main problems. The US unemployment rate is at a 50-year low, sitting at

3.5% in 2020 while job opportunities keep increasing. This creates a very tight labor market, which

will likely result in an upward trend in wages – a cost that the warehouse could not commit to.

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 Top Challenges of Warehouses

Customer Demands for Hiring and Retaining

Lower Costs Qualified Workers

51 % 56%

Percentage of respondents who Percentage of respondents who

categorized customer demands categorized hiring and retaining
for lower costs as very or qualified workers as very or
extremely challenging. extremely challenging.

Source: MHI Industry Report 2020 Source: Zebra Warehouse Vision Study 2020

Another solution could come from the closure of some physical locations of certain retailers in

urban cities. Online retailers saw these prime locations as an opportunity to expand their fulfillment

or distribution center network. By opening a warehouse in a densely populated area, they can

meet consumer demands, such as one-day or same-day shipping. But due to high real estate

costs and limited space in urban cities, warehouses are still challenged with high costs.

These scenarios are prompting warehouses to find alternative and innovative solutions that will

allow them to fulfill orders efficiently while factoring cost-effectiveness. And we believe, much like

every other industry lately, the solution that warehouses should invest in is technology.

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 The Era of Warehouse Digitalization
Technology is an effective, sustainable, and Some of these technologies include Internet

cost-efficient solution to address the of Things, Business Intelligence, Predictive

challenges of the warehouse. The Analytics, Robotics and Automation,

implementation of technology will move Automated Guided Vehicles (AGVs), Mobile

warehousing from relying too heavily on and Wearable Technologies, Blockchain, and

costly human labor to a more automated Artificial Intelligence.

and technology-focused operation, a

transition we call “Warehouse Digitalization.” These technologies can allow warehouses to

fulfill orders autonomously, be smart in space

To reinforce the possibility of this transition, management, predict consumer demand,

MHI’s 2017 annual survey reported that 80% of lessen operational costs, increase safety,

their respondents believed that digitalization transparency, accountability, and more.

has the power to disrupt the industry – while

16% of the remaining are convinced it is The above-mentioned technologies will be

happening now. explained in this guide, and they are most

likely the key technologies that will represent

Warehouse Digitalization is a transition that the future of the warehouse. Looking at the

will span far more than just management way the market is headed, this is a crucial

systems and barcode scanners. This topic that decision makers must become

evolution is aiming to achieve an almost familiar with in order to keep pace with the

automated warehouse that can run 24/7/365. growth of the market and remain relevant in

The reason for this is because, now, orders a hyper-competitive landscape.

can be sent at any time of the day

throughout the whole year. Consumers are

also expecting their packages to be delivered

on time and as soon as possible. Soon,

warehouses will be equipped with the best

technologies designed to fulfill orders

accurately and efficiently.

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 Warehouse Technology Summary
Internet of Things
A network of interconnected objects that are capable of capturing and exchanging
warehouse data in real time.

Business Intelligence and Predictive Analytics

Technologies that organize warehouse data into easy-to-understand reports and
dashboards. It also analyzes the data to determine patterns and trends to predict
possible outcomes.

Robotics and Automation

The design, construction, operation, and use of robotics and machines with the purpose
of automating warehouse operations.

Automated Guide Vehicles (AGV)

Autonomous vehicles that can navigate themselves and/or move cargo through the
warehouse using floor markers, wires, magnets, lasers, or computer vision.

Wearables and Mobile Technology

Small computing devices that are worn or carried by a user to conveniently send and
receive information anywhere in the warehouse.

Blockchain
A distributed ledger technology that exchanges recorded transactions securely among
relevant parties while increasing visibility and accountability.

Artificial Intelligence
A technology that enables machines to perform human-like tasks such as decision
making, speech recognition, spatial awareness, and visual perception.

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 Adoption Rates of Technologies in the Supply Chain Industry

Cloud Computing & Storage

Inventory/Network
Optimization Tools

Sensors and
Automatic Identification

Predictive Analytics

Robotics & Automation

Industrial Internet of Things

Wearables and Mobile Technology

Artificial Intelligence

3D Printing

Autonomous Vehicles and Drones

Blockchain/Distributed Ledger

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

In-use today 1-2 years 3-5 years 6+ years

Source: MHI Annual Industry Report 2020

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The new wave of technologies will forever
change the way warehouses operate and
will tackle once and for all many of the
unresolved challenges that have plagued
the industry for years.

Hector Sunol
Cyzerg Co-Founder & CEO
 Objective & Methodolgy
This guide aims to give the reader an in-depth analysis of the 7 technologies that, we believe, will

comprise “Warehouse Digitalization.” Each technology will be explained in four sections:

Overview of the Technology

This section will present a general description of a technology, including its capabilities and the
potential benefits it offers.

Technology’s Value in the Warehouse

This section will explain a technology’s benefits, particularly in the warehouse industry. We will
be giving specific examples of current real-world or potential usages in the warehouse while
citing different equipment in which each technology can manifest, if applicable.

Current State of the Technology

This section will use three well-established frameworks (S-Curve of Innovation, Technology
Adoption Life Cycle, Hype Cycle) to gauge a technology’s position in relation to its evolution and
market adoption. The three frameworks will be explained further in the Methodology section of
this document.

Best Time to Adopt

This section will provide our expert recommendations as to whether a technology should be
adopted now or in the future. Recommendations will be based on the previously mentioned
research methodologies and Cyzerg’s industry experience.

Analysis and Methodology Frameworks

To determine a technology’s position in relation to its evolution and market adoption, each

technology will be analyzed using three well-established frameworks, namely: S-Curve of

Innovation, Technology Adoption Life Cycle, and Hype Cycle. The information gathered from

analyzing each technology against each of the frameworks will help us triangulate and produce

confident deductions about each technology’s maturity, market acceptance, and utility.

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 S-Curve of Innovation

The S-Curve enables us to determine the maturity level of a technology, whether it is new, matured,

or declining. It is one of the major concepts that we use to identify the stage of a technology in

relation to its lifecycle.

Ferment
This stage signifies the birth of a new technology. It is marked by slow evolution, high rate of
innovation, and significant research & development.

Takeoff
In this stage, a technology has displayed its ability to overcome a significant obstacle and has
been adopted by the early majority of consumers. The technology has also managed to cross
the Chasm of Death, which denotes that a technology is bound to be successful.

Maturity
In this stage, the general public has adopted the technology. Competition will only be among
few large players, while sales reach the physical limit.

Discontinuity
In this stage, innovators start to abandon the old technology and move to a new solution. This is
the point where a new technology is born.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

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 Technology Adoption Life Cycle

The Technology Adoption Life Cycle is a framework that help us assess the market adoption of a

new technology and understand where the technology is in relation to different groups of

adopters.

Innovators
This is a group of risktakers who have the resources and willingness to try new things – even if
they fail.

Early Adopters
This group is more selective about the technologies they test and use. They are eager and
willing to try new technological innovations and influence others about trying them.

Early Majority
This group takes their time before adopting a new technology and are willing to embrace new
solutions as long as they understand how it fits within their business.

Late Majority
This group adopts technologies in reaction to market and peer pressures, standards, or
economic necessity. Most of the uncertainty must also be resolved prior to adoption.

Laggards
They are old-fashioned and make decisions based on past experience and solutions that they
are familiar with. They are often economically unable to take risks on new ideas.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

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 Hype Cycle

The Hype Cycle is a research methodology created by Gartner that traces a technology’s life cycle

in relation to hype or reality. This help us to analyze if the technology in question is relevant in a real

business case scenario, if it needs more time to mature, or if it’s just a hype. Here’s what each

stage signifies:

Innovation Trigger
This is the point where a technology is conceptualized and prototyped. Often, no usable
products are available and commercial viability is unproven.

Peak of Inflated Expectations

This is the point where a technology has the highest publicity, but it is still uncertain if it leads to
success or failure.

Trough of Disillusionment
This is the point where flaws, failures, and benefits of a technology are discovered. It is also the
point where it is innovated/improved/adjusted to fit in a real business case scenario.

Slope of Enlightenment
This is the point where both consumers and industry understand the scope and potential
benefits of a technology.

Plateau of Productivity
This is the point where a technology is widely adopted and benchmarks are set for assessing
products or solutions.
VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

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 Internet of Things

What is the Internet of Things?

The Internet of Things (IoT) is a network of exchange information, such as number of

interconnected physical objects accessible steps, when embedded with a sensor and a

through a digital network, mainly the internet. wireless chip that can gather and transmit

These physical objects can vary from data.

computers to non-computer objects

embedded with sensors, and they form an These connectivity capabilities of IoT can also

ecosystem of smart items that can capture allow for automation to happen, considering

and exchange data in real time. that the technology is capable of capturing

and transmitting data. This data can later be

IoT in the form of computers can range from analyzed by a system and automatically start

laptops, mobile phones, wearables, or any a set of processes and tasks based on the

object that is able to process, gather, and received information.

send information to a network – while non-

computer objects, such as clothes, are

converted into smart items through the use of

sensors and wireless chips to have the

capability of sending and receiving data. For

example, a regular shoe can capture and

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The Value of Internet of Things in the Warehouse

Because the warehouse is an infinite pool of Apart from RFID, warehouses can also utilize

always evolving data, the Internet of Things proximity sensors – sensors that have the

becomes a game-changer, as it is capable of ability to detect proximity within objects.

capturing these data changes. This, then, These sensors are usually installed in

allows systems to analyze the data as equipment such as forklifts, either manned or

changes occur, trigger processes and tasks unmanned, to prevent collisions by sending

at the right time, and provide information to proximity information to a computer. The

decision makers in real time. computer then quickly analyzes that data

and sends a command to either alert the

An example of IoT in the warehouse is with the driver or automatically slow down and/or

use of Radio Frequency Identification (RFID) stop the equipment completely.

sensors. Using RFID sensors, along with RFID

readers, can allow for the warehouse to Lastly, temperature sensors are another type

detect their stock levels around the clock. of IoT sensor that are especially helpful in

This, in turn, can automatically alert staff and detecting and tracking temperature levels of

systems when stock levels are below refrigerated cargo while in storage or in

minimum thresholds and trigger order transit. These sensors would allow supply

placements. chain participants and warehouses to have a

detailed and accurate temperature report of

RFID and/or GPS sensors can also provide the refrigerated cargo at all times. It would also

exact locations, status, and movements of allow participants to react in a timely manner

any cargo registered in the system. This data to temperature changes, hold everyone

can aid in optimizing warehouse layout, accountable, and improve the safety of

processes such as put-away and picking, consumers.

and more.

Leveraging the supply chain technology and the IoT, the Smart Warehouse can serve as a
hub to boost efficiency.

SOURCE: Creating a Smart Warehouse with the IoT, Samsung Insights, 2016
 The Current State of Internet of Things
S-Curve of Innovation

In relation to the S-Curve of Innovation, the Internet of Things stands between the Takeoff and

Maturity stages. This means that IoT has displayed its ability to overcome important obstacles and

has been adopted by the Early Majority. Considering that it’s currently sitting between these two

stages, it also signals that it’s reaching the point where the majority of the public will be adopting it,

meaning that the risk associated with investing in this new technology is minimal.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

Other contributors to the adoption and maturity of IoT is related to the decreasing cost of IoT

sensors, such as RFID in the recent years. Having a lower price tag reduces cost barriers and allows

businesses to feel more comfortable with taking the investment risk associated with testing and

adopting new technologies.

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 Technology Adoption Life Cycle

In the case of the Technology Adoption Life Cycle, the Internet of Things is being adopted by the

Early Majority. This tells us that more businesses are adopting and embracing IoT and are finding fit

and benefits within their operations. At this point, IoT has crossed the chasm of death, which

indicates that its fate is likely to be a success.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

According to the MHI Annual Industry Report 2020, 26% of the supply chain companies surveyed

are using IoT today. And as it relates to sensors and automatic identification technologies, 42% of

the surveyed companies are using these technologies.

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 Hype Cycle

Lastly, in the case of the Hype Cycle, the Internet of Things is sitting on the Slope of Enlightenment.

This means that both consumers and the industry understand the scope and potential benefits of

IoT. It is also near to reaching the Plateau of Productivity, where technologies are deemed to be

widely adopted.
VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

According to the MHI Annual Industry Report 2020, 54% of the respondents believe that IoT has the

potential to create competitive advantage in the industry. This implies that more than half of the

industry has an understanding of the scope and potential benefits of IoT. Additionally, Indoor

Location for Assets, which is a technology achieved by IoT advancement, is sitting on the Slope of

Enlightenment as referred to in Gartner’s Hype Cycle for Supply Chain Execution Technologies 2019.

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Best Time to Adopt:

We strongly believe that adopting Internet of that would allow for businesses to

Things now will give you an edge in the seamlessly and cost-effectively embrace IoT.

competition. IoT is one of the fundamental

layers to build a fully digital supply chain, so it Nonetheless, we encourage organizations

is recommended to start early in order to stay committed to innovation and are looking to

competitive. differentiate from the rest to embrace this

new technology as soon as possible.

It is important to remark that because IoT Although there remain minor obstacles, it is

remains between the Takeoff and Maturity important to remark that IoT has crossed the

stages of the S-Curve of Innovation, the Early Chasm of Death, which indicates that

Majority of the Technology Adoption Life businesses understand its value and have

Cycle, and Slope of Enlightenment in the Hype proven it, and this itself puts the technology

Cycle, there remain pending challenges to be on the route of becoming a mainstream

addressed. Some of these challenges include technology down the road.

the standardization of the technology,

protocols, and well-established vendors

 Business Intelligence and Predictive Analytics

What is Business Intelligence and Predictive Analytics?

Business Intelligence is a technology that techniques from statistics, data mining,

collects, analyses, and presents historical and predictive modeling, machine learning, and

current data in a compact and easy-to-read artificial intelligence to analyze current data

format. This makes it simple for decision and make statistical predictions about the

makers to understand business data and future.

make timely and informed decisions.

Predictive Analytics forecasts data with an

Because Business Intelligence is capable of acceptable level of reliability. Forecasts will

handling large amounts of data, it can assist give users added information to better

warehouse professionals and decision understand customer behavior, product

makers in identifying, developing, and performance, or any other aspect that can be

creating strategic business opportunities. And measured and analyzed. Understanding

because these opportunities are based on these aspects will allow companies to find

factual insights, they can provide businesses opportunities and better manage risks.

with a competitive advantage and long-term

stability.

On the other hand, Predictive Analytics is

forward-looking analysis. It uses many

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 Predictive Analytics - Statistical Techniques

Decision Trees Statistical Modeling

Data Machine
Mining Learning

Big Data

Source: CIO

The Value of Business Intelligence and Predictive Analytics in

the Warehouse

As mentioned in the previous technology, Internet of Things, the warehouse generates large

amounts of data. Business Intelligence and Predictive Analytics are the technologies that can help

analyze and convert the collected data into useful insights.

Although both technologies have the capability to help warehouse operators understand their

warehouses better, their difference comes in the timeframe of the insights produced. To

differentiate clearly, here’s a brief description of each technology and the questions they can

answer about the warehouse.

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 Business Intelligence can produce consolidated reports and real-time dashboards based on

collected data resulting from warehouse operations. In turn, this can provide insightful answers on

questions regarding historical performance and current operations. Here are some examples of

the questions it can help answer:

What is my picking What is my average

productivity? How many lead time?
order lines are picked per
hour?

What was my storage What is my current

utilization or volume of productivity compared to
inventory per square foot last month?
last December?

Predictive Analytics, on the other hand, is capable of forecasting warehouse performance within a

certain level of tolerance. It uses historical and current data to determine patterns and predict

future outcomes and trends. Here are some examples of the questions it can help answer:

Is my picking productivity Would I be able to decrease

likely to increase or decrease my lead time by 10% before
in the next months? the end of the year?

What would be my average Would my put-away

storage capacity in the productivity increase within
upcoming month? the next three months?

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 The Current State of Business Intelligence and Predictive
Analytics
S-Curve of Innovation
In relation to the S-Curve of Innovation, Business Intelligence and Predictive Analytics are placed

between the Takeoff and Maturity stages. This means that the technologies have displayed their

ability to overcome a significant obstacle and have been adopted by the Early Majority.

Additionally, because the technologies are sitting between the Takeoff and Maturity stages, the

risks of implementing them are minimal, and they are on track to be adopted soon by the general

public.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

To support the position of Business Intelligence and Predictive Analytics in the S-Curve of

Innovation, MHI’s Annual Industry Report 2020 states that 57% of their respondents agreed that

such analytical tools and technologies will have a potential in disrupting the industry or creating a

competitive advantage for businesses. These technologies are among the few that received the

highest approval from respondents.

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 Technology Adoption Life Cycle

In the case of the Technology Adoption Life Cycle, Business Intelligence and Predictive Analytics are

being adopted by the Early Majority. This signifies that decision makers understand the benefits of

the technologies and are seeing how these tools can be a fit for their businesses. The technologies

have also crossed the Chasm of Death, which denotes that they are likely to be mass adopted by

organizations.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

In addition to the above, MHI stated in their 2020 Industry Report that 28% of the respondents are

using Predictive Analytics today. In 2018, only 19% of the responders said that they were using the

technologies, making 2020 a significant two-year jump.

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 Hype Cycle

Lastly, in relation to the Hype Cycle, Business Intelligence and Predictive Analytics are on two

different sections of the curve. For Business Intelligence, it is sitting on the Slope of Enlightenment

as inferred by the information indicated on the 2020 MHI Industry Report. This position on the Hype

Cycle means that Business Intelligence is at a point where the industry understands the scope and

potential of the technology.

On the other hand, Predictive Analytics is located on the early stages of the Trough of

Disillusionment as specified by Gartner’s Hype Cycle for Supply Chain Execution Technologies 2019.

This position on the Hype Cycle means that flaws, failures, and benefits are still being discovered,

while the technology is being innovated/improved/adjusted to fit in real-business-case scenarios.

VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

Predictive Analytics Business Intelligence

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 Best Time to Adopt:

We strongly believe that you should start to predict the future with some level of

adopting Business Intelligence and Predictive certainty. This would help you shift your

Analytics as soon as possible in order to give business and warehouse operations from a

your business a competitive advantage or defensive, reactive approach to an offensive,

not fall behind. By doing so, you will be able to proactive approach.

better understand the health and behavior of

your operations based on facts and always Lastly, since Business Intelligence and

changing data. Additionally, these tools will Predictive Analytics have crossed the chasm

help you to detect rapid market changes and of death, wide adoption is bound to happen. It

opportunities and respond in a timely is important to that you are able to adopt the

manner. technologies earlier than the Late Majority

and Laggards, as this will give you a

Even though Gartner placed Predictive significant competitive advantage as

Analytics on the early stages of the Trough of compared to those that adopt technologies

Disillusionment, we strongly recommend to late in the cycle.

start adopting this technology as soon as

possible because the short-term risk and

pains will be outweighed by the ability

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 Robotics and Automation

What is Robotics and Automation?

Robotics is a branch of engineering and experience include sickness, sleepiness,

science that deals with the design, hunger, mortality, and emotions – among

construction, operation, and use of robots others.

that can be programmed to do certain tasks.

They can either be autonomous or semi- Automation, on the other hand, refers to a set

autonomous, and they interact with the of operations that can be performed

physical world using sensors. autonomously with minimal or no human

assistance. This lets humans focus on more

An advantage to using robots is that they complicated and mentally intense tasks that

don’t suffer from the same limitations as are impossible or hard to replicate using

humans. They can perform repeated tasks in automation. Because automation is a proven

a very consistent manner, which can help technology that allows businesses to

reduce costs originated by human increase efficiency, it is now being used in

inconsistencies and errors. They can also be several industries, such as manufacturing,

used in hazardous environments that pose a transportation, information technology,

threat to human life. Other human-related warehousing, and more.

limitations robots don’t

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 We’re changing. We’re adapting.
We continue to transform.
Doug McMillon, CEO of Walmart

The Value of Robotics and Automation in the Warehouse

The warehouse is filled with repeatable, process-oriented, and error-prone processes such as

picking, receiving, and put-away. Robotics and Automation have the ability to take over these

repetitive tasks from humans and achieve a more consistent and accurate warehouse operation.

In addition to that, transferring the most repetitive and dullest tasks to robots can improve

employee engagement and retention rates. This is due to warehouse personnel feeling more

fulfilled when tackling more dynamic roles, such as operational analysis, customer service,

maintenance, and more.

Another benefit of transferring tasks to robots is the increase in warehouse safety. In 2018, the

warehouse and storage subsector recorded 26 fatalities and a 5.1% rate of injury and illness cases.

Transferring dangerous tasks, such as the operation of heavy equipment and machineries and

working under extreme hot and cold conditions, to robots can help lower the fatality and injury

rates and help lessen the impression that the warehouse is a dangerous workplace.

Furthermore, Robotics and Automation can bring substantial benefits in 24/7 warehouse

operations. Especially in the age of e-commerce, having an automated warehouse that requires

little to no human intervention has the potential to address the need for an always-on warehouse

as well as the challenge of low unemployment rates and attracting and retaining employees.

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Amazon only needs a minute of human
labor to ship your next package. The rest is
done by robots and automated systems.
Source: CNN
 The Current State of Robotics and Automation

S-Curve of Innovation

In regard to the S-Curve of Innovation, Robotics and Automation are in between the Takeoff and

Maturity stages. Being here means that the technologies have overcome a significant obstacle to

adoption and have been implemented by the Early Majority of adopters. Moreover, because

Robotics and Automation are transitioning to the Maturity stage, the general public will be

adopting these technologies soon, indicating a decline in the risk involved when investing in these

technologies.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

In the MHI Annual Industry Report 2020, 67% of the respondents are convinced that Robotics and

Automation have the potential to disrupt the industry or create a competitive advantage for their

business. We also believe that this will be the case because the technology has gained maturity

and there are fundamental and important industry needs creating market demand. Additionally,

as the technology continues to mature, we expect cost to decrease and standardization to take

place, which will result in greater adoption rates.

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 Technology Adoption Life Cycle

In relation to the Technology Adoption Life Cycle, Robotics and Automation are being adopted by

the Early Majority. This indicates that decision makers are seeing the benefits of the two

technologies and how they are a fit to their businesses. Furthermore, being adopted by the Early

Majority indicates that Robotics and Automation have crossed over the Chasm of Death, which

means that they are most likely to become standard technologies in the industry.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

To support Robotics’ and Automation’s position in the Technology Adoption Life Cycle, MHI reported

that 39% of the respondents in their 2020 Annual Industry Report have adopted both technologies

into their businesses. Additionally, it was also reported that more than 58% of respondents will be

using these technologies within one to two years.

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Hype Cycle

Lastly, in the case of the Hype Cycle, Robotics and Automation are placed on the lowest point of

the Trough of Disillusionment. Being in this position means that flaws, failures, and benefits of

Robotics and Automation are being discovered, while innovations, improvements, and

adjustments are made to the technologies to fit real business case scenarios. Additionally, they are

at a point where the general public is starting to understand the scope and potential benefits of

these technologies.
VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

In Gartner’s Hype Cycle for Supply Chain Execution Technologies 2019, Robotics and Automation’s

positions in the curve were not clearly defined. Instead, we deduced their position by evaluating

various Robotics and Automation implementations within the warehousing industry. Examples of

some of these automations include but are not limited to the automation of weight dimension and

image cargo capture, identification and parsing of documents to eliminate manual data entry,

and others. On the other hand, Robotics implementations like articulated robotic arms are still

being tested to fit real business case scenarios. Hence, we believe Robotics and Automation are on

the Trough of Disillusionment stage.

www.cyzerg.com 31
 Best Time to Adopt:

To conclude, we recommend businesses to of these technologies sit in relation to the S-

start better understanding Robotics and Curve of Innovation, Technology Adoption Life

Automation and start finding fit within their Cycle, and the Hype Cycle. As we have seen,

operations. Although, for a good number of these technologies have already overcome

businesses, some of these technologies the most important and significant barriers to

remain unrealistic, it is important for market adoption. We can conclude this

businesses to become educated as to where because it has overpassed the Takeoff stage

they can potentially fit them in the future. On in the S-Curve of Innovation, crossed the

the other hand, we highly advised Chasm of Death in the Technology Adoption

organizations that, for technologies such as Life Cycle, and is bouncing back from the

automation solutions, this is the time to begin Trough of Disillusionment of the Hype Cycle.

adopting them as a way to increase These are clear signals that it’s no longer

efficiencies in the warehouse and reduce about “IF” but “WHEN”. So, businesses that look

error rates. to exploit these disruptive technologies to

their advantage must be proactive and ready

It is important not to ignore where each to adopt.

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 Automated Guided Vehicle (AGVs)

What are AGVs?

An Automated Guided Vehicle (AGV) is a AGVs rely on a central control system (CCS)

machine or robot that navigates itself that allows operators to strictly control their

through the warehouse with the use of floor movements and acceleration within the

markers, wires, magnets, lasers, or computer facility with a high level of precision. They are

vision. They are most often used to transport also equipped with proximity sensors to

raw materials, work-in-process, and finished detect obstacles, which allows them to safely

goods around facilities such as move across the facility and stop when

manufacturing plants, warehouses, necessary. To achieve this level of freedom of

distribution centers, etc. movement, AGVs use radio frequencies to

wirelessly communicate with the CCS.

Because AGVs are guided by technologies

such as floor markers, computer vision, etc., Additionally, AGVs are equipped with GPS

the technology is flexible to operate and systems that allow operators to direct with

move across different types of environments. utmost precision the vehicle to the exact

This, in turn, allows operators to change location where it needs to pick or drop its

vehicle routes and expand their AGV system cargo. This GPS capability also provides real-

according to their needs. As a result, this time visibility as to the operations associated

makes the technology fully scalable, flexible, with these vehicles and provides insightful

and capable of adapting to floor layouts and and up-to-date data that allows managers

operational changes. to detect inefficiencies and take corrective

measures.

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 A warehouse equipped with Kiva Robots can
process as many as four times the orders handled
by a non-automated warehouse.

The Value of AGVs in the Warehouse

AGVs bring major advantages to the warehouse. One of the benefits is that they are a safe

approach to handling materials around the facility as it keeps warehouse clerks away from heavy

equipment and oversized cargo that are often associated with injuries.

Apart from cargo movement, order picking can also be improved through the use of AGVs. Ocado,

an online grocery retailer, uses a unique AGV order picking system in a form that looks like a hive.

Their AGVs move around the hive to pick the needed items and drop them in crates, where

humans can collect them later for packing. These robots continually communicate and

collaborate with each other in order to pick the right orders while successfully moving around

without any collisions. This is an example of a unique and creative way that companies can utilize

AGVs in a warehouse or distribution center setting. To watch a visual explanation of this concept,

watch this video: https://youtu.be/4DKrcpa8Z_E

Another warehouse process that can be improved through the use of AGVs is cycle counting. AGVs

in the form of drones can fly near racks and scan cargo barcodes and/or read RFID tags assigned

to each piece. This, in turn, allows warehouses to accomplish the cycle counting process in less

than one third of the time that it takes when performed manually. This also results in a safer

operations by helping to reduce the risks involved with handling inventory when performing

counting in hard-to-reach areas.

Along with automating warehouse processes, AGVs can work 24/7 and on-demand at a consistent

speed and precision. This is because they don’t fully depend on humans to be

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operated. And although they require maintenance seldomly, they do not experience exhaustion,

nor are they influenced by emotions. This helps the warehouse cope up with industry challenges

such as low unemployment rates and attracting & retaining employees.

The global market for AGVs is expected to

grow at a CAGR of more than 9% through
2017-2021.
Source: Technavio
 The Current State of AGVs

S-Curve of Innovation
In relation to the S-Curve, AGVs has recently passed the Takeoff Stage and is on its way to the

Maturity Stage. Being at this point of the curve means that the technology recently overcame a

significant obstacle and has been adopted by the Early Majority. In this position, the technology

has already crossed the Chasm of Death, which means it is likely that it has the potential to

become a key solution to improve efficiency in warehousing operations.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

In the MHI Annual Industry Report 2020, 53% of people agreed that AGVs have the potential to

create a competitive advantage or disrupt the industry. In comparison to MHI’s report in 2019, this is

a slight increase from 51%, but is enough to drive it across the Takeoff Stage and towards the

Maturity Stage.

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 Technology Adoption Life Cycle

In regard to the Technology Adoption Life Cycle, AGVs are now being implemented by the Early

Majority. Being adopted by this group means that thought leaders are successful in influencing

decision makers about the benefits of the technology. It also means that decision makers are

starting to see how AGVs can benefit their businesses and are willing to embrace the solution.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

To support AGVs’ position in the graph, MHI’s Annual Industry Report 2020 stated that 18% of

respondents are using the technology in their operations today. This adoption rate is a significant

leap compared to two years ago where it was only implemented by 11% of respondents. Because of

this jump in adopters, it has crossed the Chasm of Death and is more likely to be embraced by

decision makers in the supply chain industry.

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 Hype Cycle

Lastly, in relation to the Hype Cycle, AGVs is plotted on the latter part of the Peak of Inflated

Expectations. This means that the technology has received its highest publicity and is expected to

dip in exposure in the coming years as it undergoes trials where flaws, failures, and real-world

benefits are discovered. At this stage, it is suggested that it is still uncertain if the technology leads

to success or failure.
VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

To conclude AGVs’ position in the Hype Cycle, we referred to Gartner’s Hype Cycle for Supply Chain

Execution Technologies 2019. We found that Autonomous Mobile Robots, which is a specific AGV, is

plotted at the latter part of the Peak of Inflated Expectations. We also learned that Gartner

estimates AGVs to reach the Plateau of Productivity in 5 to 10 years.

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 Best Time to Adopt:

In conclusion, we recommend to decision suggests that AGVs will likely become a

makers, who has the financial capability to standard technology within the warehouse.

accept risk and invest in new technologies, to This signals that beginning to adopt AGVs is

begin testing and adopting Automated an appropriate business decision as long as

Guided. As we have discussed, AGVs have the the business is aware that some risks remain

potential to takeover many repetitive tasks and that this technology continues evolving.

within the warehouse with a high level of

consistency and efficiency. Adopting it now On the downside, AGVs is about to enter the

will help you gain a competitive advantage in Trough of Disillusionment in the Hype Cycle,

the market, because so far, it has only been which means that some of the hype

implemented by the first Early Majority of associated with the benefits will not stand.

adopters. This limits us to only recommend adoption of

AGVs to decision makers who are willing to

When looking at AGVs’ positions in the S- accept financial risk as previously stated. But,

Curve of Innovation and Technology Adoption as soon as the technology makes it through

Life Cycle, we see AGVs continuing to evolve the challenges and testing phases, AGVs’ true

in the S-Curve of Innovation within the next benefits would be revealed and it would

years and rising towards the Late Majority become a more viable and less risky

group. We can also see that the technology investment.

have crossed the Chasm of Death, which

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 Mobile and Wearable Technologies

What are Mobile and Wearable Technologies?

Mobile and wearable technologies are benefited by the use of wearables include but

devices that are carried or worn by a user for are not limited to picking, packing, loading,

convenient interaction with a system, and more.

regardless of the user’s location. Both

technologies feature a two-way To describe mobile and wearable

communication that allows users to send and technologies better, here is a list of examples.

receive information from anywhere. Mobile Technology can be in the form of

vehicle-mounted computers, smartphones,

The difference between the two technologies tablets, handheld scanners, and mobile

is that mobile technologies are meant to be printers. Wearables, on the other hand, are

carried on, while wearables are worn on the represented by smart glasses, smart

wrist, head, face, or any other suitable body watches, activity bracelets, and voice

part. This difference allows wearables to be headsets.

used hands free, which gives users the

capability to perform tasks that require hands

without sacrificing system interaction. Some

of the warehouse processes that are

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 Percentage of Increase in warehouse
respondents who plan to efficiency when
adopt Mobile Technology wearable voice
and Wearables within command tools are
the next five years. used.

68% 30 %

Source: MHI Annual Industry Report 2020 Source: SupplyChain247

The Value of Mobile and Wearable Technologies in the

Warehouse
Having the ability to carry a computer allows warehouse workers to send and receive data from

anywhere in the facility. By eliminating the need to walk to a workstation in order to access and/or

enter data, staff can reduce their travel times and, as a result, warehouse operational efficiency

increases.

Additionally, by having easy access to real-time data from anywhere, warehouse clerks can

perform tasks such as viewing picking lists, processing orders, and receiving tasks instantly from

the warehouse manager, among others. These enhanced duties would likely result in an increase

in warehouse productivity and efficiency.

Another benefit of accessing warehouse data regardless of the location is increased visibility.

Accessing data easily can allow managers to be more agile and faster in making informed

business decisions. This, in turn, allows them to better plan and organize their warehouse

operations in real time and be fully connected with their teams and the rest of the organization.

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Moreover, mobile and wearable technologies can provide additional value to the warehouse by

enhancing data entry. Traditionally, data entry is performed manually either by having to enter

information into the system or using pen and paper, which are inaccurate and inefficient. But, with

mobile and wearable technologies (in the form of barcode, RFID scanners, among others), the data

entry process can be semi- or fully-automated. For example, by scanning or waving an RFID

scanner at a corresponding barcode or RFID tag, cargo information is automatically read and

accurately entered into the system. This approach can result in a faster data entry process with

near-perfect accuracy. Some of the warehouse processes that can benefit from this approach

include but are not limited to: receiving, put away, picking, packing, shipping, cycle counting, and

more.

Lastly, wearables can increase safety because they allow clerks to access and enter data in a

hands-free manner. Leaving both hands available when performing tasks lets personnel be more

focused, cautious, and alert of any potential hazard.

Pick operators are able to fulfill orders up

to 46% faster by implementing smart
glasses.
Source: Upskill
 The Current State of Mobile and Wearable Technologies

S-Curve of Innovation
In regard to the S-Curve of Innovation, Mobile and Wearable Technologies are in between the

Takeoff and Maturity stages. This position signifies that the technologies have displayed their

ability to overcome a significant obstacle and have been adopted by the early majority of

adopters. Additionally, the location of Mobile and Wearable Technologies in the curve suggests

that they are soon to be adopted by the general public, which is an indication that the risks

associated with implementing them are subsiding.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

In the MHI Annual Industry Report 2020, 47% of respondents believe that these technologies have a

potential to disrupt the industry or create a competitive advantage for their business. When

compared with other technologies discussed in this document, Mobile and Wearables fall in the

lower half of technologies in terms of creating competitive advantage or disruption as perceived

by the respondents.

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 Technology Adoption Life Cycle

In relation to the Technology Adoption Life Cycle, Mobile and Wearable Technologies are being

implemented by the Early Majority. This means that these technologies are now being recognized

by people who are cautious about accepting change and have done so because of

recommendations from thought leaders. Decision makers are also seeing the benefits of Mobile

and Wearable Technologies and how they can potentially fit within their business. At this point, the

technologies have crossed the Chasm of Death, which is an indication that they are likely to

become a technology standard in the industry.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

To support the position of Mobile and Wearable Technologies in the life cycle, 25% of the

respondents in the MHI Annual Industry Report 2020 indicated that they are currently using these

technologies in their operations. It is also presented in the same report that 23% of the respondents

are planning to adopt them within the next 1-2 years and another 20% within the next three to five

years.

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 Hype Cycle

Lastly, in the case of the Hype Cycle, Mobile and Wearable Technologies are on two different

locations in the curve. For Mobile Technology, it is placed at the start of the Plateau of Productivity

as indicated in Gartner’s Hype Cycle for Supply Chain Execution Technologies 2019. This position in

the Hype Cycle means that the technology just reached the point where it is widely adopted and

that benchmarks are set for assessing the solution.

On the other hand, Wearable Technology is located at the early phases of the Peak of Inflated

Expectations as represented by “Immersive Experience in Logistics” in Gartner’s Hype Cycle for

Supply Chain Execution 2019. This placement in the curve means that Wearable Technology is at a

point where is about to receive its highest publicity. But despite the technology being

overpromoted, this position indicates that the technology is still uncertain if it leads to success or

failure.
VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

Wearable Technology Mobile Technology

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 Best Time to Adopt:

For businesses that want to experience the industry, these innovations still have

increased operational efficiency and more proven benefits associated with adopting

real-time operations, we strongly them. Mobile Technology also has a

recommend to start adopting Mobile competitive and matured market, so the

Technology in their warehousing operations. investment and risks associated with

This technology has matured enough that adopting them is decreasing. The low cost of

products from this category are almost adoption and the significant productivity

certain to provide an increase in productivity. benefits are core reasons as to why

By increasing visibility and ease of interaction businesses and warehouses should start

not only in the warehouse but across multiple adopting Mobile Technology.

business units, the business will be able to run

more efficiently and effectively. Most For Wearable Technology, some technologies

Wearable Technologies, however, are still such as Voice Picking Systems are matured.

being tested and are not yet fully developed But for the recent innovations, such as smart

products. So, we advise businesses to stay up glasses integrated with augmented reality or

to date in relation to the evolution of virtual reality, they are still on the testing

wearables but hold in any adoption for now – phase, and challenges still await in order to fit

unless you have the capital to invest in them into real business-case scenarios. But,

research and development. as soon as this technology proves itself by

overcoming these challenges, it can be a

Although only 47% of respondents in the MHI proper investment at the right time.

Report 2020 answered that Mobile and

Wearable Technologies have the potential to

create a competitive advantage or disrupt

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 Blockchain

What is Blockchain?

Blockchain is a distributed digital ledger alteration of data in the main database to

technology that records and links (or chains) compromise data integrity. But with

blocks of transaction data from relevant blockchain and its distributed approach, a

parties in a verifiable and permanent database can become an almost

manner. This database of transactions is impenetrable cache of information, which

shared among the parties, which makes the can be used to ensure accountability among

technology distributed rather than everyone in the network while increasing

centralized. visibility.

Being a database that is distributed among This distributed approach to data

relevant parties makes data easily accessible management makes blockchain a preferred

by the appropriate individuals or groups. platform to protect data and increase

Simultaneously, its distributed aspect creates accountability while making information

a high level of security because blockchain easily accessible to the intended parties.

requires the alteration of 51% of the

distributed databases in order to record a

change. In the conventional centralized

database environment, it only requires

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 Benefits of Blockchain to the Supply Chain

These six benefits can transform the supply chain to be more

secured, transparent, and safe for all

01 02
Improve supply chain Improving inventory
visibility and traceability management

03 04
Reducing or eliminating Increased consumer
fraud and errors and partner trust

05 06
Identifying Minimizing
issues faster courier costs

The Value of Blockchain to the Warehouse

In the supply chain, which includes the warehouse, collaboration and transparency is limited

because of the many entities involved in a transaction that can alter intentionally the integrity of

the data. The value of blockchain is that it can link these separate entities under the same data

platform to ease communications, increase transparency, and strengthen data security.

Additionally, since blockchain is secured and almost impossible to hack, the data infrastructure

can be used as a reliable source of historical data and instill accountability towards the parties

involved.

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 An example of how blockchain can benefit the supply chain is Walmart and IBM’s implementation

in the food supply chain. When a food scare occurs, it usually takes days or weeks to backtrack

transactions and pinpoint the source of implicated products. This is because supply chain data is

often siloed into each entity’s systems. But, with the implementation of blockchain, this effort can

be reduced to minutes because blockchain can be a reliable, accessible, and transparent source

of all past transactions in a supply chain. This can reduce the amount of resources needed to track

the concerned products and provide safer commodities to customers.

In addition to the benefits mentioned prior, blockchain’s potential in the supply chain can be

further enhanced when paired with IoT (Internet of Things). IoT can capture various kinds of data in

the supply chain, while blockchain can be the technology to record these data as transactions and

keep them protected and accessible to all relevant parties. For example, meat in transport must

maintain a temperature of around 4°C/39°F or less. With blockchain and IoT in the form of

temperature sensors, the temperature of meat can be securely recorded at every step of the

supply chain, and data can be made accessible to all relevant parties around the clock. These

technologies can also verify the information and trigger warnings if the temperature falls outside

the requirements. This use case describes how blockchain integrated with IoT can help the supply

chain in all levels by providing a secure and reliable repository of data.

Lastly, blockchain can help the supply chain and warehouse in the form of Smart Contracts, which

are self-executing contracts with terms of agreement between two parties written into lines of

code. This can be utilized by the warehouse to automate transaction verifications and payments.

For example, when a connected pallet is delivered, the received confirmation, time of delivery, and

condition will be transmitted to the blockchain system to be verified, so long as they are in the

agreed conditions. If verified and the terms are met, proper payments will be automatically

released to the appropriate parties. This kind of automation greatly increases efficiency, integrity,

and security in these types of transactions.

What the internet did for communications,

blockchain will do for trusted transactions.

Ginni Rometty, CEO of IBM

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 The Current State of Blockchain

S-Curve of Innovation
In relation to the S-Curve of Innovation, Blockchain is currently in between the Ferment and Takeoff

stage. To be more specific, it is close to reaching the Takeoff phase, which indicates that the

technology is close to overcoming a significant obstacle. At this point, it has not yet been adopted

by the Early Majority, and it still requires significant research and development to be considered as

a major technology in warehousing operations.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

In the MHI Annual Industry Report 2020, only 33% of respondents agreed that Blockchain has the

potential to create disruption in the industry or competitive advantage for their business. This ranks

Blockchain below all technologies in this guide in regard to people’s belief in its potential to help

their business or create a significant differentiator.

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 Technology Adoption Life Cycle

In regard to the Technology Adoption Life Cycle, Blockchain is being implemented by the Early

Adopters. Being implemented by this group means that Blockchain has garnered attention by

thought leaders, who are influential in the industry and are more cautious when investing in new

technologies as compared to the Innovators group. This also means that Blockchain has

developed enough to prove its capabilities among investors with a reasonable approach to risk

and that it is seen as a technology worth investing in and researching.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

To support Blockchain’s position in the graph, MHI’s Annual Industry Report 2020 stated that the

technology is currently being adopted by 10% of the respondents. This is a 66% increase compared

to MHI’s report from 2018, which only recorded a 6% adoption rate. It is also mentioned in the 2020

report that Blockchain has an expected adoption rate of 34% within the next two years and 56%

within the next five years.

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 Hype Cycle

Finally, in the case of the Hype Cycle, Blockchain is placed at the start of the Peak of Inflated

Expectations. This position in the curve means that Blockchain is about to receive its highest

publicity. But, despite the promotion, it is still uncertain if the technology becomes a success or

failure. Usually, the technology is overhyped because of hypothetical applications of its full

potential without fully acknowledging or understanding its downsides.

VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

To deduce Blockchain’s position in the Hype Cycle, we referred to Gartner’s Hype Cycle for Supply

Chain Execution 2019. Gartner indicates that Blockchain is placed currently at the start of the Peak

of Inflated Expectations. At this point, we can presume that most people in the supply chain

industry haven’t yet become aware of Blockchain’s potential and are only about to discover it. We

expect this to happen as Blockchain rises more to the top of the Peak of Inflated Expectations and

continue its evolution through the Hype Cycle.

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 Best Time to Adopt:

To conclude, we do not recommend adopting In 2018, MHI conducted a survey regarding

Blockchain as of yet and, instead, to stay people’s familiarity about upcoming

updated regarding its evolution and technologies and showed that only 11% of

innovations in the industry – unless you are respondents have an expert or working

willing to take some financial risk and invest understanding of Blockchain.

in research and development. Blockchain’s

data security and accessibility features can On the positive side, Blockchain is rising to the

propel it to become a fundamental Peak of Inflated Expectations on Gartner’s

technology in the industry, but it still needs to Hype Cycle. This means that it is about to

undergo rigorous testing to discover most of receive its highest publicity, helping the

its flaws, failures, and real-world benefits. general public to gain familiarity and

Staying up to date in relation to Blockchain’s understanding about the technology. Its

evolution will let you have an advantage in position is also close to taking off in the S-

potentially becoming an early adopter as Curve of Innovation and crossing the Chasm

soon as major risks are overcome. of Death on the Technology Adoption

Lifecycle, which means a clear evolution of

It is also important to note that Blockchain’s this technology in both cycles. This signals

low reception regarding its potential to create that once Blockchain has overcome these

a competitive advantage or disruption to the stages, it is likely to become massly adopted

industry might be caused by the lack of by the supply chain industry.

understanding by the general public.

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 Artificial Intelligence

What is Artificial Intelligence?

Artificial Intelligence (AI) is a branch of implementation that is mostly used by

computer science that is concerned with businesses.

building smart machines and software

capable of performing tasks that require On the other hand, Artificial General

human intelligence. Generally, this Intelligence, in theory, is a type of AI that is

technology falls under two broad categories: capable of understanding and interacting

Narrow AI and Artificial General Intelligence. with the world to perform a wide range of

tasks with the same effectiveness as human

Narrow AI is a type of artificial intelligence beings, if not better. If AGI is developed to

that is focused on performing a singular the point where it reaches expectations,

human-like task or implementing a very tasks could be performed with the same level

limited part of the human mind on machines. of human-like thinking and reasoning but

Some of the innovations made possible by with computational advantages such as

Narrow AI include but are not limited to image near-instant recall and split-second number

recognition software, voice assistants, self- crunching.

driving cars, or the famous IBM’s Watson. As

of now, Narrow AI is the type of AI

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 Artificial Intelligence Sub-Technologies

Machine Natural Language Computer Robotics

Learning Processing Vision

The Value of Artificial Intelligence to the Warehouse

Artificial Intelligence manifests its value in the warehouse across different disciplines and sub-

disciplines through machine learning, natural language processing, computer vision, and/or

robotics – among others. Here’s how these four AI branches can bring value to the warehouse.

Machine learning uses algorithms and statistical models to process massive amounts of data to

make logical decisions in the warehouse. Using data gathered by sensors or inputted into the

system, machine learning detects patterns in the data and automatically suggests actions such

as replenishing nearly out-of-stock items, shorter walking routes, better inventory positioning, and

more.

Natural language processing (NLP), on the other hand, allows for voice picking, so workers can

operate hands and eyes-free to increase warehouse safety and efficiency. This is made possible

because NLP provides systems or machines the ability to read/listen, understand, and derive

meaning from human languages.

In addition to natural language processing, computer vision is another sub-discipline that helps AI

interact with the warehouse, in this case, visually. This technology can enable semi-automated,

end-to-end product tracking by placing cameras in different parts of the warehouse that detect

the movement and position of cargo. Computer vision can also aid drones to perform cycle

counting by helping them navigate through the warehouse and scan items without the need of

human intervention.

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 Lastly, robotics is a sub-discipline that enables AI to have three abilities: physical presence, spatial

awareness, and movement in the real world. By enabling these three abilities, AI can interact with

physical objects and perform semi-automated tasks in the warehouse, such as loading/unloading,

picking, and moving cargo around the facility.

Artificial Intelligence in the warehouse is not limited by these four sub-disciplines, but they are

some of the most tested and commonly used applications of AI in the warehouse. Additionally,

these sub-disciplines only fall under Narrow AI but are necessary steps to achieve Artificial General

Intelligence (AGI). If/When AGI is achieved, autonomous warehouse operations would no longer be

a hype, but a very possible reality.

Current and Planned Uses of AI

Demand Forecasting & Supply Chain

Planning/Warehouse Management

Inventory Management

Logistics, Shipping and

Transportation

Consumer Behavior Tracking

Manufacturing

Product Development

Supplier Selection and Due Diligence

Pricing

Procurement

Supply Chain Security

Contracts

0% 10% 20% 30% 40% 50%

Source: MHI Annual Industry Report 2019

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 The Current State of Artificial Intelligence

S-Curve of Innovation
In relation to the S-Curve of Innovation, Artificial Intelligence is in between the Ferment and Takeoff

Stage. Usually, being in this position means that a technology’s evolution is slow. But, in AI’s exact

position, the technology is about to cross over to the Takeoff phase, which means that its evolution

is likely to speed up significantly within the next few years.

New Technology

Discontinuity
PERFORMANCE

Maturity

Takeoff

Ferment

TIME

In the MHI Annual Industry Report 2020, 56% of respondents answered that Artificial Intelligence has

the potential to create disruption in the industry or a competitive advantage for their business. AI is

among the technologies that received a high approval rate from the respondents, which signals

people’s confidence in its potential benefits in the warehousing industry.

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 Technology Adoption Life Cycle

In regard to the Technology Adoption Life Cycle, Artificial Intelligence is currently being

implemented by the Early Adopters. Being adopted by this group means that thought leaders have

determined AI’s capabilities to be worth investing despite the associated financial risks. This also

means that AI has been adopted by a group of enthusiasts, who are instrumental in providing

helpful feedback about its pros and cons, as well as influencing the technology to becoming

mainstream.

Early Early Late

Innovators Adopters Majority Majority Laggards
CHASM

To support Artificial Intelligence’s position in the Technology Adoption Life Cycle, we found that the

technology has been adopted by 12% of respondents in the MHI Annual Industry Report 2020. It is

also mentioned in the same that 26% of respondents are planning to adopt the technology within

1-2 years, while another 22% are adopting it within 3-5 years.

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 Hype Cycle

Lastly, in the case of the Hype Cycle, we believe that Artificial Intelligence is placed on the

Innovation Trigger. Being placed in this position means that the technology is still being

conceptualized and prototyped. Often, there are no usable products or services of the technology

available for individuals or businesses to implement, and commercial viability for it is still

unproven.
VISIBILITY

Innovation Peak of Trough of Slope of Plateau of

Trigger Inflated Disillusionment Enlightenment Productivity
Expectations

MATURITY

In Gartner’s Hype Cycle for Supply Chain Execution Technologies 2019, Artificial Intelligence is not

indicated. Instead, we deduced its position from technologies that utilizes AI sub-disciplines

heavily, such as Warehouse Picking (Humanoid) Robots, Transportation Forecasting, and

Warehouse Labor Forecasting. These three technologies are all placed in the Innovation Trigger,

hence, we categorized Artificial Intelligence in the same phase.

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 Best Time to Adopt:

In conclusion, we do not recommend significant research and development to

businesses to begin adopting Artificial prove its viability and benefits in the

Intelligence yet, as it has not been developed warehouse. Additionally, its potential

enough to display realistic advantages to capabilities are still to be discovered as it has

warehouses. Instead, it is best to stay not yet entered the Peak of Inflated

updated regarding its evolution as a Expectations.

technology and in the industry. But, if you are

willing to take the financial risk and invest in On a positive perspective, even if we’re not

research and development, AI has the recommending AI’s adoption at this time

potential to create a competitive advantage because of the financial risks involved,

for your business, especially now that only an thought leaders have started adopting it and

approximate 12% of companies are utilizing it. are dedicating resources to develop AI into a

usable technology with realistic benefits for

Looking at Artificial Intelligence’s positions in their business. Hence, if you are a company

the S-Curve of Innovation, Technology that is risk averse, it is best to stay put and

Adoption Life Cycle, and Hype Cycle, it is updated on the breakthroughs of AI.

apparent that the technology still needs

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 Conclusion
As we have seen throughout this guide, Warehouse Digitalization is an important transition in the

evolution of the warehousing industry. In this case, this evolution is purely driven by technology and

the need to effectively and more efficiently operate within the warehouse and across all the supply

chain and its participants. As we have detailed in this guide, we believe that this transition is

spearheaded by seven major technologies. To summarize our analysis of the evolutionary cycles

and the stages of these breakthroughs, the following graph offers decision makers our

recommendations in regards as to how to approach each technology.

Technology Risk-Reward Analysis

REWARDS

High Rewards- Low Risks (Adopt) High Rewards- High Risks (Adopt Carefully)

Low Rewards- Low Risks (Don’t Adopt) Low Rewards- High Risks (Stay Updated)

RISKS

For the Internet of Things (IoT), Business Intelligence & Predictive Analytics, and Mobile & Wearable

Technologies, we recommend to begin adopting them now, if possible. Currently, these three

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 technologies are matured enough to provide real business benefits. This in turn has resulted in the

homogenization of these technologies, standardized products, and lower adoption costs, which in

turns results in limited financial risk associated with their adoption. These three technologies also

serve as important base layers in the emergence of the digitalized warehouse by being the data

collectors (IoT, Mobile & Wearable Technologies) and data analytics mechanisms (Business

Intelligence and Predictive Analytics) that eventually, with Robotics, will lead to intelligent and

autonomous warehouses.

As per Robotics & Automation and Automated Guided Vehicles (AGVs), we recommend to begin

their adoption (if feasible), but with certain considerations. In the case of Robotics and Automation,

implementations such as articulated robotic arms remain a challenge (and/or unrealistic) for

most companies. But, in the case of Automation, there are certain solutions, such as automatic

capture of cargo weight, dimensions, and images as well as the parsing of documents, that you

can start adopting right now without any problem. On the other hand, for AGVs, we recommend to

begin testing and adopting it only if the business has the financial strength to accept the risk (and

potential benefits) associated with them. As a reminder, AGVs recently crossed the Chasm of

Death, which indicates a high probability of success, but is important to remember that they are

about to enter the Trough of Disillusionment, which means true benefits are yet to be revealed.

Lastly, for Blockchain and Artificial Intelligence, we recommend that businesses keep track and

stay updated/informed in regards to their evolutions and innovations in the industry. These two

technologies have yet to cross the Chasm of Death and still require significant research and

development to prove their viability and benefits in the warehouse. But, if the business is capable

of taking the financial risk associated with proving their viability and benefits and the results are

positive, undoubtedly, they will have created for themselves a competitive advantage.

It is not the strongest of the species that survives,

nor the most intelligent that survives. It is the one
that is most adaptable to change.
Charles Darwin

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 To close this guide, we would like to encourage warehouse professionals and decision makers to

fully embrace Warehouse Digitalization. Technology innovation is a major factor in breaking the

cost–value tradeoff and advancing the business and the industry forward. Businesses that fail to

understand that this is not a trend but a natural evolution will have more difficulties competing in

the marketplace and will eventually disappear.

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 About Cyzerg

Call us today at (954) 417-3383 | Email us at advisors@cyzerg.com

Contact us to learn how Cyzerg can help you overcome challenges and establish a true
business differentiator using custom-tailored warehouse technology.

Cyzerg is a technology company focused on designing, implementing, and managing custom

technology solutions for warehouses and distribution centers. With our full software and hardware

technological capabilities, we have helped over 174 warehouses and distribution centers

modernize their operations, increase efficiency, and reduce errors and costs.

By providing custom technologies, we can help warehouses leverage cutting-edge solutions that

are most fitted to meet their specific requirements. And by deviating from off-the-shelf technology,

which often results in fragmented solutions and limited return on investment, we can allow

warehouses to harness the power of custom technology to differentiate themselves from

competitors and catapult their business into the future.

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