Renaud recently read Christopher Mims’ book, Arriving Today: From Factory to Front Door, Why Everything Has Changed About How and What We Buy, which explores the global supply chains responsible for getting products from factories in Asia to Western consumers. He gives his thoughts on the book’s content and focuses on the effect of automation on supply chains, the economy, and worker health, in particular.
If you prefer listening to reading…
Here’s a summary of some of the main points raised about how automation shapes the future of manufacturing and distribution.
02:14 – Exploring Amazon Fulfillment Centers.
WalMart and other stores like this fulfill customers’ needs in-store via self-fulfillment, supplying the stores themselves from regional distribution centers. But Amazon doesn’t really operate a network of stores like this, so they have to fulfill directly to customers via e-commerce and delivery. In the fulfillment center the goods per order are picked and packed, boxes labelled, and then sent out, and different staff members may handle these different functions. The staff are low-paid and low-skilled and tend to be under pressure, although this environment is not exclusive to Amazon. Over the past decade or more Amazon has been trying to implement more automation to reduce the time taken by staff to walk around, find, and check SKUs. Now in some places, they have implemented robotic automated guided vehicles that will roll to the correct location and pick the right items, bringing them to the staff member who will check, pack, and label the shipment. This improves worker productivity and efficiency as one person can pack and send more shipments in one day when walking around is taken out of the equation. Companies using this kind of system could shorten the amount of time required to fulfill an order, and ultimately either lower the cost of their services, increase their profits, or both.
12:47 – Economic Implications of Automation.
The British economist John Maynard Keynes predicted that by 2028, everyone would be working about three hours a day because as things get more automated, people will have a lot more time for leisure. But the author says, obviously that hasn’t happened. On average, Americans work six and a half hours a day of paid work. So why hasn’t more automation reduced working hours? Mims says that every time we automate a task, we tend to use more of that product or service, in combination with others, to accomplish some other more complicated end. The Covid pandemic gave e-commerce a massive boost and companies like Amazon had to pivot towards new technologies to keep up. But automation has resulted in more staff being required in its centers, because consignments are being made ready faster than ever and increased staff are needed to get them shipped out. Now low-skilled warehouse workers like this have kind of replaced manufacturing workers in the USA when that industry went to Asia (fuelled in part by online retailers like Amazon).
20:42 – Automation’s effect on employee health.
Fulfillment centre staff have to work at the pace set by an algorithm and if they can’t keep up they will be retrained and, finally, let go if they do not keep pace. Amazon seems to be a top-down culture where the management passes down the ‘rules’ that lower-level employees must work to, but it’s not very collaborative. In China, we sometimes see this top-down approach in manufacturing where the employees are there to follow and not question. Very different to Toyota who made a huge effort to get managers and staff together on the shop floor, doing more training, hiring extra capacity to avoid burning staff out, and thinking of ways to make improvements.
Regarding health, the book suggests that it may be hard for Amazon employees to make the required pace and keep their jobs if they follow the company’s safety regulations, therefore, staff safety is not the top priority. Injury rates seem to be higher in the more highly automated facilities which could be because the staff have to do fewer repetitive actions very, very quickly and there is not a lot of consideration given to ergonomics to help reduce injury.
28:00 – What could Amazon do to improve?
They could:
- Follow the McDonald’s system where many workers are part-time, instead of doing 35-40 hours per week on repetitive work.
- Give staff a larger mix of tasks to break the repetition.
- Work on much more ergonomic work process design.
- Ensure that heavier packages are handled differently.
- Etc.
Related content
- Purchase the book for yourself: Arriving Today