Augmented Reality is Changing the Supply Chain Workforce and Improving Operational Efficiency and Profitability

We are starting to see viable applications of Augmented Reality (AR) that are improving operational efficiency and financial metrics. These applications will begin to scale across the industry in the coming years. Consider DHL’s experience. After a series of pilots over the last three years, DHL is expanding the use of augmented reality (AR) in warehouses. DHL is arming warehouse workers with smart glasses capable of providing visual displays of detailed order picking instructions including where the items are within the warehouse and where they need to be placed on the cart. Delivering relevant information through smart glasses frees warehouse workers from having to hold and manage physical pick lists printed on paper. Through the use of this “vision picking technology,” DHL saw productivity improvements of 15 percent, higher accuracy rates, and reduced training times.  

DHL reports that about 50 percent of the total work hours spent in a typical warehouse are spent picking inventory. Roughly a third of DHL’s costs are related to staff costs like wages, salaries, and compensation. Cutting staff costs by 20 percent would improve EBITDA margin by 80 percent, operating margins by 112% and net profit margins by nearly 150%. According to the Bureau of Labor Statistics, there are some 950,000 U.S. workers employed in warehousing and logistics so AR technology like this could drive significant industry-wide productivity gains while improving operating metrics for myriad companies.   

Overtime AR applications like “vision picking” will likely extend into other areas of the supply chain as well. Estimates suggest drivers spend between 40% and 60% of their time outside of distribution centers trying to locate the correct boxes within their truck instead of driving. AR applications could cut delivery times down significantly by providing drivers with necessary information at the time of delivery. We have only begun to scratch the surface of AR applications revolutionizing the supply chain.  

You can see how DHL is implementing their “vision picking” technology in this video:

 

 

 

 

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