Trends of Logistics Automation in Japan”

Confidential!

”Trends of logistics automation in Japan”

Nittsu Research Institute & Consulting, Inc. (NRIC)

September 2020 Confidential! NRIC: Who we are

Research ü Cargo volume forecasting ü MHE research & advice ü Emerging markets research

“L”ogistics Consulting Goods needed, amount needed, place needed ü Inside warehouse improvement Network (node and link) ü Inventory reduction ü Delivery network optimization ü Warehouse location optimization ü Cross border trade trial • 50-year old research institute specialized in logistics ü Market entry research & advice

• Subsidiary of Nippon Express, Japan’s largest 3PL Education ü 3PL employee • Contribute and help improvement in logistics industry ü Management ü Trade terms, operation

• Employees: 75 Engineering

ü Shock, temp./humidity tests ü Carbon dioxide reduction

• Power-assist suits that help workers carry heavy things. • Three companies have introduced products. • Seen only in Japan yet.

NIPPON EXPRESS EUROPE GMBH Head Office（Dusseldorf） Logistics Research Internship (2016)

NIPPON EXPRESS (DEUTSCHLAND) GMBH Head Office（Moenchengladbach）

Demands for more labor force Increasing unpopularity/obstacles

Ø Same day, Pin-point time delivery, Redelivery Ø Avoid the industry due to lots of overtime work Ø Shortening lead-time Ø Low pay compared to other industries Ø Need for additional services Ø Harsh work environment Ø Increasing demand for high quality Ø Stricter driving licensing policy implemented

（Population） ×10,000 Results Estimation ß Declining and aging population Total population ×10,000Yen

Average Wages

Population aging rate(above 65 years old)

￥314,054/month Wage of Road freight business

￥297,233/month

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Low and decreasing pay in logistics industry

︓75 years of age or older ︓between 65 and 74 years old ︓between 15 and 64 years old ︓between 0 and 14 years old

Machine works Human works Human supports Machine supports

l Easy to standardize l Very flexible – can handle l Experience not important for various types of goods operators l Easy to change operation l Easy to educate operator procedure l Easy to reduce labor l Low initial investment l Easy to collect data l Operatorsʼ experience and l Not flexible capability decide productivity l Not able to change operation l Difficult to standardize procedure l Work load gets smaller but l High initial investment never becomes zero.

Labor shortage? Japanʼs one cannot be sustained… Longer-term view is needed

People make mistakes. Minimize Machine/System WILL fail. such mistakes. (Target closer to (100% impossible) Prepare back- 100% as much as possible.) up plan for such failure.

Fool Proof

Fail Safe

＜KPI:99% Then, what would you do?> Change in mindset 1. Spend a million to try to reach closer to 100%? needed for JPN 2. Spend a thousand to back up the 1% mistake? (Standardization)

Logistics 4.0 Western-based ＜Japanese OP＞ • No clear SLA • Customization • Individual (separate) West. improvement Japanese OP JPN OP • Bottom-up • Deep customer involvement

EU/US Western OP ＜Western OP＞ • Clear SLA • Platformed • Improvement in whole supply chain Asia JP OP Western OP • Top-down • Less customer involvement

• Japanese Operations may not completely disappear. But how much does it remain? Can we live with it?

p In Japan, customers prefer customization and idea of cooperation or sharing is limited. Shared warehousing exists, but not widely used for now.(Customers require individuality, unwilling to cooperate with competitors etc.) → Standardization is slow → Obstacle in automation

p Among industries, EC business is a mainstay in logistic automation. ( This is because of a number of SKU, small lot, priority on speed. Upstream logistics can be more easily automated, because of linkage with factories.)

p Automated picking is very challenging. It is left until last.

p Among the logistics operations, carrying is automated a lot, followed by carrying+storage. We started automation from what we can easily do, rather than planning to build a fully automated logistics center. Need to keep the budget, achieve ROI and avoid the risk of failure.

We are actually working on・・・

Type Company Product Comment

Grey Orange Butler Indian made. In Japan, used at Furniture Chain EC. New with pallet carry. Shelf-move Hitachi Racrew It is one of Japan's leading general electronics manufacturers. Robot Geek Plus Eve Beijing, China. Adopted by Chinese EC provider and Japanʼs apparel EC.

Fetch Robotics Freight Silicon Valley. Targets existing players and factories, not EC. Heavy carry. Bin-move Robot Locus Robotics Locus Bot Boston. Targets EC. DHL is testing. Rapyuta Robotics AMR Development of robot platform in addition to AMR Jakob Hatteland Autostore Norway. Flexible. Can start from small and expand. No AI.

AS/RS Dematic Rapid Pick Typical horizontal auto storage. Picker gets necessary units from the bin.

Daifuku Pick ＆ Stocker Carousel type stocker. Brings bin to picker. Vertical.

Eve Freight Locus Bot Auto Store ※Figures and photos are quoted from each manufacturer's homepage.

Type Company Product Pros Cons • Complete independent area for • Height is dead space. Shelf cannot be Grey Orange Butler robots, separate from pickers. too high because of balance. Shelf-move Safe. • Move not-picking items. Robot Hitachi Racrew • Flexible layout change by AI based • Stop all robots and picking activities on frequency of picking items. when trouble happens. (item drop, Geek+ Eve • No walk by pickers (almost zero). etc.)

Fetch Robotics Freight • High energy efficiency as it only • Pickers and robots share the same Bin-move moves picking items. space. Accident may happen. Robot Locus Robotics Locus Bot • Can install in existing layout. • Pickersʼ walk does not become zero. • • Hitachi Racrew No construction needed. Not clear if productivity goes up. Jakob Hatteland Autostore • Can use height. High ratio of • Construction needed. storage efficiency. • Cannot change layout easily. AS/RS Dematic Rapid Pick • Separate areas for storage and • Bin size is fixed. picking. Safe. Daifuku Pick ＆Stocker • No walk by pickers (almost zero).

Butler AMR(RapyutaRobotics) Rapid Pick Pick＆Stocker

※Figures and photos are quoted from each manufacturer's homepage.

Check/ Allocation/ Unloading Carrying Inspection Shelving

Storage

Check & Loading Carrying Picking Packaging

Robot Arm +3D Vision

Scanner/ GTP１（Shelf-move Type） Image recognition Loading/Unloadi system AGV/SDV GTP2（AS/RS+Robot） ng Machine Automatic packaging machine GTP3（Bin-move Type: AMR)

■AGV︓Automated Guided Vehicle ■GTP︓Goods To Person ■ AS/RS ︓Automated Storage Retrieval System ■SDV︓Self Driving Vehicle ■AMR︓Autonomous Mobile Robot

Started with Autostore．．．

uFirst, We need to reduce the movement of many people in the warehouse

uGiven the limited space in Japan, we need to improve storage efficiency per unit area as much as possible

Then, various GTP systems have been released and implemented.

As there have been various needs; pTo shorten preparatory period before go-live pTo implement the system without changing layout pTo replace only carrying operation we have worked on a number of systems to automate warehouses.

※Figures and photos are quoted from each manufacturer's homepage.

EVE Supplier︓Geek Plus Case Study︓Acca International(3PL)

Racrew Supplier︓Hitachi Racrew Case Study︓Monotaro

※Figures and photos are quoted from each manufacturer's homepage.

Alpha Bot Supplier︓ Alert Innovations Distributer in Japan︓Murata Machinery Case Study︓ ALPEN(sports goods)

The movement of the robot is not only in the two- dimensional , but also in the three-dimensional.

Skypod Supplier︓ Exotec Solutions Case Study︓ First Retailing(apparel)

※Figures and photos are quoted from each manufacturer's homepage.

Rapyuta Robotics AMR Supplier︓ Rapyuta Robotics Case Study︓Nippon Express(3PL)

Omron LD Mobile Robot Supplier︓ Omron Case Study︓ Mitsubishi Fuso Truck and Bus Corporation (MFTBC)

※Figures and photos are quoted from each manufacturer's homepage.

In recent years, logistics automation has been in transition phase - from development of new technologies to design and build operations with new technologies.

development phase Operation phase

Increasing number of Rise of GTP systems integrators

Development of WCS Importance of WES

Emergence of robot arm for Utilize DATA for Predictive logistics

Advancement of 3D & image Consigners & start-ups recognition coming into logistic industry (acquisition/alliance) ~2018 2019~

Fumihiko Inoue Senior Consultant Research ＆ Consulting Unit 4 NITTSU Research & Consulting, Inc. (NRIC) E-Mail: [email protected] Internet: https://www.nittsu-soken.co.jp/