Amazon Leverages Supply Chain Expertise for AWS Customers
Many businesses are grappling with the increasing demands of modern supply chains. Customers now expect faster fulfillment and deliveries, shrinking from weeks to same-day delivery. To meet these demands and enhance warehouse efficiency, Amazon Web Services (AWS) is now offering its customers a new professional services offering called Warehouse Automation and Optimization (WAO).
Warehousing is a critical, yet often-overlooked aspect of successful supply chain management. Costs in this area are often higher than they should be, and optimizing operations is a key area for improvement. A McKinsey study indicated substantial cost-saving potential across several industries within warehousing, with improvements of up to 30% possible.
With WAO, AWS customers can tap into Amazon’s expertise to optimize and automate their warehouses. This approach combines process enhancements, improved layout design, and the implementation of automation technologies to create a more efficient and effective fulfillment environment. These improvements can result in better business outcomes and improved customer service levels.
Operational efficiency can be improved with robotics, computer vision, and the Internet of Things (IoT):
- Optimized pick-and-put away operations increase labor productivity by 40% (InterlakeMecalux, 2024).
- 3D visualization and digital twins improve space utilization by 15% (Facility Executive, 2021).
- Implementing robotics can reduce the average labor and manufacturing costs by 25 to 30% (Meteor Space, 2024).
- Automated inventory tracking and cycle counting to achieve 99.9% bin accuracy (Stifted, 2024).
The Amazon Approach to Automation
Amazon has developed a rigorous approach to automation and digital modeling for its fulfillment centers, which are commonly referred to by generation. For example, a current fulfillment center under construction may be a “Gen 13” design. When Amazon decides to develop the next generation, new designs are implemented, including new layouts, automation, robotics, and other features and technologies.
To ensure efficient and cost-effective investments, Amazon uses digital modeling powered by Amazon Web Services, Inc. (AWS), deep industrial engineering experience, and advanced simulation on top of digital twins, which represent the conceptual future state designs. This process helps the company to make data-driven decisions about capital investments in new automation technology.
AWS Technology Offering: Warehouse Design and Simulation
AWS now provides a service offering to help customers design and optimize fulfillment centers. The goal is to uncover increased efficiencies, reduce costs, and improve performance through the Warehouse Automation and Optimization (WAO) offering. WAO leverages AWS services as well as AWS Partner technology and years of Amazon experience helping the company optimize its fulfillment centers. This offering consists of three phases:
Phase 1 – Survey and Modeling
This phase is leveraged for customers looking to improve or redesign existing warehouses (brownfield facilities). For customers looking to build new facilities (greenfield), the WAO process starts in Phase 2.
This phase begins with a Survey step where the Amazon Global Engineering and Security Services (GESS-IPS) team does a physical walkthrough and maps the existing warehouse using a LIDAR scanner to capture a 3D image.
The LIDAR scanner captures detailed images of the entire warehouse and the output is a point cloud file, which is a digital file produced by 3D scanners which measure many points on the external surfaces of objects around them. The scanner used by Amazon captures items with a precision of approximately 3cm. The elements the scanner captures include physical layout elements like walls and outbound gates, and equipment such as conveyor belts, forklifts, and storage systems.
The next step is Modeling, which generates a digital twin. A digital twin is a digital representation of a physical space, which includes the physical structure, digital assets, and data related to the physical space that enables simulation and scenario modeling. The AWS offering delivers a digital twin at maturity level 2, which can later be enhanced using real-time data, with or without AWS support.
In the Modeling phase, the point cloud file is converted into a 3D model of the warehouse. The use of a LIDAR scanner helps to accelerate modeling. The result of this scanning and modeling process results in a digital twin at maturity level 2. Each asset in the warehouse (e.g., workstations, storage systems, equipment, etc.) is identified with metadata, including design-relevant elements such as performance data, carbon footprint, cost data, and more. These assets can be repositioned to review and test different design ideas and optimize layout options.
Phase 2 – Design
This phase is designed specifically for AWS customers who are looking to design a completely new facility. This phase uses resources from AWS, Amazon, and AWS partners to develop cutting-edge warehouse designs. Conceptual designs reflect what is possible for a warehouse, including technology and automation. A key output of the Design Phase is a future-state conceptual design package tailored to the customer’s vision, including best-in-class technology, automation, and alignment with the customer’s operational and financial goals.
Examples of future scenarios include the design of a new warehouse layout, potential process changes, and equipment investments for existing warehouses. AWS incorporates certain customer constraints, such as budget, security, timeline, and infrastructure-related requirements, during this phase.
In addition to creating conceptual layouts, the output from the Design Phase includes detailed engineering and performance data for material handling equipment (MHE), automation, robotics, and storage solutions. AWS partners with SpinnakerSCA and Amazon GESS-IPS to complete the Design Phase. The team also analyzes generally available solutions that provide the best value for AWS customers in the automation and robotics phase of the design. These solutions may include ASRS, AGVs, conveyor systems, sorting systems, and computer vision solutions.
Phase 3 – Simulate and Analyze
In this phase, simulation models are created using ProModel software. These models assess the impact of new designs and automation. AWS and its partner, BigBear.ai, collect key metrics for the customer. The current performance is converted to these metrics and used as a benchmark. All data allows a deep understanding of impacts to cost, throughput, labor, equipment, and space. From this analysis, models guide return on investment (ROI) analysis for various solution options.
Simulation models in ProModel cover the entire warehouse process from receiving to shipping. The models are custom-built to ensure flexibility and accuracy to generate confidence. Then, this allows AWS to build customer input/variable dashboards.
Detailed data is collected, including labor efficiencies, equipment performance data, and more. The following image provides an example of the change in ‘picks per hour.’
Models include an aggregate view across all activities, informing users about possible changes by assessing costs and performance. AWS customers can continue using the models built in their day-to-day operations.
Conclusion
WAO design and simulation provides opportunities to reduce costs and boost the efficiency of a warehouse, regardless of the industry. Through this offering, AWS provides cutting-edge facility design and uses digital twins while also incorporating core features like simulation. The process has decreased the time it takes Amazon to build digital twins by up to 80% over traditional approaches.
Customers retain ownership of the simulation model(s). AWS experts have access to industry benchmarking, best practices, suppliers, and partners, and leverage these to benefit customers through WAO. This is the same methodology Amazon uses for its own fulfillment centers. Customers can also explore how AWS can help solve complexities in their warehouse operations or supply chain.
To learn more, customers can visit AWS Supply Chain and reach out to their AWS account manager to set up a discovery workshop with industry experts for warehousing.
