Analyst house ABI Research, in association with US network design and services firm Betacom, has put out a white paper about private 5G in warehousing, and Enterprise IoT Insights has had a quick read and (borrowed and stolen and) come up with five takeaways on the subject. All the original thinking, as such, should be credited to Leo Gergs and Dimitris Mavrakis, analysts at ABI Research and long-time familiars in these pages.
But here goes: five notes on private 5G in warehousing, with a primary focus on the US market, where the CBRS spectrum provision has made private cellular a boom market, but with clear relevance as well for the global logistics industry as it seeks to engage a range of Industry 4.0 technologies to bring efficiency and flexibility, and closer transparency, to its tangled international supply chains.
And relevance, too, for every industrial discipline, compelled to make changes in order to make savings. The points, as such, are both general, about the drive for transformation, and specific, about the character of it in warehousing. They say that, with this hot mess of planetary impacts – disease, climate, recession, war, energy – enterprises must seize control of operations, and that logistics firms, in between, must also extend control both ways along the chain.
That is the careful art of smart logistics, we reckon – to offer change to clients, by bringing resiliency, flexibility, and agility to supply chains, even as change is made at home. But we are talking around the subject. Here are the takeaways, then, drawn from the ABI Research paper, and whatever-Betacom resources. Again, all credit to Gergs and Mavrakis; the full report, with lots of good graphs and charts, is available here.
1 | Industry must change, urgently
Higher efficiency, less labour, higher quality, less energy – these are the drivers for digital change in industry, the paper makes clear. They combine, variously, to reduce operational expenditure in enterprises, and, geared correctly, to raise productivity at the same time. Which is a win-win gain for any business; the fact a major chunk of these new efficiencies are tied to a reduction of energy usage means the planet wins, too, of course – and corporations can, this way, strive to meet new CSR and ESG targets. But this is the state of play for every industrial market.
These pressures are rising for every enterprise. They are fiercer, however, for the logistics industry, and for warehouses, in particular – as physical waypoints in the chain-of-demand. ABI Research states: “Covid-19 has put pressure on supply chains, and forced fundamental structural change, sending physical retail online, a labour shortage in peak demand, port and air traffic congestions.” Climate change, economic recession, and energy crisis are working, too, to expose the old supply chain model as vulnerable, and make tech-made control and flex in logistics crucial.
2 | Cellular comes first, arguably
The other argument is that connectivity comes first. Modern network infrastructure is, without hype and without argument, a foundational layer in the new digital stack, from which enterprises can launch their change agenda, and the hardware gubbins and software pyrotechnics to make it real. The paper suggests that warehouses have it worse; that their demands for networking flexibility are higher than (most) other industrial sectors because their variety of applications is wider. This is probably fair – although there are plenty of more complex environments, too.
And as with them, there is an opportunity with new cellular (LTE and) 5G technologies for warehouses to create order in inherently chaotic and fragmented legacy networking environments – where the likes of RFID, Wi-Fi, and Ethernet each have their roles, but are also limited and limiting. In the latter two instances, Wi-Fi is under-powered and unreliable, and Ethernet is expensive and inflexible. The new 5G NR standard – triple-specified by 3GPP for high volume IoT (mMTC), data-heavy broadband (eMBB), and mission critical ops (URLLC) – solves all of this.
So the story goes; the private version of it, geared specifically for rapid deployment and easy management in smaller enterprise venues, gives enterprises a master-tech, of sorts, to cover their site comms and orchestrate multi-sided digital operations. ABI Research states: “Private 5G guarantees a high level of integrity and data sovereignty, meaning highly-critical warehousing data, such as the condition of workstations, pallet positions, or autonomous vehicles, can remain on the warehousing premises and will not have to leave for external processing.”
3 | Business adds up (and down), quickly
ABI Research has run the math(s) with a bunch of warehouse firms in the US (plus Betacom, presumably), which have connected existing pick-and-pack apps, push-to-talk services, and security camera systems, as well as new robot automation projects, leveraging AGVs, AMRs, and whatever-else, to their new-fangled private 5G networks, and seen mega returns. Indeed, the firm claims “an average warehouse in the US with a private 5G network for smart warehousing applications” should expect to realise $13.8 for every dollar they invest over a five-year stint.
Whether that is in just the network or the whole system is unclear; but the ROI numbers say “an average warehouse” will see an 11.9 percent jump in gross profit margin and operational cost savings of $248.17 million in the period. There is more: the cost for them not to commission a 5G network – the cost of inactiveness (COI) – goes as far the other way, where “each warehouse in the US is expected to forgo… $231 million of unrealized gross profit [and] 6.02 million fewer packages shipped [for an] overall COI… of $243 million.” So, shucks; get moving, ABI Research says.
4 | Energy matters most, ultimately
The subtext – which should be dom-text – is that green business is good business. The sum of this collective ROI and COI guesstimation is that the US warehousing sector, and by extension the global warehousing sector (following the same cellular-first Industry 4.0 practices in different spectrum bands), can start to deliver on its environmental, social, and governance (ESG) commitments – reducing and optimising energy usage, and enabling the IoT tools to monitor and report its sector-wide reduction.
Because the industrial sector, connecting at every turn into warehouse and logistics hubs, is a major part of the carbon problem. ABI Research states: “By 2030, each warehouse operator can reduce energy consumption by 2,000 megawatts (mW) per year. This will increase the sustainability of the sector, as it will decrease each warehouse’s carbon dioxide (CO2) emissions by almost 700 tons per year.” Just to repeat: 5G networking, industrial IoT, automation and robotics, software analytics, intelligence and insight – and 700 tons per year, per factory.
5 | Progress comes together, helpfully
A last point of the paper, buried in the conclusion, is that warehouse operators should seek help. They should not scratch their heads or sit on their hands, and run up their COI tabs all the while; this Industry 4.0 stuff, the message goes, is easier than it seems. Because the supplier side – comprising network vendors, planners, designers, integrators, operators – has been doing it for a while already. True, most of the URLLC action is yet to see the light of day, but there is enough to be getting on with, with 5G (and even LTE) based mobile broadband.
And if they know anything about making solutions for enterprises, then they will know what the low-power end of the IoT market has learned, at length: that you don’t bring a knife to a gun fight. No, that’s wrong; that if they ask for a screwdriver, you don’t sell them a hammer. Whatever. ABI Research makes the point, finally, that “trusted technology suppliers” exist. Of course they do; Industry 4.0 is a serious game, for serious players, and there are plenty hawking serious 5G for serious warehouses.
The message from ABI Research is enterprises should take courage that these vendors are available for “hand-holding through the process”, and that their service offering is flexible enough (as-a-service, on subscription) that the bill-shock of the investment case can be alleviated. As well, the advice is to listen to “trusted” partners when they make the case to go-large – because industrial 5G is a developing technology, which will precipitate all kinds of new Industry 4.0 use cases to bring further intelligence and transparency to the whole chain.
So, go now, and go-big or go-home. That is the gist.
