Warehouse innovations

Warehouse innovations

Luca Graf, CEO of MS Direct AG, has a clear plan to position the company as Switzerland’s most innovative logistics service provider. Thanks to his extensive and longstanding experience with innovations in the logistics sector, he knows how to make the most of the opportunities offered by technological change. We wanted to know more and interviewed him about current measures and trends. In this interview, he talks about automation in warehouses, robotics in pick & pack processes, the creative use of drones, and key factors for successfully establishing innovations.

Luca, as CEO you've been on a mission to establish new processes since you started. What exactly is your plan with MS Direct AG?

MS Direct used to be a logistics service provider with IT competencies, now we are evolving into a technology company of logistics applications including physical logistics. And we are already in the middle of this – in the past 45 years of operating history, we have already acquired some IT skills. During this time, among other things, the company developed its own efficient warehouse management system based on MicrosoftDynamics NAV. However, in areas such as automation, robotics or even web applications, we are still at the beginning of the journey. That’s where we’re going specifically now. We are consciously introducing technologies along the entire process chain and using them to position ourselves even better on the market, i.e. to be more efficient and customer-friendly.

We always do everything with the goal of becoming the most innovative logistics service provider in Switzerland - and we are well on our way.

Luca Graf, CEO

Which projects have already been realized?

Recently, for example, we introduced software to automate billing processes, which we use to generate invoices quickly.Our account managers can thus focus fully on their customers, who are given greater transparency. And we have a leading
e-commerce shipping solution for shipments to Switzerland, England and Norway
 in terms of cost and quality. But we are also working on internal topics – such as training – to make them more intuitive with suitable tools such as our MS Academy. We always do everything with the goal of becoming the most innovative logistics service provider in Switzerland – and we are well on our way.

The shift to technologization can be seen throughout the industry. What advantages does this bring for MS Direct customers?

One reason for the change in the industry is that there is an incredible amount of potential lying dormant in logistics. In our business, using the right technology can be associated with a strong increase in productivity and simultaneous cost benefits for our customers. These factors are crucial in e-commerce logistics. Likewise, technology can also improve the customer experience – especially in terms of transparency and communication. With the right tools, we can, for example, provide customers with real-time information about the status of shipments or make forecasts about inventory levels. There are already young technology innovators working on this – and that’s where we as MS Direct would like to be involved.

Robotics can help us gain a major competitive advantage

Luca Graf, CEO

Robotics also plays an important role - innovations in this area are gaining strong momentum, also in Switzerland. What are the drivers behind this growth?

With regard to Switzerland, we are in a country with higher wages and production costs. If production is also to be worthwhile for us as logistics service providers and other companies, then robotics can help us achieve a major competitive advantage. That’s why a lot is currently happening there. The whole thing is also triggered by the renowned institutions nearby – be it ETH Zurich with its innovations or Lausanne, where many tech and robotics companies are currently emerging.

MS Direct is investing in robotics itself and has recently deployed an automated high-bay warehouse. What led to this step and what challenges did you face during implementation?

A decisive and gratifying factor for this project was that we were able to win a major new customer. This brings us a new dimension of orders that we didn’t know before – we’re talking about a five-digit number of daily orders per day. If you add our other customers as well, there are significantly more orders per day. Our existing setup with typical manual picking reached its limits with such volumes. So the first challenge was to be able to handle this order volume at a reasonable cost. The second challenge was our existing storage area, which needed to be filled with more items. A building extension would be a logical thought, but this is not always possible or efficient. The automation approach, on the other hand, gave us the chance to condense the warehouse while maintaining flexibility. The system sought had to be expandable and able to be moved in the event of a relocation.

The decision was made in favor of the AutoStore system. Why was that the right solution?

We looked at different technologies in advance. For our setup, the AutoStore with its unbeatable storage density was just right. The Cube system has been on the market for some time and has proven to be very reliable. We now have 48 robots managing around 30,000 crates to support our packing teams. Since the robots also work at night, they can prepare late orders for the following day. At the same time, we save a tremendous amount of space: With the AutoStore, we achieve a compression of up to 400 percent. Mind you, this is only one of our first automation modules along the process chain.

Where do you still see potential for automation in the warehouse?

We have looked at packaging in the past and have been using a Packsize machine for a good two years to produce customized boxes. Although this does not pack itself, it represents an essential first step in the automation of picking. We are currently considering whether we can also use a pick-AMR system (autonomous mobile robots) or fully automated packaging machines. However, the AMR system is not only interesting for us in the picking area, but also in the internal transport of materials. We have therefore bought a used AMR and are trying it out for various processes. This will show us for which application this system is really useful.

You've worked with drones in the warehouse environment in your past. How did this come about and what are they suitable for?

In 2019, drone technology for in-building applications emerged. That’s when we found out that drones are perfect as inventory controllers, scanning barcodes from pallets. We tested a fully autonomous product from a technology provider that is already being used in ten stores today – including Ikea. The drones can be used to automate manual, repetitive work on the one hand and also improve defect detection on the other. An incorrectly deposited pallet in a large warehouse can, under certain circumstances, quickly lead to an expensive search operation. Drones can regularly scan warehouses in their entirety and find faults that can then be rectified at an early stage. It has been shown that with a typical error rate of 1-2 percent in countries with high wages, the warehouse drones paid for themselves within half a year.

Introducing innovations into companies is not always easy. In your experience, what are the key points that make such integrations work?

For starters, it is important to define what exactly the mission is. Is it about innovations close to the core business or is it about disruptive innovations further away from the core business – such as new products or business models. This is essential, because depending on the mission, it is necessary to choose completely different approaches, set up appropriate teams, define freedoms and determine the proximity to the organization.

Another factor is the maturity. Innovations are not a short-term thing. To be successful, you need a long-term vision and a suitable budget. The success of new products and business models does not come tomorrow, it has to be developed over years.

The third thing I learned is the importance of communication in change management. That means tight stakeholder management: a lot of working with people, a lot of validation, a lot of talking to customers and the business sponsors.

Thank you Luca for the interview!