October 2006 | Commentary | Supply Chain Technology

Voice Technology Hitting a High Note?

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When a new whitepaper written by Pittsburgh, Pa.-based voice technology provider Vocollect landed in my e-mail inbox, I was not surprised to find it full of positive information about the wonders of voice-directed picking. After all, companies don't prosper by releasing negative whitepapers.

The paper, Using Voice-Directed Work in the Supply Chain, showcases the ability to "improve productivity and performance, streamline the supply chain, and maximize ROI" by using voice-directed systems. These systems transmit, via a wireless network, speech-based commands generated by a warehouse management system (WMS) to workers equipped with headsets and mobile computers.

But businesses with something to gain from touting voice-directed solutions aren't the only ones saying positive things about the technology's impact on DC operations. Companies have been adding voice technology to their manufacturing plants, distribution centers, warehouses, and sortation facilities in increasing numbers since the late 1990s.

"Speech technology has been used successfully for applications ranging from quality control inspection at Ford, to package sorting at UPS, and grocery and freezer picking at several major installations...yielding consistent and long-term productivity," says a Psion Teklogix whitepaper, Straight Talk About Voice-Directed Technology in the Frozen Food Business.

A hunt through Inbound Logistics' own archives yields several stories of shippers improving warehouse operations with voice-directed solutions. Dunkin' Donuts' Mid-Atlantic Distribution Center, for example, achieved nearly 100-percent picking accuracy, eliminated its order-checking positions, and achieved cost benefits from reduced training time using a voice-directed picking system (Time to Deliver the Donuts, April 2005).

So far, food and grocery companies—including such leaders as Wal-Mart, Kroger, Safeway, Price Chopper, and 7-Eleven USA—have been voice technology's biggest cheerleaders.

That's because "these industries have low net margins and are characterized by labor-intensive, high-volume distribution operations, especially in the order picking function," says Marc Wulfraat, partner at Canadian consulting firm KOM International.

In addition, food and grocery companies frequently utilize cold-temperature warehouses, where employees wearing thick gloves who find it cumbersome to use scanners or paper-based picking lists benefit from voice's hands-free setup.

They are also the companies most likely to have technology budgets large enough to accommodate voice's price point. For small warehouses, the return on investment is not yet proven.

"A company needs to have at least 40 or 50 warehouse workers using the system for voice technology to make sense," says Steve Banker, director, supply chain management, ARC Advisory Group, Dedham, Mass.

Warehouse managers eager to implement voice had better perfect their sales pitches.

"Companies need to spend $5,000 to $7,000 per operator for a voice system, versus about $3,000 per operator for a more conventional picking technology such as bar-code scanning," explains Wulfraat. "Most average-sized businesses will not drop up to $800,000 on a solution that is only incrementally better than what they already have."

The Price is Right

For small and midsize companies to embrace voice technology in larger numbers, providers need to slash their prices, and allow for more flexible deployment. "If vendors are willing to come down to the $2,000- to $2,500-per-user range, the market is wide open," says Wulfraat.

Indeed, deployment of voice technology is still minimal—the market's total worth is estimated at only $150 million. Of the nearly 91,000 distribution centers with revenues of at least $500 million operating worldwide, only three percent to five percent currently use voice technology, according to Scott Yetter, vice president of sales and marketing for voice provider Voxware, Lawrenceville, N.J.

Though they are struggling over the magic number in terms of price, voice providers realize they need to adapt their strategies to appeal to a wider range of companies.

Vocollect, for example, targets multinational companies by offering its solution in more than 20 languages, and is moving beyond picking with voice applications for putaway, replenishment, and cycle-counting, says Larry Sweeney, Vocollect's co-founder and vice president of product management.

But the biggest development in voice providers' quest for market penetration is the improvement in the way voice systems integrate with WMS products. Because most voice systems provide product and order information back to the core WMS system in batches, they have had minimal ability to respond rapidly to warehouse exceptions. This is changing.

"A new generation of voice that is more flexible is emerging," notes Banker. "Now, interaction with WMS is virtually real time, and synergies with core systems are better than in the past."

While this sounds good on paper, getting beyond the cost issue is still a big hurdle. The solution may come in the shift to open—rather than proprietary—software standards for voice systems.

Open standards provide users more flexibility, and are compatible with a wider range of hardware, says Yetter, who believes the open approach will help eventually reduce system costs.

"The competitive landscape for voice-enabled hardware will bring innovation and competitive pricing to the market, leading to lower total cost of ownership. This will eventually enable more distribution centers to realize the benefits of voice technology," he predicts.

While Banker calls voice an "under-utilized technology" based on its rapid payback (many companies that invest in voice achieve ROI in less than one year), Wulfraat is bearish on voice's future. "This technology saw a burst of buy-in from those companies where it is a good fit, but now it is now in a lull," he says.

We'll be listening closely to see whose voice is on key.

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