As you consider evaluating and deploying automation and robotics to your warehousing and distribution processes, there are five factors you must consider to be able to implement it in an efficient and cost-effective manner. This article identifies the analyses that should be done, before making decisions on deploying automation.
Outside factors are continually driving the need to evaluate ways that automation can be deployed and justified. For instance, hourly wage rates have reached $15 and higher in many areas of the country. Amazon, Walmart, and Target have considerably higher starting wage rates and plans to increase them in the next five years.
In addition, the availability of labor has been a significant risk to businesses, as the US has now exceeded 9,200,000 available job openings (as of mid-2021) with very few businesses being able to fill these positions. This is also leading to wage rate inflation as companies struggle to meet customer order demand through the supply chain. One client has implemented a $1,200 signing bonus to entice workers to stay long-term – a portion of this is paid each month that the worker remains employed.
Automation systems should be considered to reduce fulfillment costs; increase order throughput and add scalability; reduce HR and training costs; reduce the impact on the operations due to employee call-outs; allow new hires to become highly productive in a matter of an hour or two; as well as increase the product storage capacity.
1 Major Drivers to Automation
Before proceeding down the ”automation” path, companies must answer some basic questions to determine the feasibility. The major drivers for considering automation typically include:
- Labor availability
- Cost of labor
- Quality of the existing labor
- High cost of unplanned turnover (workers leaving after a few days or a couple of weeks
- High HR and training costs
- Higher than expected order demand and a struggle to fulfill demand in a timely manner
- Inability to properly staff a second shift or peak volumes to meet order fulfillment, inventory control, and replenishment goals
Determine how these are affecting your cost of order fulfillment now and in the foreseeable future.
2 Functional Improvement
What functions are the most problematic? Deploying which automation solution would provide the highest positive impact to the business?
- Bottlenecks to throughput?
- Peak scalability?
- Breakdowns in processes?
- Difficulty in getting new people up to speed?
- Increase in human errors occurring and the cost of those errors?
How do these affect customer service and order turnaround time?
3 Critical Data and Analysis
To be able to quickly evaluate and eventually deploy warehouse automation technologies, companies must develop critical data and analyses to facilitate the process in a timely manner. Here are the types of data analyses and information that must be considered.
- Picking profile. For evaluating ways that picking could be automated or streamlined, companies must perform in-depth analysis on the order file:
- What percent of orders are single line, single-unit orders versus single line, multi-unit orders?
- What percent of orders have true ship alone line items that create “single line” picks?
- Analysis of how many picks are made within a single zone in the warehouse, versus picks that span multiple zones?
- Analyze the percentage of orders that are single-line orders versus 2-line, 3-line, 4-line, etc. orders. This is important when considering the sheer volume of units that need to be picked, and potentially sorted down to the order level?
- Inventory profile. From an inventory management perspective, to achieve a high degree of accuracy in evaluating technology and automation, the cubic dimension and weight information is critical to understand the applicability of goods to worker automation and robotics. There are often limitations on the cubic dimensions, and weight, for most all automated picking and sorting solutions. This often means that companies must invest time in capturing this data, or ensuring it is updated for the current SKU base. This data should include the cubic dimensions and weight for the following:
- Eaches – length, width, and heigh
- Inner packs – including eaches per inner pack
- Cases – including eaches and/or inner packs per case
- Pallets – including cases per pallet and the ti/hi of the cases
- Pack and ship profiles. To understand what type of packing and shipping automation could potentially be deployed, it is imperative to understand everything from which carton sizes are being utilized to how many of each box size is used – same with the poly mailer and how this mix might change in the future.
These characteristics will be critical to applying the right automation solution.
4 Proposed Solution Direction
Performing these analyses and collecting the data points will help you and a consultant determine the solution direction that provides the most significant reduction of labor during picking, as well as increasing order accuracy, turnaround times, and reduced picker “travel time”:
- Can changes to the picking process, such as a zone-based, batch pick, sorted down to put walls or unit sortation provide the biggest impact?
- How might goods-to-worker systems support these processes? This includes shuttle systems, vertical lift modules, robotics, or vertical buffer modules for instance. Each of these keeps the workers stationary with goods brought to them, allowing for anywhere from 200 – 400 picks per man hour per worker.
- What is the most efficient manner for segregating single line orders to reduce congestion in other areas of picking and packing?
- What improvements could be gained by reducing the cycle time from when an order is released for picking through the point of being manifested?
- How can the use of robotics support pick processes for various segments of orders?
What opportunities are there for a centralized approach for carton sealing, weigh in motion, print, and apply of shipping labels? These eliminate functions from packing and shipping functions that will reduce labor costs.
- In addition, are there opportunities to eliminate large segments of packing by having pickers pick into the shipping carton? The packing labor can be greatly reduced, as well as eliminating congestion at a typical bottleneck within many operations.
- Within most automated shipping lines, simple diverts can be implemented that will send packages to specific spurs to comply with the sorting required by carriers.
- By utilizing weigh-in-motion scales, audits can be performed to determine if the shipment is within an acceptable weight tolerance. This is a great way to provide a second check on the order before it goes to the customer. This reinforces the need for accurate weights of each item in the initial evaluation phase, as the data will be utilized in the future for other tasks.
This should point you in the general solution direction.
5 ROI Time Horizon
Here are several considerations regarding the ROI and time frame management expects:
- What is your time horizon from an ROI perspective? The reason for this question is that systems integrators can design a system for any environment. You don’t want to over automate and not get the anticipated ROI in the time frame committed to management.
- Most companies have conservative ROI targets of 24 months or less. However,the economics are changing quickly. Automation and robotics costs have dropped for certain applications. At the same time when you look forward year by year at the above trends, especially labor and the projected growth of your business, does an investment now make more sense than trying to operate as you have been in a conventional manner?
- Remember that once the ROI period is over, the savings begin and can add up quickly.
In today’s economy, many companies are taking a longer view of the ROI based on the cost and availability of labor.
These factors are important to think about and understand in order to best begin to explore how automation will give the ROI and changes in your business process you anticipate. Performing these steps before you formulate a solution for automated warehousing will help over the long term and ensure success.