Most small to moderate operations have what we call conventional warehouse operations. They have applied limited material handling solutions and rely heavily on manual processes and manual labor to get product in and through the center and the customer orders out the door. So, it’s not uncommon for the owner or senior management to seek out how automation can be employed in their distribution center to improve efficiency, cut labor costs and reduce errors. But there isn’t a silver bullet. There isn’t a one size fits all solution to improving your distribution center with automation. Material handling solutions are a means to the end. Because of the capital expense you have to find the practical application that has a return on investment (ROI).
This article discusses a successful methodology for identifying where automation can be practically applied. Then, we give examples of how other multichannel companies we have worked with in our operations & fulfillment consulting practice gained an ROI through automation.
It all starts with an objective operational assessment of your operation and its pain points and costs. Be methodological in defining the opportunities and the potential solutions. The most synergistic and effective solutions we provide take into account the following:
- Process and work flow improvement - review of the fulfillment process and workflow identifies "bottlenecks".
- Reduction in number of steps to accomplish a task.
- Reduction in number of touches of a product – every touch adds labor cost
- Move as much product at one time as possible. Maximizing the product per trip will reduce the total trips and time required. Applications can be found in picking, put away, replenishment, etc. warehouse functions.
- Minimize layout congestion and interference with smooth flow. Avoid unnecessary congestion or overcrowding in the warehouse. The time lost due to overcrowding or congestion is significant.
- Understand your productivity and costs for department operations and costs per order, unit, line and package shipped.
- More effective use of warehouse and order management systems. Most companies don’t maximize their order management system or warehouse management system use.
- Apply practical automation which has an ROI.
Most often it is a combination of potential solutions that have the best chance of overall improvement for your business. Here is an example. In businesses with sales of less than $100 million in sales, in our last 50 assignments, to improve productivity, lower warehouse costs, only about 20% of those required automation solutions of any major capital expense. Don’t think material handling solutions first, you may end up with too automated a solution. Think best overall solution. However, as your business volume increases, there may be sufficient volume to make capital investment and ROI.
Picking and packing have the highest labor expenses. Together they probably exceed 50% of your labor costs. What changes can be made to decrease this labor expense?
Get all benefits you can before you automate
Make sure you have gotten all the savings you can from current layout and design. Get the most out of your current environment before you automate. Don’t try to overlay automation on a poorly functioning set of processes and systems.
Involve your warehouse staff in decision making relating to facility layout or operations planning. Those people closest to the process usually understand it best. Certainly they can identify problems and we are always pleasantly surprised at solutions they can come up with. It’s a good starting point for potential options to consider.
Maintain flexibility in the operation and layout
Planning for unknown future changes to the business or fulfillment model is a necessity to avoid unnecessary costs to make unplanned changes to the facility and operation. Product assortments and businesses often change quickly. Don’t develop a layout or process that is inflexible or not scalable.
Analyze the cost benefit
Provide for the level of material handling solutions that can be cost-justified based on your particular operation and cost structure. Look for 18 month payback as a guideline. Savings come from labor reduction, ability to track inventory through the center, reduction in errors and throughput of customer orders.
Automation options and examples
You can’t just draw up a table of options and list where automation can be applied to solve problems. We describe in general the type of automation and give an example of its application. To start, our two best picks for most moderate sized businesses are:
- Bar code and scan technology throughout the operation
- Voice enabled technology
Bar code scan and RF technology
In general this is the single most important technology that operations can implement DC. Consider applications to reduce labor and improve efficiency in as many areas of the fulfillment process as possible. Applications include: inbound receiving pallets or cartons; put away and replenishment verification; pick verification, pack verification, shipping and manifesting systems, cycle counting, returns processing, etc. This technology will be the basis for all more highly automated solutions involving sorters, diverters and voice recognition applications. Track product movement and location through DC. Use in time clock systems and operation (task) time recording.
Converts computer data to voice instructions and voice instructions to computer data. Consists of a device that can utilize voice (RF scanner, SmartPhone, laptop computer, etc.), a headset and microphone. Voice can be used for a variety of warehouse functions where instructions are required and confirmation of completed tasks is an objective. Bar code scanning and RF technology has to be installed. Application: reduce picking costs, more effective use of multilingual work force, reduce errors and employee accidents, increase work pace in picking, etc.
There are several fundamental concepts to be considered as you consider picking automation. They are:
To end up the best design and ROI, you need to balance the costs of space/equipment; replenishment frequency; product location and slotting and picker productivity; etc.
Minimize the walk times (distances) and produce high accuracy levels from the pick process. Some of our client’s have measured picker average walking distance and found they walk 8 to 11 miles per day; 70% of the picker’s time may be in travel time.
With these fundamentals in mind here are some automated picking concepts to consider in total with other fulfillment layout and process changes.
- Pick and Pass. Order picking process where the order is passed from location to location using carts or conveyors. The picker stays relatively stationary with the order moving to the pickers and on to the packers. Application: Larger centers may use this to zone pick customer areas and move the carton between zones with conveyors. There has to be an organized, quick way for the pickers to identify on the order their items to fulfill the order as the carton is moving past them. The conveyors can run in long distances through the DC.
- Pick to Light. Lights and LED displays are used to direct the picking process by indicating which product is to be picked and the quantity to pick. Pick to light systems can be used with a variety of product shelving and rack storage media. Picker is stationary or moves short distance. Application: high volume and limited number of SKUs.
- Put to Light. Similar to a pick to light process however in this process, the item is sorted and packed or “put” into a shipping carton for shipment directed by lights and LED’s. Application: High volume, limited number of SKUs. Printed collateral picked into carton riding on conveyors.
- Wave Picking. All items regardless of locations or zones are picked simultaneously and directed to one specific location where they are sorted and combined into individual orders.
There are less automated options to improve the packing process. Earlier we mentioned pack verification to cut errors (bar code scan and RF section). Conveyors can be used to bring customer orders to pack stations and move product to shipping and manifesting or sort into carriers or tucks. Box erectors, automated sealers, envelop inserters, etc. are low tech material handling solutions to be considered.
Horizontal or vertical automated material handling storage and delivery system where the product is delivered to a fixed location. Typically, multiple units are employed to eliminate picker "dwell" time. Application: picking small item split case items, repair parts and kits; a customer reports productivity rates exceeding 400 lines per hour while picking flower bulbs and seed packets in season.
Racking type that consists of slanted roller sections within a frame that permits stocking from the rear of the rack and product placement near the front of the rack for easy picking. Provides relatively high density pick facings with corresponding storage behind the pick carton. Application: high volume, fast selling products. Conveyors to move customer orders (cartons) to pick the remainder of slower selling orders.
In-Line Scale and Scanner
Weighing scale and scanners positioned as part of shipping conveyors to allow manifest information to be gathered while product continues to move to carrier truck without manual bar code scanning by operator. Application: higher volume required to justify.
Mezzanine and automation
Structure with a warehouse designed to add additional levels for operations. It can be free standing or rack/shelving supported. Makes good use of unused cubic space above existing operations. Need to consider movement of product up to the raised mezzanine and down to be sure of best use. Expensive to add. Application: increase capacity of DC for product storage, packing materials and specialized operations as well as pick modules.
Conveyors are used for horizontal transport of product. Application: Whenever possible, the use of a simple transfer conveyor system can improve operating efficiencies by reducing handlings and walk time. Make sure the cost of the equipment is justified. Conveyor selection is based on the size and weight of the product and the throughput volume. Accumulation has to be planned for in any conveyor design. Here are a couple types of conveyors to consider:
- Spiral Conveyor – conveyor designed to move product from one level (like a mezzanine) to another in a small footprint by using a tight spiral configuration. Consider the grade (drop in height) and breakability of product (if the product falls off). Application: Retailer used mezzanine and spiral conveyor to house their fulfillment in a larger retail DC
- .Flex Conveyor – portable conveyor that can be expanded, contracted, or curved as needed. Application: This can be used by many operations (even the smallest) at a reasonable investment primarily to move cartons inbound from dock to receiving and outbound for truck loading.
There are many different types of sorters cross belt, pop up, push sorter, sliding shoe sorters, etc. to name a few. Don’t get hung up on where each is used. Remember they are a means to the ends - the benefits you plan to reap. However, several types are worth calling out:
Shipping Sorter – conveyor system that diverts and sorts completed shipping cartons by shipping carrier and/or shipping class of service.
- Tilt Tray Sorter – conveyor sorting system utilizing moving trays that tilt to divert product or cartons to designated locations. Used for product sorting (unit sorters) and carton sorting (shipping sorters). Application: only the very largest DCs because of investment required.
- Unit Sorter – automated process using conveyors and bar code scanning to divert individual units of product to a packing station to be packed and sent to shipping.
The problem you are designing to solve will dictate the sorters and diverters that can best solve the issues.
So, you’ve done your homework and have a plan of action to improve your DC’s productivity. Most of the time applications of automation are major projects. Who will project manage the implementation? Do you have the buy-in of your supervisors to implement the solutions and keep the day to day operations running? What is realistic given their job daily responsibilities and experience? Be sure you have worked through the training requirements and process as well as providing the time to work up the proficiency and speed. In many cases it will mean a break in period where productivity is slower before it reaches its intended levels. Key point: How much on-site coverage will the solution providers and their suppliers have during “Go Live” and is it sufficient? Have a contingency plan. Don’t abandon your current solution until your new solution is operational. Have you included a post implementation audit in your implementation process to identify things still requiring solutions after a reasonable period following “Go Live”? These are all essential issues to address to gain the benefits and ROI.