In the market for picking technologies? Chances are you’re looking for advice. Dave Piasecki, principal of Inventory Operations Consulting in Kenosha, WI, offers the following insights:
- Do your ROI calculation yourself. I am amazed at how often companies accept a technology provider’s ROI without questioning the basis for the ROI. These technologies definitely pay for themselves in the right environment, but it’s up to you to determine whether your environment is the right environment. Do your own time studies and cost comparisons. Make sure you consider all additional costs along with the savings. For example, a fully automated picking system may require more frequent replenishment than your previous manual system.
- Understand that the ROI time frame can vary greatly. Key factors are the equipment use and labor costs of the specific environment. A company that pays its warehouse workers $15 per hour will have a quicker ROI than one paying $10. For the more expensive equipment, companies must be ready to accept ROIs of two or more years. Expectations of ROIs measured in months for these large investments are usually unrealistic.
- Make sure you consider other potential improvements. Don’t compare a fully automated system to your currently inefficient manual system if other options are available. For example, could better slotting, multi-order picking, or a less-automated conveyor system provide some of the benefits of the fully automated system? If the answer is yes, then compare the fully automated system to these other options. Despite the capabilities of automated equipment and radio frequency systems, I frequently find that a well-designed picker-and-cart, paper-based system is the best choice for certain environments.
Consumer demand for next-day delivery, coupled with the retail industry’s shift to smaller but more frequent replenishment, has made fast, accurate picking technologies the “order” of the day for distribution centers. “You have to hit the benchmark, which is pretty much same-day ship now,” says Scott Talley, vice president of worldwide distribution for PFSweb Inc., a Plano, TX-based global business process outsourcing provider.
The solution to this challenge lies in automation — using machines to do what was once done exclusively by human pickers who walked miles of warehouse aisles armed with little more than paper order slips. Automation might seem like a no-brainer — machine-aided picking is faster and more accurate than manual picking, and after a typical ROI period, can reduce labor costs significantly.
But on closer consideration, implementing automated picking technology is not that simple. Even the definition of the term can get a bit fuzzy. Some experts say that anything beyond manual paper picking can be called automated, while others distinguish between fully automated (where nary a human hand touches the product to be picked) and semi-automated (where human hands, as well as feet and eyes) are aided by various technological devices. Within these two categories, there are numerous options, and picking the right one requires careful analysis.
“Every material handling equipment solution — it doesn’t matter what it is, fully or semi-automated, has to fit its application or it won’t work,” says Michael P. Hahn, vice president of sales and design for Knapp Logistics and Automation, which is based in Graz, Austria, and has a U.S. base in Cartersville, GA. “Every warehouse and every company has its own business rules and culture. You have to analyze that.”
Talley concurs that “there’s not a silver bullet that fits everything.” The type and size of the merchandise, the quality/accuracy level required, the speed/cycle time called for, along with the size of the operation and its budget, all come into play.
The A-frame might well be called the Porsche of automated picking technology. This A-shaped device is fed by multiple channels of merchandise that, in turn, feed dispensers to a collection belt. Knapp Logistics introduced the A-frame in 1983 and, by Hahn’s account, the company now controls 60% to 70%of the market. Knapp’s A-frame, the SD-2000, can process up to 2,400 orders per hour and can have up to 2,400 product channels. Some of its installations move 300,000 to 400,000 units per day, working three shifts. No human pickers are required, and the need for quality control staff is virtually eliminated, as is hiring and training of temporary workers for peak seasons.
The A-frame is a marvel of technology, but Hahn is the first to point out that it is not right for every application, and with an entry cost of $500 to $800 per channel (prices vary with the size of the system), the final price can be hefty. Because it moves through specially designed channels, products must fit specific size, shape, and weight specs and, in addition, must be stackable. The A-frame is ideal for fast-moving pharmaceuticals, cosmetics, DVDs, videotapes, and telecommunications products such as phones. But other types of merchandise, such as apparel, are not suited to it.
Dave Piasecki, principal of Inventory Operations Consulting LLC, based in Kenosha, WI, explains that for fully automated systems to be cost-effective, the merchandise “must have a high number of picks per item with a very low number of pieces per pick (preferably averaging around one piece per pick). The best environments are the ones that have adequate order volume and order policies to run the machines near capacity for multiple shifts. That’s where you’ll see the quickest return on investment.”
Piasecki cautions, however, that “if you are a same-day shipper that must process 80%of your orders in a three-hour window, you will likely find it more difficult to cost-justify this equipment, since the lower utilization will prolong the ROI.”
TIP AND FLOW
For slower-moving products, other fully automated picking systems are more appropriate. The angled flow rack is filled and replenished on one side and dispenses product on the other side. It’s suitable for merchandise with dimensions that don’t fit an A-frame. The Knapp Logistics automated cart flow rack, the LMS, is lower in price than the A-frame — $200 to $400 per channel (prices vary with the size of the system). Ideally, says Hahn, a distribution center will use both — A-frames for its fast movers and automated flow carton racks for its slow- and medium-movers. These might be combined with other technologies as well.
But, as Hahn himself points out, fully automated systems are not for every product or company. Some products — deep catalog SKUs — move too slowly to justify the cost, while some operations are too small to consider the capital investment required. And some products are better served by other approaches.
“In some cases,” says Berny McCabe, sales manager with Germantown, WI-based PCC Systems, a maker of pick-to-light (PTL) applications, “we’re seeing a move away from the high end because of its lack of flexibility.” Another trend he’s noted is blending high and low, fully and semi-automated applications. “We’re seeing more and more folks looking to see that their systems complement each other.” McCabe tells of one client that uses a PTL solution to replenish a high-speed, fully automated system, and another client that uses light-directed carts to pick quantities of product and deliver it to a high-speed sortation machine, which then sorts it into individual orders.
Lance Reese, director of sales, distribution, and technology with FKI Logistex, headquartered in St. Louis, MO, notes a similar trend toward blending technologies, and says he would advise anyone in the market for a picking solution that “you shouldn’t try to solve the problem with one technology or one solution.” His company offers a suite of solutions, many of which are PTL-based, but which interface with other technologies. “Part of why we’ve gone to the broad offering of all these different solutions is that there’s not really one offering across the board.”
Karen Berman is a freelance writer based in Fairfield, CT. She can be contacted at email@example.com.
Editor’s Note This is the first installment of a three-part series on picking. In this article, we examine automated picking technologies. Future issues of O+F will explore picker training and pick-to-light technologies.
PFSweb Inc., a global business process outsourcing provider, operates distribution centers totaling over a million square feet in its main operations center in the Memphis, TN, regional market — and that doesn’t include warehouses in Texas, Canada, and Belgium. In the Memphis area alone, the company processes 125,000 orders per day at peak times. Each year the company warehouses, manages, and fulfills more than $1 billion in merchandise and transactions. Clients include Raytheon, Hewlett-Packard, IBM, iGo/Mobility Electronics, Lancôme, NokiaUSA.com, Pfizer, Inc., the Smithsonian Institution, and Xerox.
So Scott Talley, vice president of worldwide distribution, knows something about picking technologies and strategies. To meet the needs of different clients and circumstances, PFSweb uses a variety of picking technologies, much of it produced by Siemens. The company uses several semi-automated picking solutions — pick-to-light, smart carts, RF guns, and combinations of these, as well as fully automated solutions such as A-frames for clients that require them.
“Within the walls of the building, we don’t have a one-size-fits-all solution. In the building I’m sitting in now, I serve 12 clients with pick-to-light and I serve two clients without it,” Talley says.
He advises those shopping for picking technology to “start with cycle time. How much speed do I need? Is it a same-day ship or a 24-hour ship? Then you formulate how much throughput you design into the system. When you know your throughput, you can ask what’s the most efficient way to do it.”
Another factor is accuracy. What margin of error is considered competitive? What’s better than competitive? “Quality and service level — you want to do both of those things as inexpensively as you can,” Talley says, adding, “We’ve all seen underutilized DCs — they spent tons of money on a Taj Mahal.”
For PFSweb’s operations, a sophisticated PTL system with several variations makes sense most of the time. But Talley warns would-be buyers of picking systems against buying solutions that aren’t appropriate for their needs. “If I can meet the business requirements [of a client] with radio frequency, then there’s no reason to deploy PTL, because there’s an equipment cost. I never want to buy more than is necessary, but I don’t want to be short either.”