Most small- to medium-size warehouse operations tend to rely heavily on manual processes and labor. Automation could be saving them time and money.
But while technology can be a viable solution for reducing costs and improving efficiency, as with most operations issues, there’s no one-size-fits-all solution. Keep in mind that automation is not an end in itself; the objective is to employ it strategically in ways that yield true return on the capital investments required.
How big does your operation need to be to consider warehouse automation? At order levels of 5,000 to 10,000 orders per day, you may have sufficient volume to design and cost justify some automated solutions. But typically only the largest, high-volume facilities can cost justify investments in more advanced technology such as tilt tray sortation and bed scanners.
Here’s a proven method for identifying where automation can be applied cost-effectively in your operation, plus some examples of how specific marketers have benefitted from strategic automation.
Non-automated solutions optimization
Focus first on exhausting all of the non-automated possibilities for improving your existing operations. If you start by focusing on potential automated solutions, you’re likely to over-automate or make unnecessary investments.
Further, it’s a mistake to try to overlay automation on a poorly functioning set of processes and systems. In our last 50 consulting assignments for businesses with less than $100 million in sales, 80% were able to realize significant benefits without any major capital investments in automation.
Go through all aspects of your current layout, design and systems, and make sure you’ve captured all of the potential savings. Since picking and packing usually account for more than 50% of labor costs, you’ll want to identify all of the non-automated ways possible to streamline the labor involved in these operations.
The process starts with an objective analysis of your operation and its pain points and costs.
Be methodical in defining all of the opportunities and potential solutions, and involve your warehouse staff in these processes. Those on the front lines know where the problems lie, and frequently contribute valuable ideas.
A consultant can also help you make assessments and identify solutions. If you are considering systems integrators, who often waive consulting fees if you go through with the recommended solution, make sure they have enough depth of experience and will objectively evaluate your options for optimal benefits.
Opportunity areas to analyze include:
• Improving process and workflow (identifying fulfillment process bottlenecks)
• Reducing the number of steps needed to accomplish various tasks
• Reducing the number of “touches” per product
• Maximizing the amount of product moved per trip within picking, put-away, replenishment and other functions
• Improving layout flow and minimizing congestion and overcrowding that impede efficiency
• Optimizing use of warehouse and order management systems (few companies leverage the full capabilities)
Once you’ve identified all of the non-automated opportunities for realizing operational benefits, you can assess the real cost/benefit equations of various automation options.
This starts with a thorough understanding of your existing operational productivity and costs—by department, unit and line, as well as per order and per package shipped. From there, you need to be selective and methodical about identifying and assessing the areas and applications most likely to yield cost-justifiable benefits.
Trying to assess every conceivable area where automation might help will result in confusion, paralysis and a lot of wasted time and effort. Use the list of potential automation areas on page 37 to focus on assessing the ones that are most likely to benefit your business.
For each area, estimate the savings in labor reduction, the ability to track inventory through the center, reduction in errors and throughput of customer orders, using an 18-month payback as the guideline. This will provide you with a solid read on the level of automation that can be cost-justified based on your particular operation and cost structure.
Another critical component in this assessment is making sure that your overall solution can provide sufficient flexibility and scalability to accommodate changes in your business, such as product assortment or volume changes that would affect layout needs or the fulfillment model.
There are always unknowns, and things can change quickly. While you don’t want to over-invest in capabilities you don’t yet need, you want a system that will allow for expansion. You should be able to add capabilities and adjust your facility layout without having to make significant capital investments.
Here are the primary areas that midsize businesses should assess:
• Barcode scan/RF technology: Generally, this is the single most beneficial technology to implement. Consider applications to reduce labor and improve efficiency in as many areas of the fulfillment process as possible, including receiving of pallets/cartons; put-away and replenishment verification; pick verification; pack verification; shipping and manifesting systems; tracking product movement and location through the DC; and using time clock and task-time recording.
This technology also serves as the foundation for all more highly automated solutions involving sorters, diverters and voice recognition applications.
• Voice-directed technology: These systems convert computer data to voice instructions and voice instructions to computer data. They usually consist of a headset and microphone and can be used in many warehouse functions for which instructions are required and confirmation of tasks completed desired. (You’ll need to have barcode scanning and RF technology installed.) The benefits are reduced costs, more effective use of a multilingual work force, fewer errors and increased work pace in picking.
• Automated picking: Assessing the ROI (and designing the best system, if it’s cost-justified) requires understanding a few core points.
One is that it’s necessary to balance the costs of space/equipment, replenishment frequency, product location, and slotting and picker productivity. Maximizing accuracy in the picking process is essential, as is minimizing picking employees’ walk distances. (Companies that have tracked this have found that these employees can walk as much as eight to 11 miles per day.)
With these fundamentals in mind, here are some specific automated picking applications to consider:
• Pick and pass: Conveyors or carts move the orders past pickers—and, in many cases, on to packers. You must have an efficient way for the pickers to match cartons with orders. Large centers often create pick and pass zones based on different types of orders.
• 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. Pick-to-light systems can be used with a variety of product shelving and rack storage media. Pickers are stationary or move short distances, so they’re best for high volumes and limited numbers of SKUs.
• Put-to-light: Lights and LEDs are used to guide sorting and actually putting items into shipping containers (along with printed collateral materials).
• Wave picking: All items, regardless of locations or zones, are picked simultaneously and directed to one location, where they are sorted and combined into individual orders.
• Automated packing: There are fewer options here. In addition to using barcode scanning and RF section to reduce packing errors, you can use conveyors to bring customer orders to pack stations and move product to shipping and manifesting for sorting into carriers/trucks. Low-tech options include box erectors, automated sealers and envelope inserters.
• Carousels: These are horizontal or vertical automated materials handling storage and delivery systems; they deliver the product to a fixed location. Multiple units are typically used to eliminate picker “dwell” time. Carousels work well for picking small and split-case items. One marketer reports productivity rates exceeding 400 lines per hour for picking flower bulbs and seed packets.
• Flow rack: This is a rack consisting of slanted roller sections within a frame. These racks provide relatively high-density pick facings with corresponding storage behind the pick carton. You typically need high-volume, fast-selling products to justify flow racks.
• In-line scale and scanner: With this system, weighing scales and scanners are positioned as part of shipping conveyors. This allows manifest information to be gathered (without manual barcode scanning) while products continue to move to carrier truck.
• Mezzanine: These structures are designed to add additional operations levels within warehouses, and to make use of the space above existing operations. Mezzanines can be costly, and you need an efficient means of moving product between the levels. But they work well for increasing capacity for product storage, packing materials and specialized operations, as well as for pick modules.
Conveyors and sorters
Using conveyors for horizontal product transport, even without automated picking and packing, can improve efficiencies by reducing handlings and walk times. All conveyor designs must have a means of handling accumulation.
Conveyor selection is based on the size and weight of the products and the through-put volume. Motorized conveyor equipment can run $100 per foot. So the cost will depend on the configuration, length of conveyor through the warehouse, and so on.
Two conveyor types to consider:
• Spiral conveyors are designed to move product from one level to another within a small footprint by using a tight spiral configuration. Consider the gradient (drop in height) and how likely products are to break if they fall off.
• Flex conveyors are portable and can be expanded, contracted or curved as needed. Used to primarily move cartons from dock to receiving and for truck loading, these are typically affordable for even the smallest operations.
As for sorters, there are many different types. Your specific objectives and problems determine which ones you need. But several types are worth calling out:
• Shipping sorter: a conveyor system that diverts and sorts cartons of completed orders by shipping carrier and/or shipping class of service.
• Tilt tray sorter: a conveyor sorting system with moving trays that tilt to divert product or cartons to designated locations. These are used for product sorting (unit sorters) and carton sorting (shipping sorters; they tend to be too costly for all but the largest DCs).
• Unit sorter: an automated process using conveyors and barcode scanning to divert individual units of product to a packing station.
Once you’ve decided on technology, you’ll need to control the implementation process to minimize organizational disruption. Get top management buy-in on what’s needed to implement automated and other changes while keeping day-to-day operations running.
Make sure you have a project manager who can handle the significant time and responsibility involved. It’s possible that some duties may have to be reassigned or shared during this major project.
Be sure you’ve worked through the training requirements and process, and have allotted a sufficient timeframe for ramping up proficiency and speed. Prepare for the likelihood that there will be a period of slowed productivity before work paces reach intended levels.
Key point: Make sure that solution providers and their suppliers can provide sufficient operational coverage levels during implementation. Have a contingency plan, and don’t abandon your current system until your new solution is operational.
Finally, make sure that your vendors are required to engage in an audit conducted within a short time after the system goes live, and to fix to your satisfaction any problems that remain.
Curt Barry (firstname.lastname@example.org) is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm.