6 Questions to Ask Before you Consider Distribution Center Automation

By automating your distribution center, you can provide substantial benefits and significant labor savings.

Unfortunately, if you make the wrong automation choices, you can burn a hole in your wallet getting little, if any, significant improvement over what could be done with traditional solutions.

Here are six questions you need to ask before you take the automation leap:

What are the key benefits of the automated system?
Some automated systems provide improved product security, some help with value added processes, some speed up order selection, some reduce the space required to store your inventory. Make a list of the key benefits you expect to realize through the purchase of an automated system.

Can any of these benefits be accomplished through traditional methods?
Once you have the key benefits list, ask yourself what you might be able to accomplish by working smarter.

For example, if reducing selection time is your key goal, what more traditional methods might reduce picker footsteps? If improving space utilization, can you use compartmentalized totes or containers to better store your product on traditional storage?

Will automation impact my operational flexibility?
The nice thing about people is that you can always add more of them during busy periods to get the work done. This is not always the case with automation. Most automated systems are designed based on fixed maximum production rates.

To make an analogy with a faucet, as the amount of water you need to move increases, the flow rate can’t exceed the rate of the faucet being turned fully open. If you have a seasonal or unpredictable business, make sure you don’t disappoint customers on those very busy days.

Will your operation benefit as much as the featured case study example?
A common mistake when purchasing automation is to assume that your operation will benefit in the same way someone else’s. Factors such as physical product characteristics, customer order profiles, and unit demand quantities can have a dramatic impact on the success of an automated system.

For example, sorters provide the greatest bang for the buck when sorting low unit quantities per line item, so if you have customers who order high unit quantities of individual items, the sorter’s efficiency gain will be substantially reduced. Technical analysis of historical order data and then mapping these results to the proposed automated solution can identify problems that might otherwise go unnoticed.

What is the real cost of operation for the automated system?
Everyone focuses on the initial investment cost of automation, but there is also on ongoing personnel, management, and maintenance cost. Make sure you consider the cost to operate, maintain and repair the equipment. Speak with a colleague who has had a system for several years.

Also consider how much of your labor resource will be tied up monitoring automated equipment and fixing problems each day. If you need to dedicate someone to an area, such as feeding boxes and clearing jams on an automated box maker, that person will not be available to do other things.

What are the implementation risks?
This is a hard question to answer, but you at least need to consider the potential risks before making a major capital investment. In many situations the actual problem may be totally unexpected, and therefore very difficult to predict ahead of time.

To defend against unknown risks insist that the vendor perform exhaustive testing with your product and your sample order profiles. Also consider getting the help of an expert who has seen a variety of past implementation shortcomings already.

Protect yourself and do your homework before putting your career on the line. Whenever making a significant capital investment, make sure that you look before you leap. It’s always tempting to think “I want one of those” when you are presented with an impressive automation success story.

Keep in mind that improvements from automation are almost always situation-specific and often depend on operational changes that can be implemented with or without the automation. If you still want to move forward, make sure that you get the vendor to exhaustively test their system with your product and your order profiles.

Sam Flanders is the president of operations consultancy Warehouse Management Consultants.