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Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

Dec. 6, 2011

 
Logistics News: Integrating Manual with Automated Operations Reduces Headcount While Increasing System Throughput, Flexibility & Adaptability


Can Too Many Worker Bees Clog-up The Hive?

 

Cliff Holste, Materials Handling Editor


One of the key advantages often cited by proponents of manually operated DCs is the relative ease in which they can increase or decrease labor. At some point though, congestion becomes a factor and adding more labor does not yield more volume. When this happens productivity, as measured in units shipped per labor hour, drops. Worse yet, throughput takes a hit resulting in shipping delays at the most critical peak time. Unfortunately, it’s not always easy to determine where the volume verses incremental labor tipping point is.

In spite of labor and throughput issues, the manual order picking and shipping model is the most common order fulfillment strategy for a broad spectrum for both large and small consumer goods distributors.

SCDigest Says:

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By leveraging the capabilities of the WMS to including both primary and secondary sorting functions, the company can enjoy the benefits of automation and the flexibility of manual processing in a mutually exclusive, but still integrated, system configuration.
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Over 70 Percent of DCs Have Little or No Material Handling Automation

The surprising truth is that according to a Supply Chain Digest survey (see - “Automated Case Picking 2009”), less than 30% of order fulfillment distribution centers utilize automated picking and/or shipping methods. A total of 72% of the respondents reported using manual methods in lieu of automated picking and sorting systems: 37% of order picking is done using pallet jacks and 35% via order picker truck.

Interestingly, 76% of respondents admitted to having medium to high concerns about case picking costs, and another 60% reported having medium to high concerns relative to inventory and order picking accuracy issues.

SC Digest recently published an On-Target Newsletter entitled “Logistics Companies Challenge System Automation Providers For More Comprehensive “Plug & Play” Capability”. As stated in this article, the adoption of automated material handling system technology has been slow in the U.S. because many companies consider fixed path, bolt-to-the-floor automated systems too complex and inflexible to adapt to rapidly changing business requirements. Therefore, they fear that their investment in automation might become prematurely obsolete.

We subsequently conducted phone interviews with non-automated companies that ship at least 20,000 to 60,000 loose cases per day. They consistently cited SKU diversity, customer order profile volatility, and customer value added service requirements (VAS) as being the primary reasons in favor of manual operations.


These companies tend to rely principally on WMS, ADC, and voice directed technologies to drive down cost while trying to maximize throughput. Over the years, they have become so proficient and finely tuned with their manual operations that justification for material handling automation is considered to be beyond reach.

However, when you dig deeper, the above statistics reveal that companies who are “married” to their manual methods are nevertheless looking for relief from growth related incremental labor cost and order fulfillment accuracy issues. This is probably due to the need to increase headcount and/or working an excessive amount of OT hours just to keep up with normal growth – not to mention the ciaos that typically happens during peak periods. This is the consequence of managing an expanding labor force within the confines of a fixed space facility. In other words – too many worker bees clogging up the hive!

 

(Distribution/Materials Handling Story Continues Below )

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Automated Solutions Can Eliminate DC Congestion

The simplicity of utilizing pallet jacks and order picker trucks provides a high degree of operational flexibility and is therefore attractive to some companies. However, the need to frequently adjust labor up or down depending on volume, along with the resultant nonproductive travel time and reoccurring traffic gridlock, represents a big problem to others. These issues are often the drivers for the adoption of automation that can stabilize labor and avoid facility expansion or relocation to a larger facility. For example, the most commonly cited benefit of an automated picking sortation system is improved productivity as defined by greater throughput with less labor.

By deploying automated solutions companies can squeeze more capacity out of an existing facility or consolidate multiple manual facilities into a newly designed automated facility. In addition, deploying automated solutions can result in benefits in other areas as well. Examples commonly cited by users are as follows:

 
  • Greater throughput capability
  • Reduced lead times & improved customer service
  • Better space utilization
  • Increased production control
  • Better inventory control
   
  • Improved stock rotation
  • Lower stock levels
  • Reduced number of stock-outs
 
  • Reduced operation cost
  • Improved worker safety
  • Reduced losses from damage
  • Improved shipping accuracy

Note: For more information see “Sortation Is Key To A Comprehensive Material Flow Solution”.


Balancing Automated and Manual Operations Within The Same Solution

Companies looking to reduce labor fluctuations and/or increase throughput by deploying automation technologies do not have to sacrifice manual operational flexibility. The guiding design principle should be to keep it simple. This can best be accomplished by letting the automated sorting system do what it does best – automatically sort high volumes of disparate cases/items/orders to their assigned destinations.

It is a fact that customer requirements are constantly changing with the addition of new customers and new marketing and business strategies. Therefore, a comprehensive system solution takes advantage of manual processes where flexibility and adaptability are key factors and automated operations where repetitive high volume functionality is required.

For example:

 
  • Value Added Services (VAS) like ticketing and non-standard case labeling may need to be processed off-line through a more “hands-on” manual subsystem. In other words, program the automated sortation system to recognize cases/orders that require “special handling”and sort them to a manual subsystem that is configured to efficiently process them.


  • Once the special handling process is completed, the cases/orders can be conveyed back into the automated sortation system for final sorting. The sorter speed and capacity will have to be adequately sized to handle this secondary sorting volume.


  • The same off-line approach holds true for building mixed case and rainbow type pallet loads.

By leveraging the capabilities of the WMS to including both primary and secondary sorting functions, the company can enjoy the benefits of automation and the flexibility of manual processing in a mutually exclusive, but still integrated, system configuration.

Final Thoughts

The principle advantages of material handling automation are related to improving the operational efficiency, throughput capacity, and accuracy of repetitive functions. As such, automation should not be perceived as the “ideal solution” for all of the unique processing requirements encountered in the typical DC.

Non-repetitive operations, especially those requiring a high degree of customization, should be processed in a subsystem that integrates manual operations with the appropriate level of automation. In this way, the need for operational flexibility, adaptability, and high performance can be insured.

 
Do these DC market statistics sync with what you are seeing in the market? Should companies try to lock in space/rates now with conditions tightening? Are developers smart to get back into spec building now? Let us know your thoughts at the Feedback area below.

Recent Feedback

Your article Integrating Manual with Automated Operations mentions that over 70 percent of DCs have
little or no material handling automation. Ultimately, automation is a means to an end. The goal is not
to be automated the goal is to be efficient at achieving the desired business objectives. Being proficient
with manual operations is great, but if a business strives to be lean, it also needs to be efficient with
those operations.

Sometimes automation is the answer, but often the goal of efficiency is best met through manual
processes. As long as there are manual processes in warehouses and DCs, there will be a need for
workers. And as long as there are workers, there will be a need for improving their performance. In my
experience, labor-intensive DCs often overlook the benefits of performance management programs
(methods and process improvement, engineered labor standards, incentives, LMS, etc.). This is
unfortunate because those businesses leave quite a bit of money on the table. Performance
management programs are often a no-brainer. Unlike automation, they typically don`t require
significant capital investment, and they present relatively little risk to mission-critical operations, yet
they can produce impressive results.

As always, thank you for your insightful articles. Keep them coming!


STEPHEN T. HOPPER, P.E.
Founding Partner and Principal
Inviscid Consulting, LLC
Dec, 27 2011
 
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