Supply Chain Digest / Distribution Digest just released our first report on automated case picking solutions (to download the report, go to Automated Case Picking 2009: The Next Frontier In Distribution Center Management.).

This report provided an opportunity to survey supply chain logistics executives and distribution managers relative to their interest in Automatic Case Picking (ACP) for their operations. Respondents to the survey included a broad range of US and International logistics companies (see partial list included in the report).

An important prospective gained from the extensive research, analysis, and phone interviews is that for distribution executives the proper way to approach ACP (or for that matter automation in general), is not by asking, - “Is case picking automation right for me”? Rather, the question should be - “What is the correct level of automation”? “How is it justified”? & “How will ACP be phased-in”?

While it may be easy to say what not to do, it is much more difficult to make a simple statement about what should be done. This is especially true when one thoroughly assesses today's ACP technologies and recognizes that there is no common solution from a pure technological point of view, especially when considering that no two problems are alike. The approach and technology best suited for an individual company will depend on that companies unique requirements and will most likely be a blend of technologies integrated into an overall system solution.

Having said that, for companies that are (or who want to be) top performers, the introduction of ACP in the DC should be a foregone conclusion.

A common misconception (which I heard mentioned many times in the course of doing this report) is that you have to be really big to do this kind of automation – like at least 10 to 15 million cases per year. Our research and subsequent report debunks this kind of thinking. The reality is that any company picking and shipping over 2 million (loose) cases per year is a candidate for ACP. This is true because many of the emerging ACP technologies are modular. As such, companies can take a toe-in-the-water flexible approach to ACP, adding modules gradually as their business changes and grows.

For example a company might start phase one by installing a warehouse management system (WMS) with radio frequency (RF) receiving and putaway that can direct people where to put product, when to retrieve it, and how to pick cases to build pallets to fill orders. Phase two might be an automated layer picking system to build partial pallets in layer quantities, while phase three could be an ACP system to allow them to “sequentially” pull cases to top off those pallets – as illustrated in the ACP report.

For a full-blown, completely automated ACP system involving some combination of automatic storage and retrieval, plus automated layer and case picking combined with automated mixed SKU pallet build, a company would most likely need to be doing at least 7 to 8 million cases annually to expect an acceptable ROI. This range includes distribution companies in all market segments.

Case volume is not the only driver of ACP. The opportunity may be even greater when an operation is running two shifts a day, or frequently operating extended shifts, with all of the consequential labor issues. The report provides a comprehensive list of other factors to consider in determining ACP suitability.

Final Thoughts

To move beyond survival towards success in distribution means winning the competitive battle ground of quality, customer service and productivity. There are no easy answers. Diverse technologies and solutions can lead to different results. The final solution should be carefully aligned with your company’s strategic business plan objectives.

But, perhaps the biggest hurdle to overcome is in one’s ability to accept unfamiliar system approaches. The challenge is to understand that in order to obtain cost effective benefits from ACP, entirely new technologies and methods are being offered. Much of this new technology is made possible, by the application of low cost, high speed computer power. To get your arms around it - it might be helpful to think of it as a SIMS game for the DC.

Agree or disgree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

You can also contact Holste directly to discuss your material handling or distribution challenges at the Feedback button below.