Supply chain executives and DC managers, who want to capitalize on the economic recovery as it occurs, are interested in material handling automation (MHA) that will allow them to increase throughput without an incremental increase in labor. They want to know if they can justify an investment in MHA and what is involved in moving forward with a project.

SCDigest and Distribution Digest have published numerous articles on this subject in this space. September is the time many companies begin planning their budgets for next year. Therefore, we thought it would be beneficial to provide a brief summary of the most important considerations for the adoption of MHA strategies going forward.

Taking the First Steps Toward Material Handling Automation

Initially, there are two very basic questions on the minds of logistics executives who are considering adopting automation for their operation: 1.) ‘Do we have enough volume to justify an investment in MHA technology?’, and 2.) ‘What will it cost?’

As it relates to automating the shipping operation, which is a common starting point for many consumer goods distributors, the answer to the first question depends on the amount of cases shipped daily. If you are handling and shipping at least 10,000 individual cases in a single shift you are probably a candidate for an entry level automated sorting system. If your volume is well below 10K and is not expected to be in that range for quite some time, you may want to consider a non-automated sorting system (as described in “Sorting Completed Picks for the Smaller DC Operation”) which can be automated later when case volume reaches justifiable levels.

The answer to the second question also depends on volume as higher capacity equipment generally cost more, but is further impacted by the physical and numerical aspects of the operation.

For instance, it’s a safe bet that deploying a batch order picking and sorting system in a 500,000 sq. ft. DC will cost more than in a 200,000 sq. ft. DC. This is primarily due to the difference in conveyor footage requirements. For that reason it is important to keep the “footprint” of the overall conveyor and sortation system as small as possible while still providing for an adequate amount of buffering.

Other key factors that impact on cost relate to the business metrics, such as number of active SKUs slotted in the picking face, the amount of active on-hand inventory, the required case per minute rate of the sorter as well as length and number of sort location. You will find a realistic guide to the range of sortation system pricing in “Thinking Sortation for Distribution? What will the Cost Be?”

Selective Automation – The Baby Step Approach

Many companies are sitting on the sidelines, avoiding or delaying MHA, because of “sticker-shock” and/or, because they fear that it will add a level of operational complexity they are not equipped to manage. In addition to the physical and numerical considerations, there’s a host of business integration issues that need to be resolved. As an example; to enjoy the benefits of a typical automated shipping sortation system, a company would have to move from discrete order picking to batch order picking methods. While the benefits of such a system have been well documented, it is nevertheless, a very big jump for most companies.

In the early days of conveyorized picking and sorting system development (before product was barcoded and cases were capable of being scanned), picking was paper driven and the physical material handling system was not directly integrated into the business. That is to say it was a “stand-alone” tool not connected (thru a WMS) to customer order entry or inventory control. Justification was based entirely on hard benefits like increasing throughput capacity while reducing per piece handling cost.

Surprisingly, it is still possible and even practical to take that approach today. There are many stand-alone automated systems available. The following are just a few that quickly come to mind:

• carton erector
• carton taping and sealing
• shipping compliance print and apply
• sizing and weighing systems
• shipping manifesting (including auto DIM weight calculation)
• palletizing and de-palletizing
• pallet load stretch wrapping
• trash compactor/bailer

Automated systems like the above are relative easy to plan, implement, and justify. Later on they can be integrated into a broader scope MHA project.

It is perfectly logical that companies, especially SMBs, are going to be interested in solutions that can be closely tailored to their needs. This is where “Selective Automation” can provide a competitive advantage - automating only that part of the operation that is underperforming while providing opportunity for additional improvements in the future – see “Selective Automation Reduces System Overhead and Opens Door to Increased Productivity”.

Final Thoughts

In this age of real-time, quick response, global marketing, it is critical that companies stay up-to-date on MHA technologies that will keep them in the game. Whether your automation plan is selective or full-blown, the risk of obsolescence is far greater than the risk of overreaching. Commitment to a well thought out long-term MHA strategy is imperative to maintaining a strong and competitive posture.

Agree or disagree 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.

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