When is it time to move forward with capital improvements that will allow the DC to grow while remaining competitive?

The obvious answer is before you can no longer satisfy your customer’s expectations. However, a more proactive, but often overlooked answer is when the adoption of higher levels of material handling system (MHS) technology can process items faster, more efficiently and more accurately than current methods can. That kind of incremental improvement should be the key driver for distributors who;

• see order turnaround times getting shorter as volumes increase,
• see productivity drop as volumes increase,
• are seeing an increase in charges backs do to order fulfillment errors and damaged shipments,
• need to find new ways to shrink inventory and reduce fulfillment costs,
• are experiencing high employee workman’s comp claims and low morale,
• and, are having a difficult time finding and retaining quality people with the right skill sets for working in the DC.

While “wait and see” has been the posture for many companies struggling through this current down market, it is a strategy destine for failure in the long term. Historically, companies that do not continually improve processing methods as required to satisfy their customers’ expectations - fall behind and eventually fade away.

More Orders & More Volume Are Key Timing Factors

The magnitude of a DC’s order volumes and throughput requirements are factors in determining when higher levels of MHS technology will be most beneficial.

Quite simply, the strength of a DCs operation resides in its ability to continually process more orders and higher volumes without an incremental increase in per piece handling cost. Distributors that fail to accomplish this (process more with less) will find it increasingly harder to compete.

Adopting higher levels of MHS technology whether mechanized, semi-automated or fully automated, means taking manual labor and the human factor out of the DC when MHS can do the job with greater efficiency, safety, and/or accuracy at a justifiable cost.

As an example – manual picking to paper tickets may yield only 60 to 100 picks per hour. Whereas picking rates of 300 to 600 per hour, with accuracy rates approaching 99.9% are possible using more advanced picking methods such as pick/pack-to-light, RF and/or voice systems. This is especially true when combined with semi-automated product-to-person “put” systems (see “Put Systems Provide A 3X Increase in Order Fulfillment”).

Whenever inventory or SKUs grow so large that pick tours become way too long and/or volumes are so high that congestion makes it very difficult for order pickers to work efficiently, the operation has become inefficient and is no longer competitive. Allowing an operation to get to that point can be very costly and difficult to correct. That’s why timing is so important.

Factors That Drive Automation

For many distributors the need to move high volumes is further complicated by the requirement for very short order fulfillment and delivery windows. This is a characteristic of wholesale drug and liquor distribution, which has led to widespread use of material handling automation (MHA) in those industry segments. For them, deployment of automated case picking (ACP) technology is the only practical way to satisfy customer requirements for picking and shipping huge amounts of product overnight.

However, for other distributors there are human and environmental factors that drive the move to higher levels of MHA, such as taking workers out of freezer environment or out of a hazardous workplace.

In urban areas with high land costs the decision to build up to the maximum allowable building height utilizing an automated storage and retrieval system (AS/RS), or Narrow Aisle Reach Trucks, vertical carousals, or other space saving systems is the preferred solution.

And, for high value items prone to pilferage, a minimum touch MHA solution makes perfect business sense and economic cents as well.

Ergonomics and OSHA regulations can play an important role in the decision to automate. Semi-automated horizontal and vertical carousels, as well as vertical lift modules (VLMs) present work to operators in their “golden zone” for example.

When the job involves a lot of heavy lifting and repetitive motions, such as building pallet loads, using robots instead of manually building these loads is one of the biggest factors driving MHA adoption especially where more than one work shift is required.

Final Thoughts

Given the right set of circumstances and the right mix of equipment, controls, and software - upgrading to higher levels of MHS/MHA technology can be a best practice that will clearly put a DC in the competitive forefront.

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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