Fixed path material handling equipment and systems, the kind that can be found in the typical order fulfillment DC, have relatively long useful life expediencies - usually 15 to 20 years depending on duty cycle and how well it is maintained. In many cases these older system are still functional but need to be updated in order to remain efficient and productive. While vendor provided software code eventually becomes extinct, most mechanical and control components can be replaced with an updated version.

Maintenance & Operating Cost Verses Benefit

Many distributors grapple with the question of how much they should continue to invest in an aging material handling system.

Recently, we interviewed a company that has a full case picking and sorting conveyor system that was installed in the mid 70s and is still in operation, albeit on a limited basis. Obviously, the company has enjoyed full ROI benefits many times over. However, due to changes in the company’s business model over the years, system is now being uses so infrequently they admitted that it will probably be scraped the next time something major needs fixing.

Overtime, with changes in a company’s business model, customer order profiles, and SKU mix, an aging system design, equipment and controls, can become outdated. Still, given the high replacement cost, it’s critically important to investigate alternatives.

If the problem is frequent breakdowns resulting in the loss of productivity, industry experts generally agree that with very little capital expenditure you can increase the performance of older conveyor and sortation systems by 10 to 20%. The following table shows the typical benefits that can be derived from a pro-active approach to system optimization management:

By taking the following pro-active steps, companies can extend their investment by keeping their system running at peak performance:

• Performance Audit: An effective way of keeping a material handling system operation up to date is by doing a performance audit every few years. A performance audit can help you zero in on productivity drains, evaluating such areas as picking, conveying, and sorting rates. Whether you utilize internal resources or hire an industry expert, a comprehensive audit will analyze systems from both an operational and functional standpoint, including a final report detailing recommended adjustments. Thus, you will be able to pinpoint and fix inefficiencies, realizing cost savings from improved productivity rates and system performance.

• Preventative Maintenance: A comprehensive PM program is an effective way to keep your system’s performance “fresh”, reduce breakdowns, and extend equipment service life. In particular, it can reveal if your equipment is functioning properly or if it requires a tune-up. Regularly scheduled preventative maintenance can help you determine when components will fail so you can do corrective work on them before they breakdown. Thus, you can keep systems running at peak efficiency and avoid the high cost of malfunctioning equipment, including downtime for emergency fixes and hefty replacement expenses for components beyond repair. Another benefit is that a properly tuned and maintained system consumes less energy.

• Retrofitting: Retrofitting can boost efficiency by 15-20% or more. By retrofitting the equipment, your system will be able to function beyond its initial capacity limits and be in better condition to satisfy increased production demands. This can involve upgrading components, increasing speed/capacity, or incorporating new technologies.

By reusing equipment instead of replacing it, you can enjoy considerable savings. For one thing, the cost of retrofitting is often less than 60% of new equipment cost. Moreover, by retrofitting and modernizing your equipment, you boost its reliability, renew its service life, while cutting maintenance and operating expenses. Furthermore, by retrofitting companies can ensure compliance with current federal and state safety regulations, thereby helping reduce work-related injuries and insurance premiums, including workers' compensation. Finally, a retrofit allows for parts standardization, further trimming costs as well as making parts easier/quicker to replace.

At the same time, companies seeking to upgrade their material handling systems should consider adding a Warehouse Control System (WCS) to enhance flexibility, performance, and broaden access to real-time operational data.

Final Thoughts

While companies must understand that the above (3) strategies can't push back new capital expenditures indefinitely, they do however, represent effective ways to get the best performance and value out of equipment and systems over the long haul.

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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