Although there has been significant improvements in equipment and controls, the typical DC picking and sorting conveyor system deployed before 2005 is most likely based on equipment layouts and system engineering practices that were developed decades ago. The problem is that system designs that worked well back in the 1980s, 90s and even the early 2000s fall short of satisfying today’s dynamic DC requirements. They lack the flexibility and agility found in more current technology (see – Material Handling Tech Note: Advances In Conveyor Technology Increases System Flexibility).

After a company has done all that it can to update its aging material handling system operation in an attempt to satisfy current customer requirements for quick response and special value added services, but still the operation does not have the flexibility and agility to respond efficiently – perhaps it’s time to consider deployment of more current methods and technologies.

For example, just think about the scope of today’s Value Added Service (VAS) requirements compared to that of even the early 2000s. Looking back, the occasional customer request for special service was usually processed off-line as an exception. In the case of a particularly large order a discrete order processing area would be set-up. The focus was primarily on maintaining high throughput and order accuracy.

But, in today’s quick response environment, while throughput and order accuracy are still important, the key competitive factors now are flexibility and agility to quickly and efficiently adjust system operations to changing order profiles, while providing customized order processing and palletizing services - all within a 24 hour shipping window.

The Next Frontier in DC Management

Recently we reported on strategies that can extend the life of an aging DC material handling system. Still, at some point the squeeze is no longer worth the juice. Companies know that when they reach that point it’s time to adopt more up-to-date methods or risk not being able to compete.

The fact is that today there are many more deployment options for order processing than most logistics managers realize especially as it applies to DC automation. The speed, at which system providers are bringing automated solutions to market, along with the number of deployment proof points that have been establishes in just the last few years, is truly impressive.

Logistics managers must therefore, find a way to organize the evaluation criteria relative to adopting new process methods. Below we offer a starting point by listing a number of key variables or attributes that can differ across technologies and providers. Some are obvious (such as total system cost), while others are more subtle factors. This list was excerpted from our groundbreaking report on automation in the DC, which can be downloaded here: Automated Case Picking 2009: The Next Frontier in Distribution Center Management.

• Initial System Cost: Hardware, software, implementation, building modifications, training, etc, can vary widely depending on how much new equipment and technology is integrated into the current operation.

• Flexibility & Agility: How will the system operation handle business changes, customer order profile changes, VAS, and SKU changes relative to velocity and varying carton sizes and weights?

• Throughput (cases per hour shipped): This can be tricky to calculate due to the incremental way systems can be implemented. For example, automated picking may improve productivity and flexibility but not bump-up throughput.

• Supporting Labor Cost: How much labor will be needed to staff the new system, or in related work processes upstream and downstream from the new system?

• Process Complexity & Replenishment: How complex will the system be to manage, especially relative to replenishment - an often overlooked factor?

• Footprint Requirements: How much floor space and vertical height is required and optimal (these are two different numbers)? You might also want to assign a cost to this space usage.

• Changes Required to Existing Building: Scope and cost of any building changes needed for each alternative system.

• Expansion Capability (easy and cost): How “small” can you start, and how easy and expensive will it be to expand the system over time?

• Maintenance Issues/Uptime: What sort of system maintenance will be required, what are the skills required (can you do it yourself?), and what is the projected level of uptime?

• Percent of Total Volume That Potentially Could be Handled: The alternative systems will likely vary in terms of how much of your total order processing volume that they can physically handle.

• Proven Implementations: How and where has each solution been implemented, both generally and within your industry or type of distribution model? That does not mean a company shouldn’t consider partnering with a system provider to jointly develop a new-to-market solution, but among more established solutions see where your type of application has been successful.

• Power Consumption: How much energy will each system under consideration use?

• Safety: Are there important differences in the level of safety and risk of injury between the different alternatives?

• TCO & Total ROI: What is the project total cost of ownership (TCO) over five years, and then what is the total ROI for each solution?

Of course, other criteria can be added that is more specific to the companies operation and the applied technologies, but we think this is a good list from which to start the search and evaluation.

Final Thoughts

Abandoning the old for the new is not without risk. It requires considerable thought and planning. However, trying to make the original system perform in ways for which it was not designed can put the future of the business at risk. Look for a middle ground where integrating new automated order fulfillment processes with current receiving and shipping operations provides the desired flexibility and agility going forward.

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.

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