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Expert Insight: Sorting it Out
By Cliff Holste
Date: Oct. 16, 2008

Logistics News: Straight Talk about Warehouse and Distribution Center Automation

The Central Question: Are Highly Sophisticated Automated DCs More Productive than Lower End Conventional Mechanized Operations?

Today, DC management is pressed as never before to reach new heights of productivity. Caught between escalating costs, aggressive competition and a constantly accelerating flow of new technology, today’s distribution executive senses an unrelenting urgency to act. Yet the very complexity of the problem argues hesitation.  Searching, often in vain, for assurances that the decisions made will be the right ones, and that the productivity, efficiency, and throughput goals will be realized.  The central question is - are the highly sophisticated automated DCs more productive than lower end conventional mechanized operations?

Based on my over 3 decades of material handling system experience spread over a variety of project settings, I have found that a high degree of automation does not necessarily equate to high performance.  In fact, a high degree of automation may yield just the opposite effect.  How does that happen??  Excess equipment/control and/or software complexity along with improper justification; inadequate or no operator training; ill-advised experimentation with new methods and/or technologies; subjective decision making; and inflexibility are a few of the issues that come to mind.

Simply designing an automated DC as a tool for productivity is not enough.  \This tool must be properly applied. It must be properly installed.  Operators must be taught to understand its proper use. They must be taught to have faith in its ability; not to fear or suspect it. It must be properly managed. It must be continuously maintained.

Let’s take a closer look.

Complexity and Justification

Supply chain logistics, as it relates to warehousing and order fulfillment processes, is inherently complex and is becoming more so all the time. Automated systems are also inherently complex. Therefore, one must proceed with caution. I remember reading somewhere that by applying complex solutions to an already complex situation you get complexity squared”!

Before going down that path, you should examine all of your operational areas such as, receiving, put-away, picking, value-added services, order consolidation and shipping to determine how they can be simplified and streamlined.  In addition, look for functional improvements in slotting, order batching, pick path routing, and work flow simplification.  These upgrades may yield as much as 20% to 30% improvement in overall productivity, and be realized with a relatively small initial investment.  What remains should be consistent enough to reliably automate.  After these upgrades have been made, a larger investment in automation can be considered and at that point may or may not be justified.  This approach is sometimes referred to as incremental justification, or maybe it’s just common sense.

Training, Audits and Documentation

When considering a multi-million dollar automated material handling system that may include voice and/or light directed batch order picking and sortation with a supporting warehouse management system, extensive operator and maintenance training including proper documentation is essential.  Without it – you are flying blind.  Yet, sometimes in competitive bidding situations this critical requirement can be offered as optional or as a scaled down 1 or 2 day event.

A proper training program will be tailored to your specific needs and customized to the exact equipment, controls, and software systems being provided and at a minimum include the following 3 stages:

First Stage – Maintenance Hands-On

In order to get familiar with the system components as well as their installation and location within the system, your maintenance staff needs to participate during actual installation of the system.

Second Stage – Formalized Training

The purpose here is to ensure that your maintenance and operational staff are acquainted with the functions and operation of the system.  This training should enable your management and operating staff to maintain the operation of the system and at the same time carry out the necessary preventive maintenance and fault corrections provided with the system.  It should include an overview of operation, component identification, functionality, as well as concentration on managerial statistics and their meaning.

Third Stage – System Audit and Refresher

About six months after system acceptance, the system provider(s) should perform a mechanical and controls audit to determine actual system performance criteria and to perform any required follow-up training and/or re-training.

Training Documentation

At a minimum, you should receive “as-built” system layouts and design drawings, mechanical equipment bill of materials, recommended spare parts lists, schematic drawings, controls diagrams and electrical wiring information.  Some system providers offer videos that provide step-by-step instructions.

The Latest New Whiz-Bang, Sure Fire Method

I know many people, myself included that will not buy a new automobile model in its introductory year.  However, I am grateful for all the others who are willing to be the guinea pigs.  But, I’m guessing that even they think twice before committing their companies to the probable vulgarities of being a Bata site for some new technological advance.

A current example is “waveless picking”, which was discussed by SCDigest editor Dan Gilmore in his June 8, 2006 article  “To Wave or Not to Wave”.  Those who are advocating waveless picking claim it can pay off in a big way by increasing throughput and operational efficiency; improving labor productivity; reducing exceptions; reducing, if not eliminating, buffers; and, in many cases, avoiding capital expenditures.  At this time there are a handful of successful installations in mostly very high volume operations.  It may be another 3 years or so before the cost benefits and deployment risk become attractive enough for medium to high volume operations.

If you’re going to consider newly developed technology, then you must have a well thought out backup plan, or temporary work around that will keep your operation running while faults are being corrected.  This is especially true if the experimental or prototype is deployed in the mainline system.

Flexibility and Adaptability

Highly automated systems are typically difficult to reconfigure.  If your business is in anyway fashion orientated, then you know that year-to-year changes in products, customer order profiles, and value added services are normal and to be expected.  Therefore, all throughout the system planning stage the need for operational flexibility must be stressed.  In addition, many DCs have at least one or two huge peak seasons per year when they may require a large pool of temporary labor.  In order to accommodate this surge, operator training must be quick and easy.

In concluding, perhaps it’s appropriate to note that we have become conditioned to believe that machines can solve our problems.  For instance, if you want to lose weight and get back into shape, purchase a treadmill or exercise bike and your excess pounds will disappear.  After reading the instructions you learn that this may be true so long as you use it properly and follow a regiment that includes going on a diet

And, if you do not use it properly, it may not be helpful at all and may even cause injury.  We quickly learn that the machine is just a tool, and what makes a difference is our behavior and disciplines.  I suggest that this lesson can be applied to the purchase of automated material handling systems.  It’s about the organization and implementation of the complex factors which affect the realization of productivity, efficiency, and throughput goals.

Agree or disgree with our expert'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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profile About the Author
Cliff Holste is Supply Chain Digest's Materials Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.
Visit SCDigest's New Distribution Digest web page for the best in distribution management and materials handling news and insight

Holste Says:

Supply chain logistics, as it relates to warehousing and order fulfillment processes, is inherently complex and is becoming more so all the time. Automated systems are also inherently complex. Therefore, one must proceed with caution 

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