A system’s realized shipping capacity (yield or throughput), which in the material handling system industry is referred to as Actual Rate, depends to a large degree on your ability to properly train, staff, and manage the system over which your MHA vendor has no authority or responsibility.
The following are but a few examples of the factors that impact actual system performance:
- Variation in carton length, and conveyable product from the original specs
- Proper staffing and training
- Re-induction of cartons from re-circulation and/or cartons with bad (non-scannable) labels
- Shipping lane availability
- Downtime for maintenance
- WMS or other software issue outside the conveyor system
- Management effectiveness
- Employee turnover
- Ability to close out and overlap “waves” on the system
While the vendor uses Actual Rate as the starting point or basis for determining the type and capacity of equipment that will be applied to the system design, it is a “soft” or target number. The hard number, which is what the Sales Agreement is based on, is the Demonstrable Rate.
For example, during acceptance testing, the vendor will “prove” this rate by filling the sorter feed conveyors with average length cartons (or totes) and “clocking” or measuring the actual induction rate. In this way, the vendor can declare victory while the cartons shipped per day may be way below what they should be, i.e., the customer’s actual rate.
So, let’s look at some numbers.
Let’s say a company needs to be able to process 20,000 cartons in a day (1 shift). This actually gets a bit tricky, because that design criteria likely is for a future year, not year 1, but we’ll stick with that number this exercise.
The system vendor will implement a system capable of doing that many cartons physically during that time period. Actually, they will add in some fudge factor for the inevitable losses that will happen regardless if everything else runs perfectly. That number is typically 10-20% - I’ll use 20% in this case.
That means the vendor would produce a system capable of handling 24,000 cartons per shift (20k x 1.2). Assuming 7.5 hours or 450 minutes of work per shift, then the system would be designed, and the contractual language would stipulate, that system will be capable of 53 cartons per minute (cpm) – 24,000/450.
But, as noted above, all kinds of things can happen that decrease the actual throughput numbers – in some situations substantially so. As long as the vendor can show under the right conditions that the system can manage 53 cpm, it has met its system and contractual obligations – even if the system as a whole is viewed as not meeting expectations.