Holste Says: Management recognizes that the future success of their business depends on being able to satisfy customer requirements with efficient and competitive methods. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

It should be noted that the companies included in the SCD survey have a high percentage of products (case goods) that are suitable for handling on automated equipment/systems. However, further investigation shows that a growing number of distributors are becoming concerned that the current move towards the use of “more economical” packaging materials and container construction will increase the percentage of non-conveyable products.

Most of these non-automated companies depend on WMS, and some combination of RF and Voice Recognition technology to reduce errors and operating cost while maximize throughput capacity. Over the years, they have become very proficient at fine tuning their operations. They fear that bolt-to-the-floor automation will inhibit operational flexibility. They consistently cited SKU diversity, customer order profile volatility, and customer service requirements as being the primary reasons in favor of manual operations.

Digging a little deeper, we found that among companies shipping at least 20,000 to 60,000 loose cases per day, 76% have medium to high concerns about picking costs, and another 60% have medium to high concerns relative to inventory and order picking accuracy in case picking.

This data can be reviewed in our groundbreaking report on Automated Case Picking 2009: The Next Frontier of Distribution Management.

The Path Forward

As it relates to automation, the FUD Factor, (Fear, Uncertainty, & Doubt), can often be overcome with examples of success. As DC automation becomes a reality in the wider logistics marketplace, more companies will be attracted to the benefits that they perceive (or fear) that their competitors are enjoying.

In fact, the most commonly cited benefit from DC automation is improved productivity, i.e., greater throughput with less labor. In addition, deploying automation can result in benefits in other areas as well. Examples commonly cited by current users are as follows:

• Greater throughput capability
• Reduced lead times & improved customer service
• Better space & cube utilization
• Increased production control
• Better inventory control
• Improved stock rotation
• Lower stock levels
• Reduced number of stock outs
• Reduced operation cost
• Improved worker safety
• Reduced losses from damage
• Improved shipping accuracy

Later this year SCDigest and Distribution Digest will publish an update to the above referenced 2009 ACP report. This time we will be reporting on installed automated systems to demonstrate that automation is not “science fiction”, and that these are real solutions that are operating in real companies with real results and ROI.

Final Thoughts

Some time ago I heard the story of two high level marketing people who were hired by a manufacture of women’s brassieres to check out the market potential for their line of bras in South Africa. After spending sufficient time in the country becoming acquainted with local customs, the first person reported that most South African women do not wear bras, and therefore saw very little sales opportunity. The second person, having observed the same thing as the first, reported that women were not being properly supported and therefore the marketing potential for bras is huge!

So it is with automation – most DCs are not automated, therefore it could be said that the potential for automation is somewhere between very little and huge. There may be very good, understandable reasons why most women in South African do not wear bras, and that most DCs are not automated.

When a company decides to invest in automation it is usually because of the need to increase performance and capacity in order to take full advantage of current and future sales opportunities. Management recognizes that the future success of their business depends on being able to satisfy customer requirements with efficient and competitive methods. Automation is seen as an effective alternative solution to controlling cost while increasing the scope and capabilities of the company.