Holste Says: Historically, companies that do not continually improve operations as required to satisfy their customers' evolving expectations, fall behind and eventually fade away. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

Actually, the answer has nothing to do with chronology. Nor should it be overly influenced by external events beyond the company’s control. By the time company decision makers realizes that the current operations can no longer satisfy customers’ expectations – immediate corrective action is needed. When they understand that by adopting up-to-date material handling system technologies the company will be able to process customer orders faster, more efficiently with fewer errors, and grow the business, that is the “time” for action.

While “wait and see” has been the posture for many companies over the past few years, it is a strategy destined for failure in the long-term. Historically, companies that do not continually improve operations as required to satisfy their customers’ evolving expectations, fall behind and eventually fade away.

What Are The Warning Signs?

Whenever inventories and/or SKU grow is so large that pick tours become way too long and/or volumes are so high that congestion makes it very difficult for order pickers to work efficiently, the operation has become inefficient and is no longer competitive. Allowing an operation to get to that point can be very costly and difficult to correct. Constantly playing catch-up is an inefficient and profit eroding game.

Quite simply, the strength of any order fulfillment operation resides in its ability to continually process more orders and higher volumes, without an incremental increase in per piece handling cost. Distributors that fail to accomplish this (process more with less) will find it increasingly harder to compete.

Logistics executives and business managers need to be aware of and look for the following telltale signs of trouble:

• See per piece handling cost rising incrementally with sales volume.
• See order turnaround times getting longer as volumes increase.
• See productivity drop as volumes increase.
• See an increase in charges backs due to order fulfillment errors and damaged shipments.
• See increased storage congestion and expanding inventory.
• Are experiencing increased employee workman’s comp claims and higher absenteeism.
• More difficult time finding and retaining quality people to work in the DC.

Adopting higher levels of material handling system technology (whether mechanized, semi-automated or fully automated) means taking manual labor and the human factor out of the DC whenever the technology can do the job with greater efficiency, safety, and/or accuracy at a justifiable cost.

As an example – manual picking using paper pick tickets may yield only 60 to 100 picks per hour. Whereas picking rates of 300 to 600 per hour, with accuracy rates approaching 99.9% are possible using more advanced picking methods such as pick/pack-to-light, RF and/or voice systems. This is especially true when combined with semi-automated product-to-person “put” systems (see “Put Systems Provide A 3X Increase in Order Fulfillment”).

Factors That Drive Automation

For many distributors the need to move high volumes is further complicated by the requirement for same day picking and shipping. This is a characteristic of the E-Commerce market which has led to higher adoption of material handling automation across both B2B & B2C market segments. In this case, deployment of automated case picking (ACP) technology is the only practical way to satisfy customer requirements for same day picking and shipping.

However, for other distributors there are human and environmental factors that drive the move to higher levels of automation, such as taking workers out of a freezer environment or out of a noisy and/or hazardous workplace.

In congested urban areas with high land costs the decision to build up to the maximum allowable building height is often the driver for utilizing an automated storage and retrieval system (AS/RS), or Narrow Aisle Reach Trucks, vertical carousals, or other emerging space saving technologies.

And, for high value items prone to pilferage, robotic picking solutions make perfect business sense and economic cents as well.

Ergonomics and OSHA regulations can play an important role in the decision to automate. For example: Semi-automated horizontal and vertical carousels, as well as vertical lift modules (VLMs) present work to picking operators in the “golden zone” reducing the fatigue factor and increasing productivity.

When the job involves a lot of heavy lifting and repetitive motions, such as building pallet loads, using robots instead of manually building these loads is one of the biggest factors driving adoption, especially where more than one work shift per day is normal.

Final Thoughts

You often hear the expression “timing is everything”. But how does this relate to the real world of logistics? This, of course, is the challenge every distributor faces. Staying on top of marketplace and industry related developments is essential.

Perhaps there is some comfort in knowing that given the right set of circumstances and the right mix of flexible and scalable systems, upgrading to higher levels of material handling technology can be a best practice that will provide a competitive edge.

Now you can see it, touch it, and learn more about how other companies successfully solved their order fulfillment challenges at ProMat 2013, Jan 21 – 24 in Chicago at McCormick Place. For more information: www.ProMatShow.com.