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Cliff Holste is Supply Chain Digest's Material 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.

Logistics News

By Cliff Holste

February 26, 2014

Equipment Verses System – The Difference Is Integration Complexity

The Typical Order Fulfillment "System" Includes Complex Integration of Various Pieces of Equipment

Holste Says:

When making a systems purchase, companies are almost certainly entering a relationship of some considerable duration with the provider.
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Previous Columns by Cliff Holste

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Sorting It Out: For Shippers - Benefits Of Real-Time Control In The DC Are Huge!

Sorting It Out: Shippers Looking to Improve Operations Choose Customer Centric Approach

Sorting It Out: Productivity is a Crucial Factor in Measuring Production Performance

Sorting It Out: Packaging Construction Impacts on Logistics Operations


Equipment is generally thought of as tools, machines, or other things that you need for a particular job or activity. Another important characteristic of equipment is that it is capable of functioning in an independent, standalone environment. A PC, for example, may be the most important piece of equipment you will buy.

A System, on the other hand, is an assemblage or combination of things (equipment) or parts forming a complex or unitary whole such as a railroad system or a conveyor system.

A forklift is a piece of equipment. However, when equipped with technologies such as; RF, Computer Directed Voice, Scanning, GPS, etc., it becomes an integral part of the total materials handling system. The difference is a major bump-up in complexity yielding higher levels of flexibility, efficiency and productivity.

While buying material handling equipment out of a catalog or at a trade show is relativity easy, it's not unusual for a company to be thrown off track by what appears to be a straight forward equipment purchase but is actually a more complex system purchase.

Take Pick Modules for example (as shown below) – exclusive of any powered equipment, they may appear to be a commodity item similar to static shelving or pallet storage rack. They don't require software interfaces or I/O checkout. Most companies choose their picking modules based on the type of products to be stored with features such as pallet flow, carton flow, or piece picking functionality.

Given the number of different pieces and components included in a typical pick module arrangement, they tend to be application engineering intensive. And, while they are stand-alone static structures, they must integrate with conveyor system operations and the people using them. Upon closer examination, you discover that there are many issues and questions that need to be considered, such as:

  • If multi-level, what type of decking will be need? Decking requirements vary, based on fire sprinkler requirements and the type of picking. Or, if operators will be picking to carts, what type of wheels do the carts have to move smoothly on the decking surface?
  • Have the operations and engineering staff considered conveyor integration issues related to replenishment, takeaway and trash removal?
  • Where will pallet returns be installed? How many are needed?
  • Are pallet slide rails required?
  • Should pallet flow positions have safety bar grating under each pallet position?
  • Should safety netting be used around stairs and outer walkways?
  • Does the setup conform to local building codes and site requirements?
  • Is the floor slab sufficient for the imposed loads?
  • Do you need a building permit?
  • Who will manage the project and equipment installation? Will the installation crew be factory trained or hire from the local labor pool.

So even equipment as benign as a pick module can have complexities similar to that of a system purchase. This is especially true if computer directed picking technology (RF, light and/or voice) is included.


Key Factors Buyers should Consider when Purchasing a System

In the typical material handling system purchase, the Buyer becomes the “De Facto” General Contractor. Material Handling System vendors are not likely to take responsibility for building design/modification or other requirements that fall outside of their expertise. More importantly, very few system vendors (if any) are willing to assume operational responsibility for equipment and systems designed and installed by others. Nor will they take performance responsibility for the system they provided but do not manage. They will of course, train the operators and guarantee the operation and functionality of the equipment, controls and software in accordance with the sales agreement.

Note: Buyer Beware: Because the system is operated and managed by the Buyer’s employees, over whom the system provider has no contractual authority, the provider cannot guarantee system performance, staffing levels, or ROI. While most system vendors will provide an estimate of minimum staffing levels, they do not take responsibility for this estimate. This issue becomes even more problematic when union labor is involved. Interestingly, the more automated the system becomes the more system performance responsibility the vendor can assume. For example, in a fully automated “lights out” DC operation, the provider would be expected to assume 100% system performance responsibility.

When faced with a system purchase, especially for the first time, companies interested in a do-it-yourself approach are well advised to bring onboard an industry expert, or hire an independent consultant, or choose a highly trusted systems integrator - who has been down this path many times before and can ask the appropriate questions and provide expert advice – see “Are You Ready To Hire A Materials Handling Consultant?” 

When making a systems purchase, companies are almost certainly entering a relationship of some considerable duration with the provider. Ideally, whoever you choose to work with, they will offer an objective, analytical analysis with a broad spectrum of solutions. If the purchase is based on compliance to a firm price bid specification, beware of change orders submitted by the vendor for items and services not included in the bid specs. Buyers should insist on having a formal change order review and approval process including a detailed cost and schedule impact analysis.

Buyers should also be aware that some system vendors may subcontract the controls engineering and software programming to a third-party provider. This raises the risk of miscommunication, errors, and may lead to limited site support. Controls and software are definitely not commodities. Companies should make sure they understand how and by whom this critical portion of the project will be developed, tested, and installed prior to signing the sales agreement. And don’t just ask whether the software can meet the requirements; ask how the requirements will be met, and who will maintain and provide emergency backup service.

Note: All too often a third-party's lack of involvement in the planning stage can cause confusion during delivery and commissioning relative to expected functionality.

Final Thoughts

From the beginning to the end of a system design and implementation, there will be many decisions affecting system performance that are based on assumptions. It’s unavoidable and plays a major role in contributing to “Buyers Remorse”. Unfortunately, unless properly documented, Buyer’s may not be aware of what assumptions are being made and how they affect the performance of the system.

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