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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

March 25, 2015



Logistics News: DC Automation – Pros & Cons

Complexity & Justification Still Major Concerns


Holste Says:

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...When considering deploying automation, a well conceived backup plan or temporary work around, that will keep your operation running while faults are being corrected, is essential.
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Previous Columns by Cliff Holste

Logistics News : Calculating Inventory Levels Complicated By Shorter Product Life Cycles

Logistics News : Is Your DC Order Fulfillment System Out-of-Date?

Logistics News : High Frequency of Internet Orders Drives DC Automation

Logistics News : Three Key Factors for Implementing a Profitable Returns Capability

Logistics News : Shippers Looking To Automate Should Simulate Recommended Solutions Prior To Committing

More

After spending 2 days at ProMat 2015 (please see our video recaps Day 1 & Day 2) speaking with logistics professionals (visitors and exhibitors) operational complexity, risk, and cost justification still appear to be among the major stumbling blocks for adoption of automation in the DC. However, digging a little deeper, there appears to be a lack of confidence in the reliability of technically complex automated operations. This is especially true when it comes to automated order fulfillment technologies, which attracted much attention at the show. We were reminded by one skeptical operations manager that no matter what type system or equipment problems may arise – customer orders must be shipped on schedule each and every day.

While it is generally recognized that DC automation is beneficial many operations managers fear that once installed, depending on system complexity, there may be no way to quickly recover from system design or operational deficiencies that are likely to surface at some point. They struggle to understand how a bolt-to-the-floor, fixed path order fulfillment system can be designed to adequately service customer order profiles and SKU mix that are frequently changing.

There appears to be several factors that contribute to this concern:


Vendor tendency towards excessive equipment, control, and software complexity;

   

Lack of on-hand technicians and IT personal at the DC, especially DCs with multiple shift operations;

   

Ill-advised experimentation with new methods and/or technologies;

   

Inadequate long-term planning and evaluation relative to options and alternatives;

   
and, because “stuff” happens – the lack of a “what if” analysis and/or backup plan.


An example of what drives some of this concern is how quickly Ecommerce and the Direct-to-Consumer portion of Omni-Channel Distribution impacted on DC operations. Systems installed just a few years ago are now required to transport and sort smaller products (cases, cartons, bags, cold sealed items, inner packs and eaches) a capability most do not have. While new products are being introduced to address these requirements, current operations are being forced to either increase their percentage of non-conveyable items or provide special sub-systems to handle them.

The DC automation picture is not as clear cut as we would like for it to be:

Pro - Automated equipment such as weigh-in-motion, label print and apply, case filling and sealing, sorting, palletizing, and the newer generation of AGVs and robotics, are examples of where automation will definitely increase throughput and productivity of repetitive operations. Standalone automated equipment of this type can operate in the typical DC environment reliability and efficiently without a high degree of system integration and dependency. This level of automation makes it much easier to accommodate changes in SKUs and order profiles while increasing DC performance.

Often the above standalone types of automated equipment can boost productivity and DC performance with relatively small incremental investments. After these upgrades have been made what remains should be consistent enough to consider higher levels of integrated system automation.

Con – Highly integrated automated systems are not easily modified. It’s a fact that bolt-to-the-floor systems can be difficult to reconfigure once installed. System planners usually incorporate extra capacity into the system for expansion purposes. This is sometimes described euphemistically as being a “scalable” solution. 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 this case, automation may be a benefit or a hindrance depending on how it is configured and applied.

Material handling systems represent a major long term investment. Therefore, it is highly recommended that before committing to any such project, invest in an independent computerizes graphic simulation of the proposed system operation. This will provide the opportunity to test and prove the system design under a variety of conditions and obtain a clear understanding of its performance capabilities. In addition, such a simulation can greatly reduce the possibility of over or under sizing the system – both of which are potentially costly mistakes.


Final Thoughts

DC managers should understand that failure of any part of an automated system operation can be difficult to recover from. Therefore, when considering deploying automation a well conceived backup plan, or temporary work around, that will keep your operation running while faults are being corrected, is essential. This is especially true if experimental or prototype equipment is deployed in the mainline system.

 

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