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About the Author

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

July 29, 2015



Logistics News: DC Automation – Essential for Some, Not So Much for Others

Operational Flexibility Trumps Labor Savings


Holste Says:

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It's interesting to note that the most commonly cited benefit from DC automation is greater throughput with less labor.
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Previous Columns by Cliff Holste

Sorting It Out : Two Factors Drive Decision to Automate – Cost & Justification

Sorting It Out: Improve DC Efficiency With Alternative Storage & Picking Methods

Sorting It Out : Improving DC Performance - Back To The Basics

Sorting It Out: Depending On Size, Shippers Think Differently About Order Fulfillment Operations

Sorting It Out: Conveyor System Capacity Constraints Impact Productivity

More


The deployment rate for automation appears to be strong in selected industry verticals like Grocery, Pharmaceutical, Beverage, Wine & Spirits, Electronics, and Automotive Parts. Likewise, DCs that support manufacturing operations tend to deploy higher levels of automation.

Companies in these industries are driving the demand for technologies such as Goods-to-Person, AS/RS, Automated Case Picking and Sorting, and Robotic Palletizing.

However, notwithstanding the high level of interest, automation in the DC still has a long way to go before it becomes widely accepted (especially in the USA). Based on a SCDigest survey, 72% of USA distributors pick orders manually (37% using pallet jacks and 35% using order picker trucks). Over time these companies have become very proficient at fine tuning their operations. The other 28% use conveyor systems that include automated shipping sortation as well as the more advanced technologies mentioned above.

Shippers included in the survey have a high percentage of products (case goods) that are suitable for handling on automated equipment/systems. 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. They fear that bolt-to-the-floor automation will inhibit operational flexibility. They consistently cited SKU diversity, customer order profile volatility, and value added customer service requirements as being the reasons in favor of manual operations. In addition, there is concern that the current move towards the use of more economical packaging materials and smaller cases will increase the percentage of nonconveyables.

It’s interesting to note that the most commonly cited benefit from DC automation is greater throughput with less labor. However, this does not alleviate the above stated concerns. In order to attract a broader segment of the market, automation providers may need to explain that automation can result in benefits in other areas as well, such as:

 
  • 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
 
  • Improved worker safety
  • Reduced losses from damage
  • Improved shipping accuracy

For automation to gain traction with a broader range of shippers it needs to be recognized as an effective alternative solution to controlling cost while increasing the customer service capabilities of the company.


Final Thoughts

When a company decides to invest in technology it is usually because of the need to increase sales opportunities and profit margins. Management recognizes that the future success of their business depends on being able to satisfy customer requirements with efficient and competitive methods.

 

 

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