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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News

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.

March 30, 2016

Logistics News : Preparing for the Adoption of DC Processing Technologies

For Shippers - Flexibility & Agility are Key Objectives


Shippers, especially those who are considering DC automation for the first time, should have an in-depth comprehensive understanding of what their long range business objectives are relative to adopting technology. This may seem like common sense. However, in today’s omnichannel, quick response environment, while speed and order accuracy remain important customer service objectives, the key business objectives are flexibility and agility. Shippers with these characteristics have the inherent advantage to quickly and efficiently adjust operations to changing customer order profiles, while providing customized value-added order services - all within a 24 hour (or less) shipping window.

With the understanding that every company is different, the following provides a list of considerations for defining, developing and/or enhancing operations through the adoption of technology:

Holste Says...

In today's omnichannel, quick response environment, while speed and order accuracy remain important customer service objectives, the key business objectives are flexibility and agility.

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  • Justification: Hardware and software technologies can vary widely depending on how much new equipment and automation will be included. All of which will need to be justified based on a combination of hard and soft benefits. Independent industry consultants can assist in the development of a plan and budget.
  • Flexibility & Agility: How will the technology adapt to on-going changes in customer order profiles and changes to SKU configuration? The technology must be able to continually support product evolution, marketplace dynamics and integration of value-added-services (VAS).
  • Throughput (cases per hour shipped): This can be tricky to calculate due to the incremental way technology can be implemented. For example, automated picking may improve productivity and flexibility but not bump-up throughput. Deployment of an automated package sorting system may increase throughput but require changes in order fulfillment and/or packaging operations.
  • Labor: What new management and operational skills will the technology require? What is the impact on labor allocation?
  • Footprint: How much space will the technology require? Are there any special environmental requirements.
  • Building Modifications: Scope and cost of any building modifications along with the cost of rearrangements and downtime (if required).
  • Expansion Capability (Scalability): How “small” can you start, and how easy and expensive will it be to expand the operation over time?
  • Maintenance Issues/Uptime: What sort of maintenance will be required? What are the technical skills required (can you do it with internal resources?), and, what is the projected level of uptime and/or the MTBF (Mean Time Between Failures) for key pieces of equipment?
  • Percent of Total Volume: Each alternative technology under consideration will likely vary in types and amount of items handled.
  • Safety: Are there important differences in the level of safety and risk of injury between the different technologies?
  • Backup Plan: Understanding that customer orders must be shipped every day, what contingency plans are available in the event of a system failure?
  • TCO & Total ROI: What is the project total cost of ownership (TCO) over five years, and then what is the total ROI for each solution?

Of course, other criteria can be added that are more specific to the business and technologies being considered, but we think this is a good list from which to begin the analysis and evaluation.

Final Thoughts

There is an abundance of proven technology available to shippers looking to improve operations while maintaining order processing flexibility and agility. The next best opportunity to learn more about DC technologies and how they can best be applied can be found at MODEX 2016 April 4 – 7, 2016 in Atlanta, GA. Check-it-out at:

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