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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News - Sorting It Out

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.

February 1, 2017

Sorting It Out : What Kind Of Investment Does It Take To Implement Sortation In A DC?


Understanding Cost Range Based on Shipping Volume

 

Holste Says...

There are many variables, and while the ranges provided are fairly broad, they at least give business managers some guidance as to what a sortation system for their operations might cost, and provide a range for some initial assessment about potential ROI and capital budgeting requirements.

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As the economy expands, many shippers are experiencing a significant increase in orders and shipping volume. As a result, there is a renewed interest in order fulfillment methods that can process higher volumes without incremental increases in labor. This is the ideal environment for the deployment of a mechanized sortation system.

Sortation systems are integrated material handling systems that provide some level of automation of the order picking, order consolidation and often truck loading processes. In the most typical example, cases are "batch picked" (see batch picking graphic below) to a conveyor in a pick module, transported to a sorter, which sends each carton down the appropriate divert lane for customer pallet building or direct truck loading. The batch picking method can provide significant labor efficiencies versus "discrete" order picking, and the sorter takes care of redistributing those batch picks to the proper order.


But what kind of investment does it take to implement a sortation system in a distribution center?

That's literally the million dollar question, and one that materials handling vendors are generally reluctant to answer at least in the initial planning stage. In fairness to them, it isn’t easy to answer even at a "ball park range", for a variety of reasons.

There are simply so many variables that go into the ultimate system price, and a huge variety of system options, from “a Chevy to a Cadillac,” as the saying goes. Finally, there is a question of what assets a company brings to the table at the start. For example, does it have a Warehouse Management System that is capable of supporting the new automated system? Or does the WMS have to be upgraded as well? 

Despite all that, below is Supply Chain Digest’s guide to the range of sortation system pricing. It is a rough guide at best, but can offer a ballpark snapshot of what this type of technology costs. It is meant to reflect traditional sorters, not tilt-tray technology, which generally adds costs. 

The Low End – Entry Level Sorter: One low cost approach to sortation is to implement a sorting method in which batch picking strategies are employed to reduce labor costs, but rather than automatic sortation, a simple re-circulating loop off which operators pick cartons to pallets (see graphic below).

Don't let the name fool you. This can be a very effective approach for companies that do not have enough volume (more than 10,000 or so cartons per day) to justify a fully automated sorter, and has in fact been used by many large companies in some operations.

Cost range: $250,000 to $350,000, including pick modules

Basic Automated Sortation System: Capable of handling some 20,000 cases per shift, a basic system would have conveyors from existing full case pick areas to diverters or a pop-up wheel type sorter with 12-15 diverts.

Cost range: $750,000 to $1.5 million

Medium Throughput System: Capable of handling perhaps 40,000 cartons per shift, this level system might include 2 two-level full case pick-to-belt modules; an automated print and apply labeling system, some split case picking support. and a medium-speed shoe sorter with perhaps 20-30 diverts.

Cost range: $2-4 million

High Throughput System: Capable of handling perhaps 60,000 cases per shift, the high end system might include 3-4 two, three, or four level full case pick-to-belt modules, split case pick modules; automated label print and apply systems, and use a high speed shoe sorter with 24-48 diverts with shipping docks equipped for fluid loading.

Cost range: $6-10 million

At mega-distribution centers, found in large retailers and some other operations, even higher end systems are often needed, with costs escalating proportionately.

There are many variables, and while the ranges provided are fairly broad, they at least give business managers some guidance as to what a sortation system for their operations might cost, and provide a range for some initial assessment about potential ROI and capital budgeting requirements.

Final Thoughts

The best opportunity to learn more about DC sorting systems options and alternatives can be found at: ProMat 2017, April 3-6, 2017, Chicago, IL. www.promatshow.com

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