As pressure increases to reduce operational cost and improve efficiency in distribution centers, many companies are once again looking at materials handling automation as a means of achieving the lean objectives set forth by operations management. In most cases, the “quick fix” objective for the automation is the elimination of labor. Although labor savings is a major donor to the payback equation, many find that this alone (and the inherent costs and burdens associated with manual operations) is not enough to satisfy the financial objectives set forth by management. Adding automation benefits such as reduced product damage, error elimination, injury avoidance and a collection of other “difficult to quantify” parameters to the savings calculation can prove helpful, but even with these added in, most projects still find it difficult to sneak under the payback bar.

Raising the Bar on Return

To raise the bar on return, a broader view of the benefit equation needs to be considered. Beyond the low hanging fruit of labor savings, automated solutions can improve cube utilization in the building, reduce the stresses associated with SKU growth and streamline the overall supply chain logistics, all of which have a quantitative value that can, in some cases, equal or exceed the savings associated with labor alone.

Benefits of Automation

Automation in its many forms can alleviate the pressures associated with SKU growth, offering better cube utilization and pick efficiencies over the manual status quo. As an example, in the near future RMT will be implementing a large gantry, robot-based automated case pick system for a client that, once completed, will occupy approximately 1500 sq. m (approx. 16,000 sq.ft). The manual system it is replacing currently consumes approximately 3550 sq m (38,000 sq.ft), a reduction of approximately 2050 sq m (22,000 sq ft). Aside from the space savings, the system will also process approximately 30% more cases than the current manual system.

Using a conventional approach towards justifying the expense of the automation, most would compare the capital cost for the solution against the current operating costs of the manual operation (people and equipment ). What is missing in the payback equation is the true value of the automation: cost avoidance. If an automated solution was not implemented and the operational status quo maintained, eventually additional floor space and manual labor would have to be added to alleviate the strain on the facility.

Seeing the Bigger Picture

Although it is most easy to focus attention on the low hanging fruit, often taking a few steps back to see the bigger picture will reveal the true bounty of the harvest.

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