ProMat 2011 will no doubt be a showcase for a new generation of automation technologies. The reason why so much exhibit space and attention is being given to automation is primarily due to the extreme pressure being applied to most distributors to reduce labor and improve efficiency in a DC environment that is becoming more specialized and demand driven. One of the key drivers is the need for more flexible and intelligent material handling solutions. The best way to do this typically involves some level of automation help in the DC.

To complicate matters further, many of the key characteristics of the typical business model affecting DC operations have changed:

• Proliferation of slow moving SKUs
• Shorter lead times for processing orders
• Higher proportion of small orders
• More severe and later seasonal spikes in volume
• Ever increasing demand for highly customized VAS

Both large and small distributors are facing these problems, and they are not limited to one type of industry.

Based on surveys and phone interviews that Supply Chain Digest has been conducting (in preparation for the soon to be published 2011 Automatic Case Picking report), distributors could use some help in determining; (A.) when to automate, (B.) how much to automate, and (C.) what types of automation solutions make sense in various DC processes.

Most logistics managers know the signs indicating when it’s time to move to a higher processing level;

• when their ability to meet throughput volume and/or accuracy requirements is compromised,
• can no longer meet service levels,
• experiencing frequent bottlenecks and system interruptions,
• amount of overtime is increasing,
• higher than normal employee turnover rate.

These are all clues that the current processing methods are either maxed out or are no longer optimized.

To avoid making assumptions – it’s best to get conformation from an independent source, see “Distribution Center Audits – Real Value, or Marketing Exercise?” This is important because perhaps automation is the way to go, however, comparing a new automated solution to an existing sub-optimized operation will result in calculating an inflated ROI.

To make sure your operation is running as effectively as possible, start by focusing on the “low hanging fruit” – slotting; replenishment; location and inventory tracking; vendor compliance; and pick/pack productivity.

B. How much to Automate

The most labor-intensive operations can usually support some level of automation. For instance, in the typical direct-to-consumer business model, the areas of picking and packing can represent up to 50% to 60% or more of total DC labor.

Having to track, store, and process thousands of SKUs of vastly different sizes and shapes presents additional challenges. Key variables are product type (weight and cube), order volume (peak and average), and the number of units required to fill orders (order profile). Items that are considered to be non-conveyable will probably fall outside the scope for automation requiring manual processing methods perhaps with mechanical devices to assist.

To actually determine the amount of automation that can be justified, you need to have solid data to measure the impact of automation against. Unfortunately, many companies do not have good measurable data or operating standards in place to use as the basis for evaluation purposes. However, this is necessary information in making good decisions about how much automation can be justified. Without it you are flying blind.

C. What Types of Automated Solutions Make Sense

Full case and pick/pack environments lend themselves to certain types of automation. The need to quickly process a large number of small orders of less-than-full-case quantities is the ideal environment for product-to-picker solutions.

An excellent example of this type of automation can be seen in the SCD videocast “Lean & Warehouse Automation Can Go Together”.

When a large percentage of slow moving SKUs are involved, automated product-to-picker solutions like mini-load AS/RS may be the perfect fit, see “Managing Slow Movers With Product-to-Person Technology”.

The increasing demand to build mixed case pallets is one of the key drivers for stationary robotic materials handling.

DC executives should consider the flexibility and scalability of automated solutions when comparing them to the more conventional bolt-to-the-floor conveyor and sortation solutions.

Remember that one size rarely fits all; you must define your unique business and operational requirements before evaluating automation options. Without a detailed set of operating metrics and requirements, the chances of finding the right automation solution or technology is slim.

There are dozens of automation and robotics providers in the market. Below is a list of providers, many of which SCD has mentioned in various pieces on the subject, that are exhibiting at ProMat 2011. They offer their material handling solutions separately or as a part of an integrated solution.

Final Thoughts

What you will learn at ProMat 2011 is that automation technology can help your operation become more competitive, provided you do your homework when evaluating opportunities to automate. The path to selecting and deploying an effective solution can be challenging, but also well worth it.

Agree or disagree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

You can also contact Holste directly to discuss your material handling or distribution challenges at the Feedback button below.