I have been designing sortation systems in distribution operations for more than 30 years, and have been repeatedly struck by one thing: while we can design very efficient processes and technology for case-level order picking (e.g., batch pick-to-belt) and install increasingly high speed sorters to divert those picked cartons to the proper lane, at the end we are stuck with a manual pallet building process on the back end that is generally not very efficient.

We’ve had some interesting discussions on this topic recently, including taking a question from one reader who was considering if his company could reduce the number of divert lanes it used and possibly save some labor costs as a result. That led to some additional thoughts about how you really determine the optimal number of divert lanes and pallet building positions you need per lane. (See Logistics News: Optimizing the Number of Sortation System Diverts and Pallet Positions.)

Now, logistics managers might also need to consider factoring another variable into that equation: Should they consider a new class of automated systems that are capable of mixed case pallet building at the end of those divert lanes?

The potential for automated mixed case pallet building is part of the overall trend towards exciting new solutions for automating case picking operstions generally, with an array of recent technology introductions that are providing some solutions to this important DC challenge. (See Logistics News: Are Automated Case Picking Systems Coming to a DC Near You?)

We have had automated palletizers in manufacturing for more than two decades. But those palletizers have a somewhat simple life – a narrow range of cartons sizes, identical for a given pallet build, with a pallet build design that is constant for that SKU over some long period of time.

But flexibility in those applications is minimal. In fact, even modest variations in the need to build pallets in manufacturing for retail customers, such as the creation of “rainbow pallets” with columns of identically sized cases of different variations of a SKU, are frequently sent to a 3rd party service to manually perform the work. Automation? “Forgetaboutit!”

So it’s understandable that many logistics manages might think the potential to automate the pallet build function in distribution is highly impractical, especially when you consider the vast assortment of case sizes and shapes that flow through a typical consumer goods DC.

But there are some changes afoot. Advances in robotic technology and computing power means automation options are in fact now available for mixed SKU pallet building at the end of a sortation line.

Let’s look at the math.

My research says that an automated pallet building robot can be deployed at an “entry level” for about $120,000 (without the buffer system briefly described above).

That robot should be capable of handling 600 cartons per hour, or roughly the work of at least two pallet build operators. (While for a given hour an operator may be able to handle 300 cartons per hour, that rate in my experience is not achievable over a full shift, so this is actually a very conservative estimate.)

The cost to operate one of these machines is in the .50 to $1.00 range.

So, if we take a fully burdened labor cost of $20 per hour (your operation may be higher or lower), we get:

• $120,000 up front investment
• Labor reduction for one-shift operations: $20 per hour x 2000 per year x 2 operators = $80,000
• Labor reduction for two-shift operation: $20 per hour x 2000 per year x 4 operators = $160,000
• Robot operational cost of $2000 for one shift operations per year, and $4000 for two shift operations.

So, rough figures, for a $120,000 investment you would save $78,000 in labor for one shift operations, and $156,000 for two shift operations. Either way, it’s a strong payback.

Pallet building automation vendors say there other benefits as well, such improved accuracy, the ability to build taller pallets (thus getting more cube on a truck), and more.

While this type of technology is new to most of us, it has actually been around for nearly a decade, though I believe the total number of deployments is still fairly small. FANUC Robotics, as just one example, introduced its first mixed case palletizing solution in 2000, and is currently on its fourth generation of the product. That was news to me.

Like any automated solution, this approach won’t be right for everyone. It seems to me this particular approach might work better in greenfield sites, where the extra space required (especially for the buffer system approach) can be designed in, rather than shoe-horned in to an existing facility.

Nonetheless, it’s worth remembering, especially for multi-shift operations, that such a robot is capable of working 24x7, doesn’t need many “breaks,’ never calls in sick, etc.

We really are in an exciting new period of DC automation advances after some plateaus in the last decade – and the US needs to catch up with Europe, which is ahead of the game in this regard.

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