Disruptive changes are coming in distribution center automation – and you heard it here first. We are approaching an inflection point that will have some profound effects on how we think about distribution processes and technology.
Two years ago or so, I wrote a column called The Two Paths for Distribution Center Automation, which predicted at a high level that over time companies would likely choose one of two paths for their DCs: (1) go “Lean” and highly flexible, with relatively little or no physical automation; or (2) adopt very automated DCs that will be levels above where most thinking on that topic is today.
The middle would get squeezed – the sort of moderate levels of automation so many DCs have implemented today. Some agreed, some disagreed (as it should be), but I stand by my prediction.
What’s driving my prediction? Number one is the tremendous concern over labor costs, demographics and headaches; two is fear about increased unionization that could come from “card check” legislation; and third is the general trend towards fewer, larger DCs that make investment in automation more possible or even necessary.
Those concerns/trends came out in spades in a number of one-on-one interviews that our Materials Handling and Distribution Digest editor Cliff Holste performed as part of the research for our major, just released report on automated case picking. This is truly a groundbreaking research effort – more on that in just a second. (To download the report, go to Automated Case Picking 2009: The Next Frontier in Distribution Center Management.)
What is happening, in part, is that at the same time DC labor costs and headaches are increasing, the cost of DC automation is flat or, in some cases, declining. Project out that curve, and the automation equation becomes increasingly attractive relative to labor costs/concerns.
However, there have been many barriers to moving to this higher level and even “lights out” distribution, not the least of which was that it was difficult to truly automate many DC processes, perhaps most importantly, full case picking and multi-SKU pallet building. The vision was emerging, but the reality lagged. Automated case picking has been really something of a “holy grail” in DC automation.
That landscape is changing, and changing rapidly. Holste and I were first struck during our reviews of the ProMat 2009 materials handling show in January at the number of new technologies focused on automating or semi-automating case picking processes.
Hence, our research and the new report. I can assure you that there has never been research like this performed in this area to date, anywhere. I can’t emphasize enough how surprised we were at the developments and what is happening in technology to automate case picking processes. A lot of R&D investment has been made, and many joint vendor-customer development projects are in play to solve the case picking and palletization challenge.
The research for the report included a survey that drew responses from over 200 logistics managers. That was followed by detailed, very insightful one-on-one interviews with a number of companies, including several supply chain/logistics executives. Then came detailed research on available solutions.
The labor and other concerns mentioned earlier were consistent themes. Not unsurprisingly, the data showed huge interest among those with large case pick volumes in new technology to automate the case picking process.
Overall, 40% of total respondents expressed Very High or Fairly High interest in automated case picking solutions. For companies with DCs doing 20,000 to 40,000 full case picks per day (at peak periods), that number jumps to 57%, and to a remarkable 76% for DCs doing more than 40,000 full case picks per day.
That is just one of the many data points and charts you will find in the report.
“We have many more labor headaches today than we did 10 years ago, and see a changing workforce with even more turnover,” one executive told us. “So across the board we are relooking at automation, and we have heavy case pick volumes.”
Clearly, some of the “new” solutions involve partial or substantial use of technologies that have been around for awhile. Others are truly new invention. We start with traditional batch pick-to-belt systems with downstream sortation as a sort of baseline, which we would say mechanizes case picking, but automates sorting and segregating. It has been the paradigm for two decades.
The great news is that an impressive array of technologies that attack the related issues of case picking and mixed-SKU pallet building from a variety of angles are already here or nearly here. Much (but not all) of this is driven by step-change improvements in software controls and computing power that is available today to drive these systems. There have also been significant improvements in the range, flexibility and dexterity of devices that can handle individual cases – a big limitation of the recent past. Major developments in robotics also play a key role. Some is just bright thinking.
In the report, we comprehensively categorize this case picking solution landscape, and are confident that this is the first time it has ever been done. Existing solutions range from big improvements in some existing solution categories, to mobile robots, stationary robots that are much more flexible and smart than in the past, systems that dispense cases like vending machines onto conveyors, high-speed gantry cranes that rapidly build pallets, a new approach to mini-load AS/RS that increases throughput and lowers cost, and more.
I wish I had time to do more justice to what is in the report, but I guarantee that if this topic at all interests you, you will find it valuable – especially as it is free. Cliff and I leaned a heck of a lot, and promise you will too.
In the space I have left, here are some key takeaways:
- The good news is the range of the solutions available now is indeed very broad, though many are, to date, little known by most logistics professionals. This range of solutions is, in part, based on different visions/research directions by materials handling vendors, and also because the needs of different industries and DCs will also vary, based on order profiles, case packaging and characteristics, cycle time requirements, floor space, appetite for change, etc.
- The epicenter of automated case picking right now is the beverage industry (beer and soft drinks), where much activity, development and deployment is happening. The food sector will be close behind, but others are testing too, including a major paint company that has already deployed a solution.
- We can honestly say that the potential of where some of this could go is breathtaking. There are examples already in Europe. It will be difficult for many companies and managers to envision this level of automation, such as drastically reduced labor counts and robots running around the DC. This, we believe, will actually be a more important barrier to adoption than ROI or technology fit.
- As Holste repeatedly reminds me, another huge barrier in the past has been flexibility to handle operational changes and varying carton sizes, weights, etc. Some of the approaches have clearly solved these challenges. Other have made improvements that have dramatically increased flexibility.
- Many companies are likely to deploy combinations of these technologies over time.
- The role of systems integrator – as SIs emerge that really understand this landscape – will likely expand, though there are truly just a handful that see the whole picture currently.
I wish I had more space. Maybe a part 2 soon. We have learned so much. Please download the report – as you can see we are proud of the effort. Look for upcoming Videocasts on the topic. There is no one in the industry that understands this subject right now as well as our Cliff Holste, and we want to find a way to make that insight available one-on-one to readers. Email us at the Feedback button below if you are interested in speaking with him.
What is your reaction to Gilmore’s column on new case picking technologies? How big is the need or opportunity? Will managers be ready for a much more highly automated DC future? Let us know your thoughts at the Feedback button below.