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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News

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.

June 8, 2016

Logistics News : When Is The "Best" Time To Upgrade DC Operations?

Moving Beyond the "Wait & See" Posture


While “wait and see” has been the posture for many shippers over the past few years, it is a plan destine for failure in the long-term. Historically, businesses that do not continually improve operations as required to satisfy their customers’ evolving expectations, fall behind and eventually fade away. By the time business managers realizes that current operations can no longer satisfy customers’ expectations – immediate corrective action is needed. When they understand that by adopting up-to-date order fulfillment technologies they will be able to process customer orders faster, more efficiently with fewer errors, and grow the business, that is the “time” for action.

Holste Says...

Historically, businesses that do not continually improve operations as required to satisfy their customers’ evolving expectations, fall behind and eventually fade away. 

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What are the Signs of Trouble?

Whenever inventories and/or SKU grow is so large that pick tours become way too long and/or volumes are so high that congestion makes it very difficult for order pickers to work efficiently, the operation has become inefficient and is no longer competitive. Allowing an operation to get to that point can be very costly and difficult to correct. 

Quite simply, the strength of any order fulfillment operation resides in its ability to continually process more orders and higher volumes, without an incremental increase in per piece handling cost. Shippers that fail to accomplish this will find it increasingly more difficult to compete.

Business managers need to be aware of and look for the following telltale signs of trouble:

  • handling cost rising incrementally with sales volume
  • order turnaround times getting longer as volumes increase
  • productivity drops as volume increases
  • increases in charges-backs due to order fulfillment errors and damaged shipments
  • increasing warehouse congestion with expanding inventory
  • increasing employee workman’s comp claims and higher levels of absenteeism
  • difficultly in finding and retaining quality people to work in the DC

Adopting higher levels of technology in the DC (whether mechanized, semi-automated or fully automated) will increase efficiency, speed, safety, and accuracy while reducing per piece handling cost. 

For example:   Manual picking using paper pick tickets may yield only 60 to 100 picks per hour. Whereas, picking rates of 300 to 600 per hour, with accuracy rates approaching 99.9%, are possible using more advanced picking methods such as pick/pack-to-light, RF and/or voice systems.

Factors that Drive Automation

For many shippers the need to move high volumes is further complicated by the requirement for same day picking and shipping. This is a characteristic of E-Commerce marketing which has led to higher adoption of material handling automation across both B2B & B2C market segments. In this case, deployment of automated case picking (ACP) technology is the only practical way to satisfy customer requirements for same day picking and shipping. 

However, there are other human and environmental factors that drive the move to higher levels of automation, such as taking workers out of a freezer environment or out of a noisy and/or hazardous workplace.

In congested urban areas with high land costs the decision to build up to the maximum allowable building height is often the driver for utilizing an automated storage and retrieval system (AS/RS), or Narrow Aisle Reach Trucks, vertical carousals, or other emerging space saving technologies.

And, for high value items prone to pilferage, robotic picking solutions make perfect business sense and economic cents as well.

Ergonomics and OSHA regulations can play an important role in the decision to automate. For example: Semi-automated horizontal and vertical carousels, as well as vertical lift modules (VLMs) present work to picking operators in the “golden zone” reducing the fatigue factor and increasing productivity.

When the job involves a lot of heavy lifting and repetitive motions, such as building pallet loads, using robots instead of manually building these loads is one of the biggest factors driving adoption, especially where more than one work shift per day is normal.

Final Thoughts

Through the deployment of flexible and scalable systems, upgrading to higher levels of material handling technology can be a best practice that will provide shippers with the ability to process more volume while at the same time offer more customer services without adding increment labor cost. Staying on top of marketplace and industry related developments is essential.

You can see it, touch it, and learn more about how to solve order fulfillment challenges by attending the various trade shows such as; ProMat in Chicago, IL and MODEX in Atlanta, GA. For a sample of what is available see our live on-the-spot report from the recent Modex 2016 show here: MODEX 2016 Day 1 Video Review and MODEX 2016 Day 2 Video Review.

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