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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News - Sorting It Out

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.

March 28, 2018

Sorting It Out: Is Automation Right for Your Business

It May Depend on Five Readiness Considerations


MODEX 2018 begins in less than two weeks (April 9–12) No doubt there will be lots of interesting automation technologies on display. The most prevalent question among many shippers attending the show is – Can we benefit from Automation? Or, perhaps an alternative question maybe – Is automation right for our Business Model?


With March madness in mind it should be noted that automation is not a “slam dunk”. Along with these two initial question are the - what’s it going to cost and how are we going to pay for it type questions. Given all the automation options that are on display at the show – it can be a bit overwhelming. So the trick is to stay focused. To help with that SCD suggest that the following five considerations should be given some thought prior to attending the show.

Holste Says...

It is imperative that the automated solution be sensitive to changes in your business model and activity level.

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1) Can you define your order fulfillment requirements?

Integrating automated processes into an existing operation requires a clear definition of process steps, projection of activity rates, analysis of customer order profiles and value added services. Some of these receiving, picking and shipping operations may benefit from automation others may not, so their definition cannot be ambiguous. This is an opportunity to get cross-functional alignment on how your business really operates.


2) Do you have repetitive processes that are straight forward enough to automate?

Although it is possible to provide automated solutions that cope with highly variable processes and demands, it is generally far more expensive than one in which the same steps are repeated. Not all order fulfillment operations will fall into this category, i.e., value added services, but most should.


3) Can exceptions be integrated easily into the automated solution?

Operational flexibility and adaptability are key considerations. Customer order and SKU profiles frequently change. So it is important to understand how automation will impact on customer service levels. When routing complexity or buffer requirements begin to add significantly to the cost, and/or risk, handling these flows manually off-line, may need to be a part of the solution.


4) Does the company have the time and internal resources to take on an automation project?

Successful projects require the dedication of a project management team. The time commitment will vary based on project size and complexity, but could easily last for a year, or more. People who are capable of filling these slots are generally those who have been key players in the normal on-going operation, so their availability and level of involvement must also be considered. Hiring an independent industry expert/consultant will not reduce the need for internal decision makers.


5) Does the company have the operational skills and discipline to manage an automated solution?

After the automated solution has been purchased and installed, internal resources will be required to manage, operate and maintain the operation. Managing the synchronization of automated and manual operations is critical to maintaining high utilization and productivity of the integrated system. This may require a skill set that is not currently available.


Once you have considered the above five readiness questions, there are two more considerations to take into account. Both relate to the actual system design.


It is imperative that the automated solution be sensitive to changes in your business model and activity level. This is not easy. As hard as you try, predictions for the future will be problematic. As a result, any automated solution must be sufficiently robust to adapt to a reasonable range of variation. That may necessitate adding more resources on a demand basis, for example – adding more picking robots or automated guided vehicles, or maybe supplementing with human resources. This capability must be built into the operating plan.


Other consideration have to do with throughput capacity. How much is enough? Can you level the peaks by deferring or advancing work? Can you handle a portion of the peak volume off-line? Do to the non-recoverable cost most companies prefer to avoid working extended hours and/or adding a second shift.


Final Thoughts


These considerations are not meant to scare you away from automation. They are intended as guidelines to help ensure its success. Henry Ford once said, " If you need a machine and don't buy it, you end up paying for it without ever benefiting from it." So, if automation is right for the company, then you have an obligation to consider it.

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