• More Than Labor Reduction

    Dec. 1, 2011
    Distribution Automation's Evolving Role

    Since the first wheels were put on a cart to allow an ox to pull goods to market, distribution automation and mechanization have grown and evolved. Sometimes that growth has been in response to the needs of product moved (would we need refrigerated trucks or warehouses if we had never discovered the joys of ice cream or other perishable products that we want to supply over great distances?). Sometimes efficiency desires in distribution, such as developing conveyors to move cartons of product efficiently or fork trucks to rapidly move large quantities of product on a pallet, drove that evolution.

    Most of those examples are now so commonplace that they may no longer be considered automation (or even mechanization). Indeed, they do seem to pale beside the newer current applications of robots and RFID or voice pick and vehicle with video recognition for guidance. No matter what the current technology application, the real evolution today is in the recognition that automation in your warehouse provides far more than just labor savings and taking full advantage of those benefits to increase your competitive advantage.

    First, to be clear, there almost always are labor savings associated with mechanization or automation. Robots pick product without the need for a pick laborer. Automated guided vehicles transport and sort palletized product without a lift truck driver. The labor saved is usually obvious and expected from such an investment. But automation can bring numerous other advantages to an operation, and recognizing them can bring a competitive advantage to a business in many more areas than cost efficiency. Any device, automation or mechanization approach that saves labor can contribute to decreasing the cycle time of completing an order — increasing accuracy in several facets of distribution operations and reducing costs outside of pure payroll savings.

    Automation almost always enables an increase in supply chain accuracy. Inventory accuracy can be the result of diligent, knowledgeable and conscientious associates (no, really it can be), but even the best associates will make errors more frequently than a properly implemented automatic picking system. Automation also can significantly increase the accuracy of the picking workforce through applications such as RF-directed picking, voice-directed picking and pick-to-light application.

    The operation saves dollars through lost inventory avoidance (the simple value of the finished goods) but accurate inventory helps avoid stock outs, reducing overall inventory levels necessary to ensure there is enough inventory available. That accuracy increase also reduces customer service failures, such as being out of stock in the face of customer demand when you think you are in stock but actually are not due to inaccurate inventory. Ultimately, the accuracy increase that automation can provide can trim inventory and increase customer service, positively improving sales and possibly market share.

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    Some automation and mechanization can decrease the cycle time required to process an order through an operation. Cycle time, in this case, is the time an operation requires to assemble and make available to ship an order, from the time the order is available to the distribution operation through to the time the order is assembled and ready to ship. Mechanization that moves orders past areas of the warehouse that do not have any product for that order, or that decreases the time an operator requires to pick an order, inevitably allows for the order to be processed more quickly.

    If a business demonstrates desired value to its customers by completing an order more quickly, perhaps to allow for receipt of the order at the customer location a day earlier by making it available to their parcel carrier before a key cutoff time, it may realize a competitive advantage. If customers desire a shorter cycle time to the degree that it is considered a service differentiator, this will allow for an increase in market share, essentially due to the mechanization or automation applied to the order fulfillment process.

    Other capabilities of automation that provide value to an operation are the accuracy increases available for the assembled orders. The same accuracy advantages brought to inventory by automation can increase order accuracy as well. This can take the form of Warehouse Management System (WMS) & Warehouse Control System (WCS) pick direction systems as well as verification devices (such as RF-directed picking, voice-directed picking and pick-to-light applications) or automation to bring the part, case or unit to the picker so he or she cannot select the wrong item or, in the extreme, have a robot pick the product directly.

    Order accuracy benefits (in addition to inventory accuracy) vary by the type of business achieving the accuracy increase. For retail store replenishment, this puts the right product in the right place, maintaining or increasing sales. For wholesale and direct-to-consumer retail operations, this ensures that customers receive what they ordered, reducing returns and maintaining or enhancing customer satisfaction. As a final example for assembly line WIP or assembly line parts supply, this drives continued assembly lineup time by ensuring that the needed parts are available for assembly when the line requires them. Here again, automation can provide an overall competitive advantage to the business, increasing sales and market share while reducing costs in other areas of an operation.

    Automation applied within particular areas of a distribution center also can benefit the transportation link of that business' supply chain. Automating or mechanizing the unloading or loading process through something as simple as an expandable gravity conveyor increases the throughput that a shipping or receiving dock can achieve, which decreases the time trailers' areas are tied up unloading, and increases the amount of product a facility can move in or out of the building over time. More fully automated truck loading systems ensure product is safely loaded without delay.

    Regardless of the level of automation applied, it can benefit transportation capabilities and costs by reducing damage during the loading process, eliminating detention charges by reducing the amount of time required to load or unload trailers and lowering transportation claims by increasing loading and unloading tally accuracy. Some applications can increase outbound cube utilization and maintain consistent loading practices, thus allowing more product to ship on a single truck. When applied to loading and unloading areas of a facility, automation can increase asset utilization, reduce claim and damage costs, and increase throughput while reducing costs in other areas outside of the facility.

    Automated and mechanized applications within the warehouse environment provide far more advantages than simply labor savings. When considering automation, while understanding the productivity improvements that it should enable, do not lose sight of the additional improvements it can bring. Those improvements, depending upon the type of technology implemented and the nature of the operation to which they are applied, can enhance inventory accuracy, order cycle time, order accuracy and transportation costs. Recognizing these additional benefits and maximizing them to the greatest extent possible will allow you to rocket ahead of your competition as they trundle along to market in their ox-drawn carts.

    Bryan Jensen has 27 years of experience in retail and wholesale distribution, ransportation and logistics and is a vice president and principal with St. Onge Co., York, Pa., assisting clients in identifying the optimal picking approaches for their operations. St. Onge Co. is a material handling and manufacturing consulting firm specializing in the planning, engineering and implementation of advanced material handling, information and control systems supporting logistics, manufacturing and distribution since 1983 (www.stonge.com). Contact Bryan at 717/840-8181 or by email at[email protected].