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.

January 24, 2018

Sorting It Out: DC Automation – Overcoming Perceived Barriers

Adopting Automation is not a Question of “If” but “When”

With multiple DCs, complex supply chains and marketing channels, today’s shippers are continually searching for ways to do more with less. Consolidation of multiple warehousing and distribution facilities, while cost effective from a square footage perspective, places more pressure on material handling resource, controls and software systems to handle multiple tasks in a high capacity environment. Filling orders placed through multiple channels across a proliferating SKU count keeps business managers seeking the most efficient order fulfillment technologies.

While several well known shippers have embraced automation, small and midsize operations are for the most part not automated. They typically have forklift trucks and perhaps a network of conveyors and pushcarts to assist in moving product to and from various locations and operations within the DC. Most of them are doing a commendable job shipping orders to customers within a few days of order placement. However, as volumes increase they are forced to add incremental labor to compensate. Therefore, higher shipping volumes may not yield higher profits.

Many small to midsize shippers see higher labor cost as an acceptable trade-off for maintaining operational flexibility, agility, and high customer service levels. However, at some level manual methods cannot keep up with demand. Shipping delays begin to degrade efficiency and choke-off growth. Extended working hours and/or adding a second or third shift increases operating cost. It’s a downward spiral that can put the business at risk. The fear is that their current manual methods will not scale-up to support order fulfillment and shipping operations as the company grows.

Holste Says...

Most industry experts agree that before a shipper considers adopting technically complex systems it should examine its core operational areas such as, receiving, put-away, picking, value-added services, order consolidation and shipping to determine how they can be simplified and streamlined.

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Proven automated order fulfillment systems, similar to the one pictured below, have been available for decades. According to various SCD surveys, while shippers are interested in automation, perceived loss of operational flexibility and agility are the main reason they avoid it. They fear that they won’t be able to satisfy their customers’ increasing demand for value added services (VAS) and faster response times. In addition, for some shippers there is often an in-house technology gap.

Once this is completed, what remains should be at a point where automation could be added without excessive complexity and overstated justification. This approach, referred to as phased implementation, allows for a somewhat easier transition to automation. In addition, a phased approach allows for adjustments (corrections) to be made before moving on to the next step.

While fear of technology can be a show stopper for some, for many others the operational benefits derived from advanced material handling technologies outweigh the challenges associated with managing them. These top performers are leveraging more automation technologies, have better data visibility, and work harder at cross-training their staffs.

Next week we will cover DC Audits which are often the first step toward improving operations.

Final Thoughts

While automation adoption rates are steadily growing, improved warehouse and distribution center productivity remains a goal for some shippers, not a reality. Perhaps a solution can be found at: MODEX 2018 April 9 thru 12, in Atlanta, GA. You can check it out and pre-register at www.Modexshow.com

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