Balancing the short term cost savings against the long term benefits is critical to the success of a storage and retrieval project. And getting the equation wrong can cost you dear…
Demands for aggressive payback performance from storage and retrieval systems could be costing companies dear, according to one industry specialist.
Steve Richmond, director of Jungheinrich’s Systems and Projects Division, says: “Employment costs are rising and one of the key benefits of automating the storage and retrieval process is the savings on labour costs that such systems allow. By opting for traditional labour intensive manual systems, companies may be able to minimise their initial spend but, over the life of the project, their costs will be significantly higher than they would be had the automated option been chosen.
“In short, the return on investment calculation is often very different if labour costs are properly factored in to the equation.”
Ed Hutchison, managing director of BITO Storage Systems, agrees that automation can bring big increases in productivity and personnel savings, but emphasises the long term nature of the investment,
“To avoid the risk of operating a costly white elephant automation should only be introduced when the business case justifies it. The flexibility of the system will also need to be considered carefully by companies seeking a solution that can meet possible changes to their operations.
“The tipping point towards automation moves closer when personnel costs are higher or indeed personnel are difficult to find or when there are high volumes that demand accuracy. This also leads to a more favourable case for automating small parts storage and retrieval.”
“The basis of most projects is a payback of around three years,” admits Craig Rollason, head of sales and marketing for Knapp UK. “This is a bit of a thorny issue because of the different interpretations of ‘payback’ – the traditional opex v capex view can sometimes be too simple, as there is a plethora of other relevant factors in the mix.
“For example, implementing warehouse automation not only improves picking efficiency but also picking accuracy, which in turn reduces returns and thereby secures significant savings. Another example would be the way in which automation could help to sweat assets; it might, for example, lengthen the life of an existing building by getting more capacity from a given footprint, thereby avoiding the cost of moving the operation to new premises.
“As to whether the balance point of the equation is changing, the simple answer is that it is always changing through the impact of a multitude of factors such as, for instance, the growth in e-commerce and the increasing importance of environmental factors in the supply chain.”
Of course, developments in technology are opening up new opportunities. Hutchison highlights the flexibility that shuttle technology can provide. This is a semi-automated storage and retrieval option that uses remote-controlled, battery-powered pallet handling vehicles that operate in pallet racking.
“The technology can transform standard pallet racking into semi-automatic pallet racking and ensure continuous and efficient in-feeding and out-feeding of pallets into a storage lane as well as keeping track of stock movements.”
Rollason points out that when Knapp introduced the OSR Shuttle range ten years ago it was a tote-based system primarily for slow movers.
“Now the addition of Fastbox buffer towers close to picking stations for the rapid retrieval of fast-movers means that the OSR Shuttle is ideal for many more applications. As well as being able to handle segmented totes, the system can now also store containers and cartons of various dimensions without having to use trays.
The range of shuttle systems has been growing. Last month Vanderlande launched the Quickstore Microshuttle – an extension to the Quickstore range of shuttles, miniloads and load handling devices, at LogiMAT.
It says the Microshuttle is a cost-effective and energy-efficient solution for low to medium throughput applications in a broad range of industries. It also offers scalability: as throughput requirements increase, the system can be expanded with additional shuttles.
Shuttles are not dedicated to one storage level but can move between different levels in the racking via a lift. The shuttles have on-board energy through the use of capacitors. This ensures that shuttles can operate autonomously, without the need for power rails in the aisles. The Microshuttle system uses wireless communication.
Vanderlande points to other benefits such as high accessibility and availability. Each location in the racking can always be reached manually because of the platforms in the racking with a distance of 2.5 metres each. It expects the first Microshuttle system to be operational in the second half of 2012.
Jungheinrich’s Steve Richmond sees a growing trend towards automation based on conventional truck technology pointing out that automated VNA trucks, for example, can be almost completely based on a standard truck which is fitted with an automation package.
“Today we can start with a standard VNA truck with wire guidance and transponder technology and, by introducing additional sensors for profile checking, centring and various other safety-related functions, adding a bus bar and automation controls for the truck’s sensors and fitting an interface to the warehouse management system – the truck becomes fully automated.
“This approach makes automation scalable. Trucks can be supplied as manual machines, upgraded to semi-automated vehicles and ultimately to fully automated systems as the client’s requirements change.”
The internet is also making its presence felt in the warehouse as multi-channel plays an increasingly important role in retail. “The continuing growth in e-commerce is undoubtedly driving the need for multi-channel DCs where clients can pick in a multitude of ways,” says Craig Rollason.
Andy Blair of Swisslog believes that multi-channel is driving the adoption of high speed picking systems and goods-to-man systems. And Brian Whale highlights the opportunity to improve utilisation density with Swisslog’s AutoStore system. “Multiple pickers at goods-to-man stations can access every storage location. AutoStore is especially suitable for internet based deliveries.”
BITO’s Ed Hutchison points out that multi-channel retail has led to a mix of adjustable shelving for slower moving items and carton flow racks, which offer a greater density of pick locations within a short distance. “Boltless versions of these systems are popular because they can be quickly and easily configured or reconfigured to handle the large peaks experienced in the online sector.”
Rollason says a shuttle system works well in multi-channel environments where is a need to serve retail stores, home-delivery customers and maybe also resellers. The OSR Shuttle offers “the flexibility to pick goods as singles or cases, with all storage, transport and picking processes optimised automatically. Some bulk storage is still required by multi-channel retailers, but only as a buffer of several days’ stock.”
In fact, automated storage and retrieval is moving within the range of more applications, as the technology is being developed to be more flexible. Hutchison points out that modular systems allow scalability while automated storage and retrieval technology suppliers are striving for designs that increase efficiency and reduce initial investment to give faster paybacks.
Andy Blair argues that the greatest potential scope is in the use of automated case handling systems. “These are generally scalable and can be used as islands of technology within an existing or new distribution centre. One of the pressures on businesses at the moment is the push from retailers back to the manufacturers. This means that some activities previously carried out by the retailers are now being managed by the manufacturers who are rapidly having to become adept at the complexities of order picking.”
However, for the end user, effective planning is vital. “It is essential that, from the outset, any company planning to update its existing storage and retrieval operation or develop a process for a new site, has a clear understanding of the type of products that will be stored and handled and the throughput levels it expects to achieve if optimum efficiency is to be achieved,” says Richmond.
Case study: Fast picking for fast fashion
Austrian 3PL JCL Logistics provides distribution services for a Swiss fashion brand, and recently invested over 18m euros in a logistics centre at Werndorf that accommodates some 2 million hanging garments, 15,000 containers and 10,000 pallets. The 484,000 sq ft site uses automated material handling systems to meet B2B and B2C demands in a flexible way.
At the heart of the order picking operations is Knapp’s OSR Shuttle system which uses an independent shuttle on every level of the storage cube, served by dedicated lifts at the aisle ends. This system achieves up to six times the rate of totes in/out than a traditional ASRS, while having about a 20 per cent smaller footprint.
JCL was the first Knapp customer to have the Fastbox buffer storage product installed. Fastbox is a tall storage tower for containers, trays or cartons, served by the ultra-rapid lift module from Knapp’s OSR Shuttle storage system. Any number of these Fastbox buffers can be located directly adjacent to the order picking stations and used to store fast-moving products, such as lines on promotion. This is designed to maximise picking speed for frequently required goods. Fastbox towers can be up to 12 metres high.
Case study: SSI Schaefer for Harrods
SSI Schaefer is installing an automated storage, handling and picking system at Harrods’ new 240,000 sq ft distribution centre at Thatcham near Newbury.
The system includes four aisle miniload cranes system, transport, replenishment and picking conveyors, automated goods to man workstations with pick by light technology, medium item shelving, man up order picking in VNA pallet racking to 12 metres, big ticket high bay racking integrated with special large product order picker machines, process area workstations for inbound stock handling and outbound store preparation, 10,000 store delivery totes and handling equipment.
The retailer is relocating from its existing site in Osterley. Simon Finch, deputy director, distribution at Harrods, said: “From the outset of this project we were looking for a turnkey supplier that could project manage the entire fit-out of the warehouse, and we found this in SSI Schaefer.”
SSI Schaefer will also implement SAP’s WMS – Extended Warehouse Management. The new warehouse will hold some 10,000 product lines while many more SKUs will be cross-docked and delivered to the Knightsbridge store continually throughout the day from its convenient location off the M4.