Retailers are being challenged to come up with inventory management strategies that meet extreme new delivery demands. Automation is increasingly being seen as a solution.
Retailers, and specifically their warehouses, are under serious pressure. With next day delivery of orders placed at midnight, and delivery within 90 minutes as well as click and collect options, shoppers are spoilt with incredible service options. But it is warehouse operations that have to follow through on delivering the products, and the promises.
“Concepts such as instant order placement to delivery have become common practice, pushing the boundaries further on delivery lead times – increasing pressure on operations tenfold,” says Andy Murden of Kewill. “Therefore it is critical to have the systems in place which can direct, segregate and prioritise orders, alleviating pressure on operations and streamlining the order process to ensure lead times are met.”
And with such tight timeframes creating super-human tasks, automations is often the only option. Swisslog’s Brian Whale says: “Most existing warehouses are not able to provide the small piece picking. To offer a 90 minute delivery slot is both expensive and difficult to achieve. This is where automated solutions provide the tool to pick and sequence orders such that they are available at the truck loading door early enough for hitting the delivery times.”
Martyn Broadhead of Intermec agrees that this trend for extreme delivery options is making investment in automation positively essential “These demands are forcing operations to make huge improvements in their ‘dock to stock’ cycle times and comply with the ‘perfect order index’ (shipped on time, complete, damage free and with correct invoice)…
“Investments in technology enhancements are imperative to make sure customer satisfaction is maintained.”
Automation is already ubiquitous for retailers dealing with products that can be moved and stored in standard load units, such as garments or CDs, but a bigger product mix is a huge challenge for automation systems.
Product mix challenge
This is really felt in the grocery sector where each order will have many items from all across the store, and each item will have different considerations for picking. Orders must be assembled and despatched without falling short of temperature requirements. And while tins of beans may seem easy to deal with, it’d be best not to dump them into a tote of delicate fresh produce.
Bob Gill of Total Logistics suggests that the next big potential leap forward will be the development of a system that will be able to handle grocery cases to accumulate supermarket orders, specifically if it can address the complexity of the pick itself. “A range of methods have been designed to provide the product to the person in the most effective format to minimise walking. These include conveyor loop, mini-load or dense storage cell and iCollector.
“Kiva (robotics) seems to offer an interesting alternative as it is more flexible and scalable to grow as the business expands,” says Gill.
Craig Rollason says that Knapp has won business with grocery and department stores since it bought the overhead conveyor systems firm Dürkopp Fördertechnik, as it had the means to handle these clients’ more diverse product mix.
The channel factor
However, each application will require a different balance of automation, depending on the physical properties, volumes and variety of product lines, but also the order channels on offer.
“We have seen a trend recently among multi-channel retailers to push their ‘collect in store’ service,” says Rollason. “This method has obvious benefits for the retailer in terms of minimising picking and delivery costs, as well as driving footfall and opportunistic sales at their retail stores.”
“The key point is how the goods are then picked and prepared for the various order streams. The reality is that it’s very much down to the nature of the distribution network of the retailer in question. For example, the logistics system we supplied to Boots’ new distribution facility in Burton-upon-Trent earlier this year is a multi-channel one but it’s predominantly for e-commerce.
On the other hand, the multi-channel solution Knapp delivered to the Austrian third-party logistics supplier, JCL Logistics, fulfils B2B and B2C orders but its operations are mostly for supplying stores.
And there is also the question of blending the channels. Whale points to the fact that Swisslog’s AutoStore can be installed to a live warehouse, and service both shop replenishment and internet orders at up to 3,000 order lines per hour.
As well as how to address the different channels, retailers must also consider when, and how much they should cater for. Phil Steeds of TGW says that it is often a case of scaling operations up as demand for better delivery offerings increases.
“For a high street retailer launching an online or catalogue operation, for example, an area of an existing site is usually used while volumes grow to justify a standalone facility. However a different picking regime is required compared to a bulk to store warehouse solution, so the materials handling system needs to be approached in a different way to integrate with existing systems.”
And automation doesn’t always mean a massive installation. Jungheinrich supplies trucks that can be upgraded to semi or fully automated vehicles as requirements develop, and its Auto Pallet Movers can operate as a stand alone product or be integrated into a WMS.
The widely held opinion is that it is preferable to share stock, and fulfilment operations should be shared across the channels. However there is no getting around the fact that each channel has divergent service requirements.
“The orders in a multi-channel world are very different from those that supply retail outlets. They are characterised by being smaller, on a tighter lead-time and also absolutely required (they cannot be substituted or changed)… There is often a need to batch multi-channel orders so that they mimic the picking characteristics of a store order. It can be highly challenging to create automated solutions for both store and customer orders without using a secondary method of sorting customer orders,” says Gill.
“Environments where customer orders are the majority (for example Amazon or Office Depot), have conveyor picking loops linked to carton erection and sealing to deliver an efficient operation, though feeding store orders through such a process is challenging.”
But it is just such challenges that retailers expect automation to fix. For automation firms like Crisplant, being able to offer a piece of kit such as its LS-4000 sorter which uses up to 75 per cent less energy than conventional motor powered sorters, means offering an added incentive to retailers. Although this is just an ancilliary benefit.
Brian Jones of Crisplant says flexibility was the main requirement of an installation commissioned by New Look “We are currently finalising an installation for New Look in the UK, which, with an LS-4000 Cross-belt sorter at its heart, has the flexibility to operate at three different speeds, allowing it to optimise the sorting capacity while minimising wear and tear, noise level, and power consumption.”
The primary demand of any automation system is that it will make a valuable return on investment. In a time of tight margins and precarious market conditions any investment will be well rationalised but this seems to be working in favour of automation as there are real benefits to be had.
“The balance of benefits versus investment has often delayed decisions where marginal ROIs have been realised. However automation solutions normally produce powerful benefits and returns of approx 10-20 per cent depending on solution set,” says Murden.
And Gill says the business cases become clearer if retailers are willing to consider a longer term forecast of five years or so. “The absolute cost of equipment is also coming down,” he points out.
This is good news indeed. As consumer demands force retailers into offering seemingly impossible levels of service, warehouses are having to catch up fast.
With product and channel mix making every operation’s requirements different, there is certainly no catch all solution. But there may well be an automation answer for every challenge. And the range of systems and equipment on offer means that if retailers do like their customers and shop around, automation will be indispensible.
Case study- Autostore for Asda IDC at Lutterworth
Asda is to use Swisslog’s Autostore automated goods-to-man system for its small case product lines at its Lutterworth IDC.
Ant Everett, head of network development for Asda Distribution, said: “We have been looking at a number of ways to improve the use of space within our existing distribution centres. Asda is very excited about the emergence of this innovative technology that will transform the way in which we handle small-case products.
“The IDC is already one of the busiest depots in our distribution network. The ability to re-engineer our facility and build a space-efficient and ergonomic materials handling application that can integrate with our existing operation and systems was therefore a key selection factor.
“The Swisslog design team has shown great aptitude in understanding the needs of our business, and has demonstrated a willingness to customise the application to meet our unique requirements”.
Installation on the site is ongoing, working around the existing operation. This assembly will be Swisslog’s largest AutoStore installation to date, and will be delivered in two phases.
The design incorporates more than 70,000 storage bins and 160 robots, linking eight ergonomic decant stations with a dozen goods-to-man picking ports.
The system will allow Asda to manage several thousand different stock keeping units, while allowing further phased investments to accommodate more bins in line with the site’s developing requirements.
AutoStore enables efficient warehousing and order processing of small cases and single items in a very compact area. The system aims to make the best possible use of space teamed with extremely dense storage, as robots on the top of the grid automatically store and retrieve goods with minimum space requirements.
Compared to traditional automated solutions, Swisslog reckons AutoStore allows far greater capacity and storage density, with up to 60 per cent more goods stored in the same space as a conventional warehouse.
Case study- Robots with Roses
Kraft Foods commissioned CKF Systems of Gloucester design an automated robot re-circulating distribution system for its core Cadbury brands Roses and Heroes at its Bourneville factory.
The automated distribution centre had to meet production requirements, eliminate cardboard waste and provide safeguards to the integrity of the chocolate assortments.
The wrapped chocolates that make up these assortments used to be moved through the factory in cardboard boxes. Operators would remove the boxes from pallet stacks, open and tip the boxes into the designated hoppers for sorting into the assortment collections, leaving empty boxes to be crushed and removed from the packing area.
CKF designed a more efficient system, which has now been installed in three production areas and over two floors.
Now, an automated robotic system with high level delivery and return and vision controlled distribution, automatically feeds the two packing plants.
The wrapped chocolates are handled in open plastic tote bins allowing the high definition vision systems to identify product type using the latest recognition technology.
Four ABB 4-axis IRB 660 robots, with vacuum tooling are arranged in a balanced cell format. Each has six pallet-feed conveyors to receive product and to discharge re-palletised empty tote bins.
The chocolates are identified by one of two HD vision camera stations, and loaded into the appropriate robot cell in-feed. On demand from the packing plants, the robot then de-palletises the tote bins with a custom designed vacuum head and places them onto the delivery system to the re-packing plants.
Tote bins are moved along a conveyor system routed through the factory over two floors. The system incorporates spiral elevators and de-elevators, reject stations, intelligent accumulation, automated tote bin tipping and manual feed operations for each plant.
HD cameras are located at the entry to each packing plant distribution system. This defines and distributes the totes of sweets to the correct hopper lane, to ensure the correct mix goes into each box.
Across both plants there are a total of 35 lanes with intelligent accumulation, giving sufficient buffer capacity prior to the automatic tipping machines. Developed specifically for the project by CKF, the tipping machines deliver chocolates into the feed hoppers upon demand.
David Moreton, BD&E project manager at Kraft, said: “Given the volumes of these two packing plants we have improved operational efficiency with additional positives brought about by the reduction in material movements, vehicle activity and cardboard usage. The automation has enhanced our environmental programme and, importantly, decreased the plant’s carbon footprint.”
“For Kraft, investment in robotic and automation applications is essential to remain competitive.”
Case study- Euro DC update
VF Corporation is one of the world’s largest apparel companies, with more than $9 billion in annual revenues and brands including The North Face, Vans, Lee, Wrangler, Reef, Kipling, Eastpak and Jansport.
Its European distribution centres in Belgium and Czech Republic supply conventional retail, VF’s own retail stores, outlet stores as well as the firm’s growing e-commerce business.
Operations at the Belgian DC were outgrowing the available space, requiring a new DC nearby specifically for the North Face brand.
Total Logistics produced a concept design for the DC, that would accommodate the changing order profile. It also managed the tender process with materials handling equipment vendors and the contracts. VF retained TL through implementation and testing.
The new facility handles a 17 million units annually throughput at a reduced operational cost. The solution included 16 Mini-load cranes accessing 200, 000 carton storage locations.
The picking operation is spread across two levels of mezzanine floor, with 64 semi-automated workstations for value added services.
The concept design phase identified an automated solution would provide a cost per unit reduction of €0.14 and a payback on investment of 2.7 years.