With warehouse automation, it is often thought that the bigger the investment, the better the return. But new developments mean that even smaller firms can take advantage, says Johanna Parsons.
Warehouse automation is often seen as a barometer of the economy, as generally the sectors on the up are the ones that can afford to invest in the sunk costs of a sophisticated system.
For retail, and in particular e-commerce, high fulfilment and delivery expectations mean that automation is often the only way to meet the pressures and the scale of demand.
And third party logistics providers too are being braver with automation investments, to keep up with for growth and expansion for clients, often retailers themselves.
But Phil Taylor of LB Foster can point to growth from another direction being indicated by demand for warehouse kit. “Automotive is the big driver for us at the moment. Certainly Jaguar Land Rover, with its large investments into the UK is having an effect on tier one and tier two suppliers… The increasing production that they’re putting on-stream is coming through faster and faster, and 2014 will be a big year for us.”
With automotive manufacturing’s time critical production patterns, it’s no surprise that the sector is looking to streamline processes as much as possible while the cash is there. For example JLR’s supplier of leather seats has taken on an automated dispatch system, which loads finished seats in sequence onto a trailer, ready to plug straight into JLR’s production line.
And while retailers have always been early adopters of automation, the new ways people shop are creating new requirements for the warehouse – and new opportunities to take advantage.
Julian Mosquera of LCP Consulting explains: “Omni-channel simply raises the bar and demands an integrated retail platform to truly work seamlessly. LCP research has shown that few retailers have made this journey, with many just embarking on it, but all who do, will invest massively in automation to achieve this.”
“As a result, there is a real opportunity for 3PLs to steal a march, by judiciously making such an investment and breaking their current operating paradigm that typically requires high human resource in DCs. This would not only appeal to the major retailers who could develop and operate these themselves, but it would be an economic breakthrough for medium scale retailers – who cannot afford the implied investment.”
In line with the adage you’ve got to speculate to accumulate, it’s often the most ambitious projects that make the best returns. Phil Houghton of Clipper says: “There is less short termism in retail logistics now, as retailers are appointing 3PLs to implement solutions more reliant on automation technology… The sums simply don’t add up for shorter-term projects.”
“The big pressure on retail distribution centre design is the cut-off time and how you deal with an ever smaller window to pick available product, pack it and despatch it,” explains Gordon Smith, of SDI Group.
“Even the fastest mechanical systems will have a two or three hour process time, so if you want a 10pm shipping time that means you have to have transparency and access to the product by 7pm. The approach taken by many retailers is to use automation for the bulk of the work within the window and then use low-level manual activity for a quick response to last minute orders.”
Mike Alibone of SSI Schaefer says: “The most successful systems are those that combine storage, order picking and replenishment within a single system. Sequencing picked product for packing and loading is becoming increasingly important in this respect.”
For retailers that fulfil their own B2C orders, automation is imperative to meet the demands for speed and accuracy that amount to customer service.
Last month Logistics Manager exclusively revealed that John Lewis has enlisted Dürkopp, the hanging garment specialist acquired by Knapp, to kit out its massive new fashion DC at Magna Park.
And Knapp’s Craig Rollason describes how the automated systems it supplied to Boots have allowed Boots.com to offer “order by 2pm today, collect in store by 2pm tomorrow” and “order by 7pm on a weekday, receive delivery at home next day”.
“Along with the appeal of the product range itself, this service level accounts for the current expected growth rate of Boots.com of 60 per cent,” says Rollason.
The braver investments are enabling some impressive operating models. “The most innovative example I have seen recently involved an internet only business that used some existing principles and applications regarding cross docking, scanning and consolidation,” says Paul Wilson of Davies Robson.
“Imagine a warehouse without any stock, where all received goods will be despatched today, every single item that is received is scanned and allocated to an order on arrival and when all the goods for that order are scanned and placed in the packaging the order is checked and despatched. A warehouse without stock, put away, replenishment or picking!”
But smaller scale systems are also popular. Taking a modular approach to investing in automation, mechanising certain manual handling processes, for example, gives a more focused but nevertheless compelling business case, often with faster ROI.
Alibone says SSI Schaefer has found that the chilled and frozen foods sector has woken up to efficiency gains to be made by relatively unsophisticated solutions based on a low-cost, low-level automation such as mobile racking and automated pallet shuttle systems. “We are seeing growth from the smaller owner-operators who want to manage their stock by reducing or removing the overhead costs associated with running fork lift trucks.”
And Taylor says LB Foster is seeing even the big grocers like Tesco and Morrisons looking to take advantage of optimising such basic operations. He gives the example of a pallet storage operation that uses lots of forklifts to ferry pallets back and forth. “Just putting in pallet conveyors saves half the running of the trucks, which makes a massive saving even though it’s not an all singing, all dancing set up.”
Another stand-alone system becoming increasingly popular is the waste conveyor. These are especially useful for sites dealing with product returns, of which there are becoming more and more, as e-commerce grows.
“If you’ve got five people going around collecting waste to keep the area clear, and you’ve got five people loading the bailer, very quickly an overhead conveyor becomes easy to prove in terms of payback,” says Taylor.
And e-tailers are beginning to use automated systems as marketing tools to differentiate brands. As well as enabling incredible order turnaround times, automation can also offer uniform finish and high grade presentation. “Our client John Lewis, for example, is one of the e-tailers leading the way when it comes to delivery presentation,” says Rollason. “With e-commerce meaning that there’s no fancy store, designer bag or courteous shop assistant, the customer experience beyond the doorstep is absolutely crucial.”
And for the future, Taylor sees the higher end of automation, specifically robotics, becoming more accessible to even low tech users.
For example, Knapp’s first installation of its Pick-it-Easy Robot is taking place now at a dental supplies company in Benelux.
Taylor cites the rapidly dropping purchase costs of such technology, the unparalleled reliability, and the running costs, compared to manual labour. In contrast to an annual wage, with additional managerial costs, a robot can cost as little as £25,000 to £30,000.
That means a return on investment with a couple of years, and you can add to that the fact that a robot can be expected to keep running for 10 – 15 years, with minimal running costs, and no days off sick. Plus, as time goes on, there is an expanding market for refurbished robots.
As pressures on fulfilment operations mount it seems automation is the sure way forward. And while the big spenders might see the most impressive results, taking one step at a time, or using existing technology in new ways can give operations of any size impressive results.
Case study: Refurb investment to sweat the assets
Yearsley Logistics completed a major infrastructure refurbishment at its automated cold store facilities at Grimsby & Hams Hall earlier this year.
The business now operates four ASRS automated cold stores, and a range of Autostore warehouse management and control systems from Central Systems & Automation.
Central Systems replaced all existing crane and conveyor software with the Autostore Crane and Conveyor Control Systems. Integrated with Yearsley’s I Series WMS, the Autostore WCS boosts efficiency of all material handling sub-systems in real-time. It also provides a uniform interface for the automated crane and conveyor equipment, controlling all automation across goods-in, the high bay, conveyor and marshalling operations.
The refurbishment has given Yearsley improved high bay throughput of 220 pallets per hour across a capacity of 42,000 pallets. And it has lowered Yearsley’s total cost of technology ownership by extending systems’ lifecycles.
Chris Herbert, head of Yearsley’s cold store operations, says: “Our throughput is more efficient and critically, with its exceptional product and pallet visibility and traceability, Autostore gives us accurate, fingertip control of the business day-to-day”.
Case study: Double decker sorting
TNT Fashion Logistics has doubled sortation capacity at its facility at Bergen op Zoom, The Netherlands, by installing an exact copy of its existing SDI Flexible Sortation Unit right above it, on a 5.5 metre high mezzanine.
TNT now has the flexibility to release any type of carton from any conveyor lane into either sorter. The productivity improvements from this space saving solution will produce a payback in less than 18 months.
Both machines from the SDI Group sort single and or pre-packed single garments. This now gives TNT 56,000 carriers per hour and 440 drops in total.
“Although we do not need this capacity for three years, TNT is investing heavily and early because it is vital to have capacity on hand for when the volatile retail market needs it,” said Terry Norman, development director at TNT.
“We also wanted to minimise costs. This meant optimising the cube of the building rather than just its 320,000 sq ft footprint.”