Thursday 29th Sep 2016 - Logistics Manager

Technology to take on the big boys

SMEs can be at a disadvantage to their larger rivals when it comes to making use of the latest technology in the warehouse. However, there is a range of storage techniques and equipment that they can use to fine-tune the efficiency of their warehouses to maximise their existing space and compete with bigger competitors.

“With smooth material flow, minimised floor space occupation, maximum utilisation of storage volume and immediate product availability, an SME can provide competitive logistics productivity and efficiency. More importantly it will give them the agility to respond to any changes in business circumstances,” says Edward Hutchison, managing director of BITO Storage Systems.

“Many SMEs will be involved in online retail fulfilment. Overall, the same advice as conventional storage still applies: reduce costs using better picking equipment that requires fewer staff and other costs.

“There are clearly many ways in which SMEs can look at their intralogistics to gain advantage. However, it is important to engage with experts in the field of storage efficiency to ensure that fine tuning solution will improve warehouse efficiency rather than constrain the company’s growth.”

Originally published in Logistics Manager, January 2015.

Originally published in Logistics Manager, January 2015.

Ian Roper, supply chain solutions divisional director at Access Group, points out that consumers now expect everybody to offer next-day delivery, guaranteed time-slots, the right product every time, and no-quibble returns policies – areas that the larger companies are well tuned into. “But with a little forethought it is possible for smaller firms to compete too,” he says.

“Start-ups may have the advantage of a clean sheet, but there are particular challenges for established, traditional, businesses moving, for example, from traditional b2b with small numbers of large orders to business customers who themselves are buffering stock, to servicing large numbers of small orders by consumers who want the product immediately. Traditional businesses are often shocked at how much time and effort is involved in picking orders for multiple single items, rather than by the pallet or case. These firms need to take techniques such as wave picking, tote picking, and order consolidation, much more seriously.” 

Faster picking

Hutchison highlights the value of order picking from live storage systems, where banks of flow shelves can be installed for new or additional pick zones in free areas of their warehouses to gain faster picking. This comes with the added benefits of reduced manpower and improved space saving and organisation.

“Live systems are particularly suited to SMEs who need to compete with larger rivals that may be benefiting from the deployment of automation.

“While live storage will initially cost more than static shelving or pallet racking, it gives a far greater pick location density – saving, for example, up to 20 per cent of floor space for small parts storage compared to static shelving, while travel time for pickers can be improved by two thirds.

“Automation gives high-density storage, predictability of operations and a competitive edge in terms of hitting service levels. However, these benefits can only be realised when there is a good business case for automating a process, otherwise a company can end up with a system that lacks flexibility and will not achieve the envisaged throughputs to deliver a return on their investment,” says Hutchison.

“Success brings its own problems for SMEs particularly when it comes to room for expansion. Instead of moving to a new location or going to the expense of a building extension, mezzanines can give an extra level or more for picking zones in what might otherwise be empty airspace.”

“A company may wish to go to a pick by voice or pick by light system to gain greater picking accuracy, but there will be a leap in cost. It can, however, spread its investment over several years with flow racking and good labelling before moving to the new technology when it is appropriate.

“Opting for a lower investment storage and retrieval solution, such as carton live storage, will see a small saving in personnel, yet the investment is relatively small so the payback period will be shorter – between three to six months. For many applications, particularly where cash flow is restricted, the principal of keeping things simple can certainly pay,” says Hutchison.

Roper also highlights the challenge of determining the appropriate balance between manual and automated systems and technologies.

“This decision is not so much about the size of the company, but rather the complexity of the logistics. A retailer of very high value items may have an impressive turnover on an easily manageable number of orders; equally a single product company may be able to handle very large order volumes with little automation. It is the combination of product variety and order volumes that can become a logistical nightmare.

“Most e-tailers experience an explosion in skus – mainly because it is so easy to add new products to the offer on the website. But businesses need to build into their systems and processes a far greater degree of scalability.

“That doesn’t necessarily mean betting the farm on sophisticated technologies such as sortation systems or pick to light – you probably need a multi-million pound gross margin to justify the level of investment. But many technologies are becoming more affordable for smaller businesses and can offer scope for future growth. Voice picking is easily viable for high order volumes in the right environment.

“However, what is undisputable for all but the simplest operations is the importance of an effective warehouse management system – after the order is placed the whole customer experience around correct, timely, in-full delivery is down to the WMS,” says Roper.

“Other aspects of WMS for e-commerce include the production of advanced consolidated order picking notes; and a variety of pick and pack routines including the ability to create a box manifest so that the contents can be established without opening the box – which sounds obvious but not every system can do that.”