Automation could be the way forward for many storage and retrieval operations, but what are the key factors determining the optimal choice. Malory Davies investigates.
Storage and retrieval is a prime candidate for automation, particularly in the light of changes in the market. Retailers, in particular, are having to deal with the growth of online shopping and the need to modify warehouses to support this at the same time as continuing to provide efficient store replenishment.
On top of that are issues of labour availability. Many warehouse operations now rely on workers from other countries in the European Union and the UK decision to leave the EU is already having an impact on recruitment of such staff.
And then there is the development of the technology itself. Modern automated systems are not only more flexible than they were in the past, very often the cost of entry is lower, particularly with the development of semi-automated systems. Not only that, the development of collaborative robots is likely to have a growing impact on the market over the coming years.
John Boulter, managing director of DHL Supply Chain Retail UK&I, argues that today’s businesses face a unique combination of challenges in terms of supply and demand which determine their choice of storage and retrieval system.
“When making a system choice, businesses need to consider the specific products to be handled and anticipate order characteristics for a minimum span of five years. Any choice will also need to be flexible, to respond to changing demands and requirements, and capable of managing inbound supply. “Businesses should also ensure that there is a compelling business case for each new system component to make sure it’s truly of value. In terms of automated systems this would usually mean that the equipment is required to operate approaching 24 hours per day,” says Boulter.
Mike Hilton of TGW Logistics argues that while there are some generic issues that affect the choice of system irrespective of industry, there are other critical factors, which are sector or industry-specific.
“We have the rapid development of a more value-conscious society that still demands convenience and choice from its retailers, but is not willing to offer loyalty in exchange. In grocery retail, for example, the trend towards smaller-size households, changes in lifestyle, more frequent but shorter shopping trips and the growth of online grocery shopping and click-and-collect have all had an impact on the industry. In apparel, retailers face the same online challenges, but with greater returns volumes to handle and a much faster turnaround of seasons and styles to manage. Grocery retailers are dealing with falling sales densities in hypermarkets and large format supermarkets. They are having to manage fluctuating inventories that may need to incorporate a broader range of non-grocery, customer-enticing ‘lifestyle’ products. They are reviewing their estates, closing stores and are refocusing on reduced store sizes or expansion through smaller ‘convenience’ outlets within or alongside non-competing third parties,” says Hilton.
“In apparel, distribution and fulfilment operations are compelled to have every product available, driving fewer amounts of individual SKUs with more selection. To compound this further, e-commerce fulfilment operations strive to recreate the store experience by inserting flyers, adding tissue and providing wrapping services. The brick and mortar apparel stores are also changing the way they carry product and satisfy the in-store customer at the same time. In many cases, retailers have downsized their store size so there is less room for inventory. As a result, stores are ordering less but more often, which means just in time orders need to be filled more frequently. In both sectors, the result is a more complex, more dynamic supply chain, where a warehousing infrastructure designed originally to service large supermarkets or large high street stores is rarely fit for purpose,” says Hilton.
For businesses looking to automate, a key decision is whether full-scale warehouse automation is required, or if more modular solutions to optimise specific tasks may be more appropriate.
“For example,” says Boulter, “we have found that new automated technologies, such as collaborative robotics are particularly well-suited to co-packing and customisation, as the robots are highly adaptable and can be programmed to take on a range of specific tasks during peak periods. At the same time, we are looking at how to harness the abilities of automated guided vehicles to drive efficiencies in warehouse environments where the use of conveyor belts or larger vehicles isn’t feasible.”
“If businesses opt for full scale automation, they need to consider whether technology can be retrofitted into legacy structures, or whether there needs to be a greenfield deployment. Ultimately, the success of any new technologies will be dependent on how well they are integrated into existing processes and the workplace,” says Boulter.
Hilton emphasises the importance of careful analysis of the available historical business data, “taking a holistic view of the entire business and generating operational models that accurately reflect its current and future requirements. It’s worth bearing in mind that maximising the fill of the warehouse envelope doesn’t necessarily mean filling it. Sifting key small data from the big data can help identify the right choices.
“For example, we automated part of an ambient case pick warehouse for a customer in mainland Europe for its slowest moving products. The benefit came from relocating its faster moving products into a more condensed space and, by so doing, massively increasing the productivity of its picking teams and the overall performance of the warehouse. The automated process begins with the storage and handling of stock in different mediums in automated pallet, carton and tote stores. Sequencing buffers and high-speed mini-load or shuttle devices then granulate and consolidate orders into multi-channel deliveries ready for onward distribution,” says Hilton.
“Automation undoubtedly helps organisations to complete more work in less time. In the not-too-distant future however, it’s likely that operations will need to achieve this and more with fewer people and in less time. Recent and on-going developments in technology have marked a sea change in robotisation. The end result is a reconfigurable, flexible product that carries out a range of highly specific tasks with a precision and an indefatigable energy beyond the reach of any human – enhancing safety and efficiency while also improving productivity for the business,” says Hilton.
Retailers particularly have to consider the trade-off between single stock pots with large scale automation efficiencies and the need for speedy local fulfilment.
DHL’s John Boulter says it is also seeing customers weighing up a similar trade-off between more manual flexibility alongside an increasing need to drive efficiencies throughout the supply chain for profitable e-commerce fulfilment.
“Ultimately, the business needs to prioritise where to invest capital and decide where it wishes to differentiate itself against competitors. ‘Low-cost’ solutions often need to be integrated with other systems and processes to realise their full ‘automated’ potential, which can result in significant extra cost. The full-life cost of an automated solution needs to be considered, as investing in a higher quality solution which could operate for decades, could prove better value for money in the long run,” says Boulter.
Mike Hilton of TGW Logistics says: “Automation can range from simple conveyor technology, through to fully automated solutions. All are designed to reduce the amount of manual handling in any given environment. Key factors that need to be considered will range from health and safety, ergonomics and the repetition of tasks, as well as the most effective way to replenish, pick and transport products in a warehouse environment. Allied to this will be considerations of where a business is in its warehouse development, in terms of its throughputs and types of activities. For example, a warehouse that only stores and moves full pallets may, dependent on its demands, benefit from High Level VNA trucks using camera technology and some form of wire guidance within the racks, operating at 14 metres high, with pallets being fed to and from the racking with standard pallet conveyor.
Return on investment
“In other solutions, this may well be a fully automated warehouse using driverless automated cranes operating in heights up to 40 metres high. The decision to automate and to what level are always going to be driven by the type of business, the demands on the business now and in the future, together with the capital cost and the anticipated return on investment,” says Hilton.
Return on investment is always a critical issue. Boulter points out that it can take six to seven years for businesses to see a return on investment from full scale integrated automation projects, and they often involve significant changes to internal processes for full integration. Meanwhile, more tactical and stand-alone automated solutions, such as collaborative robots, can pay back in as little as 18 months.”
Hilton reckons return on investment for automated warehousing solutions can often be between two and five years. “However, considering total cost of ownership early in the planning of an automated logistics installation helps businesses to estimate not only their initial investment costs but also all related costs that will accrue during the facility’s operation. To calculate TCO, it is important to understand that the true price of a logistics system is more than just the initial investment or capital expenditure.”
Sportamore picks Swisslog for automated warehouse
Sportamore, the Nordic online sports retailer, has chosen Swisslog for its new automated warehouse situated 70 miles west of Stockholm.
The new logistics centre is 23,000 square metres and will be operational during the summer of 2017. Swisslog will supply an automated handling solution that consists of an AutoStore solution, conveyor system, work stations for picking, packing and receiving, as well as its warehouse management software.
Sportamore logistics director Jonas Kolehmainen says: “The new logistics centre will give us substantial capacity to expand, as well as creating opportunities for lower handling costs and increased efficiency, delivery quality and scalability in our logistic.
“Swisslog was the supplier capable of combining an effective storage and robot solution in the form of AutoStore with an autonomous pick and pack function. A combination and a solution that we feel gives us the best of both worlds as well as flexibility to manage our future growth.”
Swisslog is also supplying an AutoStore system for Yusen’s Tuas warehouse in Singapore. The system is expected to go into operation in 2017.
Francis Kwa, head of contract logistics at Yusen, says: “This investment enables Yusen to deliver five times more put-away and retrieval throughput without increasing current operating head-count cost. Storage volume is doubled in the same storage space in the warehouse.
“Doubling the volume of storage capacity within the current footprint coupled with productivity gains is the means to gain a competitive edge in a global economy that is being disrupted by technology,” says Kwa.
John Lewis expands Magna Park campus
John Lewis has invested some £250 million in its logistics network as part of its goal of becoming the UK’s leading omni-channel retailer. Magna Park 2, its second automated warehouse went live in stages during 2015 and 2016 enabling John Lewis to boost the efficiency of its store replenishment and online fulfilment from a single pool of stock.
Knapp supplied the automated system at MP1, which opened in 2009. This connects to MP2 via a 96m-long link bridge to create a ‘campus’ operation to support further growth. Automated handling systems from Knapp’s Dürkopp Fördertechnik subsidiary allow the processing of clothing on hangers in MP2 and enable the consolidation of hanging garments with other goods for both store replenishment and online orders.
John Munnelly, head of operations at the Magna Park Campus, says: “The ability to consolidate goods in this way is crucial for the business, because some 40 per cent of fashion orders include what we call ‘binnable’ items – those stored in totes – such as shoes and accessories.”
At peak, Magna Park replenishes some 3 million units of stock to stores each week, as well as delivering some 60 per cent of online business.
MP2 has a footprint of 675,000 sq ft and a further 1.1 million sq ft of space on its mezzanine floors, giving it capacity for 1.6m garments. The hanging garment storage area has six levels. The static storage area uses Dürkopp’s ‘trolley-less’ conveyor technology. Hangers are carried directly on the conveyor, enabling single items and blocks of garments to be transported on the same system. The dynamic storage area has 126 buffers and uses Dürkopp’s RFID-controlled Rolladapter technology, which allows the use of plastic or metal hangers. Every garment carries unique product information in real time for tracking, picking and sorting. The Rolladapter system is also used in the garment sortation area, where a 3-stage sequence sorter ensures that batch-picked product is delivered in a store-friendly manner to shops, while e-commerce items are transported to the packing stations in the right sequence.
Tote storage in MP2 is handled by Knapp’s YLOG-Shuttle system, which enables shuttles to travel in both directions through the use of swivelling wheels and an innovative power supply system. With 72 shuttles serving over 71,000 locations, the YLOG store feeds totes containing flat-packed fashion items to three ergonomically designed pick-to-light stations. MP2 also features a high-bay pallet store for pre-toted buffer stock, served by five automatic stacker cranes that operate to a height of 19.4m in aisles that are 130m long.