Logistics Manager Magazine

Warehouse operations have become increasingly complex over the past year as companies have been forced to diversify to remain competitive, but at the same time downsize teams and stretch budgets further. The market is now beginning to recover, so the race is on to find ways to improve efficiency, increase productivity and reduce costs. As such, the role of automation is being given a fresh look.

One of the key benefits of automation is its ability to reduce labour costs, which in many instances represents the largest overhead in any given warehouse or distribution centre.

By implementing an automated storage and retrieval system, Richard Price, sales manager for materials handling at Kardex, says it is possible to increase productivity by some 400 per cent. “Or put simply,” he says, “it allows companies to get twice the amount of work done with half the number of people.”

Furthermore, automation can boost pick accuracy helping to lower inventory and free up cash, explains Price. “If there are inaccuracies then companies have to overstock by around 20 per cent to allow for errors and keep productivity lines running at all times. To put it another way, if you have a stock holding of £1 million and you’re overstocking by 20 per cent, you immediately release £200,000.”

Bjarne Johansen, systems engineer at Crisplant, points out that automating a warehouse secures processes and all data connected to processes including track and trace. “It enables a fast reaction to market demands; providing reliable and accurate information like delivery schedules, storage/stock status, ordering of replenishments, control of resources, automatic ordering and invoicing, data-flow statistics and history.”

Storage capacity can also be increased through automation, says Mike Alibone, business development manager at SSI Schaefer. “Automating any storage system removes the need for human access to the stored product meaning that a higher storage density can be achieved. This allows distribution centre operators to ‘sweat their asset’ without the need to consider moving to larger premises as their business increases, therefore keeping costs low.”

SSI Schaefer recently launched the Schaefer Orbiter System, a deep store pallet shuttle system which provides dense storage for a high number of pallets with a low number of SKUs, while at the same time reducing the need for an extensive forklift truck fleet and a large number of operators. It is capable of travelling up to one metre per second and allows for high density storage with channels of more than 20 pallets in depth with availability of specific pallets on demand using selective racks mounted on mobile bases.

The Orbiter claims to increase capacity compared to traditional drive-in storage methods and features a power supply that allows it to be recharged each time it enters the docking station.

Long life power caps mean the system can also be used in deep freeze environments without loss of power or operational efficiency. Alibone reckons the capacitor charging system will last up to 11 years in an ambient environment, compared to a battery which may only last up to six years in other shuttle systems.

Impact

Andy Robinson, managing director of Autotech Controls, says that although the recession had a huge impact on business, he found that projects with a duration of two years or more were unaffected as they simply could not be stopped. “Large projects are a bit like ocean liners,” he says, “there’s a lot of effort involved in setting them going and then stopping or turning them is almost impossible. Smaller projects, however, have been in limbo, with most companies delaying decisions until the economy improves.”

Automated systems now have to address a wider range of challenges than ever before as retailers have expanded operations to incorporate additional retail formats and sales channels over the past few years.

Steve Baker, head of Dematic’s Global Industry Solutions Team, says: “The major supermarket chains, for example, now encompass convenience stores, high street supermarkets, edge of town superstores and hypermarkets, and major e-commerce operations. These diverse formats bring with them an equally wide range of order profiles, and all stores need to be served by sequenced deliveries that minimise the amount of time it takes to get them on the shelves.”

Above all else, he says, “automated logistics needs the inherent flexibility to respond quickly to a fast changing market”. However, it seems one of the key reasons companies are wary of automation is the worry that it won’t be flexible enough.

Craig Rollason, head of sales and marketing for Knapp UK, says: “It never ceases to amaze me that there are many companies that could profit from automation but which are blinkered to its benefits through misplaced fears about inflexibility and slow return on investment. The simple fact is there are very few firms with manual handling operations that would not benefit from automating at least some of their processes.”

There also seems to be a preconceived view that automation is only an option for larger companies, but this is not necessarily the case, says Pieter Feenstra, managing director of Swisslog. “Automation for any sized operation starts with having a decent WMS system, which allows a better control of material and information flows, a better control of inventory and, especially when equipped with voice picking, improved pick rates.

“With a reasonable expenditure, and we are not talking millions, all of these factors can lead to lower costs. Smaller companies in particular may opt for ‘pockets of automation’ – standalone areas of automation only where justified. This could include elements such as a small AGV solution to transport and store pallets, ideal for smaller bottling companies operating in three or more shift operations.”

Terran Churcher, chairman of mobile data specialist Codegate, agrees. “Regardless of size,” he says, “warehouses are now able to invest as little as £10,000 to get automated picking, stock-taking, put-away and goods movements.”

During the recession, projects large and small did get put on ice somewhat as the finances just weren’t there, but as we come out the other side even companies previously unsure or uninterested in warehouse automation are considering it afresh, according to SSI Schaefer’s Mike Alibone. “Most interest is coming from internet retailers who have seen a significant growth in sales as the number of online shoppers continues to increase, putting pressure on e-fulfilment operations to a) maintain delivery performance, b) use storage and operational space more effectively and c) keep operational overheads to a minimum.”

Dematic has noticed a rise in interest from new customers too, says Steve Baker, particularly from those looking to tackle issues such as “shortages of labour, the pressure to improve workplace ergonomics, the need for better control of product, and the simple increase in operational efficiency”.

While enquiries are up and there is more interest in automation projects compared with a year ago this has not yet lead to more projects receiving final board approval. According to Richard Price of Kardex this is because the point of decision making has changed.

“Before the recession it was different because the heads of different processes had more control of budgets. Now any spending has to go above them to the financial level. At this level there is more detachment because they will be looking at the bigger picture for the company as a whole – not just what is best for that specific problem. It could be that another area of the business is currently more in need of the funds.”

For companies which are ready to make the leap but can’t necessarily afford or justify a one-off payment there are options. Gursh Atwal, sales manager at AEB (International), says: “The financial market is supporting this trend [of renewed interest in automation] by increasingly offering leasing options, enabling business to take full advantage of currently still available price-benefit packages without the immediate full investment impact.”

Clive Fearn, marketing director at The Barcode Warehouse, concurs. “One of the things we are seeing a lot more of is a requirement to lease products/solutions, removing the need to find large amounts of capital up front. Leasing enables organisations to deploy new equipment quickly when budgets are tight.”

Although companies might not be ready to jump head first into large scale fully automated projects, Keith Edmonds, head of sales at Logistex, says there is considerable interest in upgrading and modernising systems, “which often achieve most of the benefits of an entirely new system, but at far less cost and with less disruption”.

Caljan Rite-Hite recently started a refurbishment project with Siemens at a facility in Germany. Telescopic conveyors are used at each end of an automatic sortation system, which extend into vehicles and containers, enabling parcels to be loaded and unloaded in the most efficient way. The conveyor system is used daily, so in order to minimise disruption five teams were set up to work at different locations in the hub, refurbishing five booms at a time so that no one area was unduly weakened. This approach means that it will take several years before the project is completed. During the first year, 484 unloading telescopic conveyors were checked and refurbished, and in total 129,134 parts and 12km of belt have been replaced.

Gursh Atwal of AEB says that while updating current systems is always a more financially attractive alternative to a new system, new business requirements and ideal workflows must be carefully measured against the existing system’s design and purpose as there is a “fine line between extending a system to perfection and pushing it outside of its initial scope”.

Continual evaluation

Additionally, Codegate’s Terran Churcher warns that it shouldn’t be about extending the life of existing systems, but the continual evaluation of the cost per movement within the warehouse. “A warehouse automation system installed five years ago will require more people and be more costly to maintain than a new equivalent. Add higher labour to higher support and the cost per movement becomes greater than the newer system, ergo less competitive. Each year the curve on the ROI graph turns downward when compared to the newer, more efficient alternative.”

Regular and timely service and maintenance can go a long way to keeping systems running efficiently and reducing costs in the long run, says Ebb Kretschmer, head of customer services for Knapp UK. “The downturn has obviously put pressure on budgets. Companies are having to do more with less and are very interested in solutions to prolong the operating life of their handling equipment.”

Thermal imaging is used in everyday maintenance routines at all four UK sites where Knapp has resident customer support teams. “At the site of one of our resident maintenance contract customers,” he says, “we estimate that use of our thermal imaging camera has saved the client over £250,000 in potential repair and downtime costs in just three months.”

Kretschmer believes clients are increasingly realising the benefits of having support engineers permanently based on site. “As well as the obvious advantage of fixing any problems quickly and efficiently to minimise costly downtime there’s also the fact that on-site engineers often prevent problems from even occurring, whether by preventive maintenance or simply by proactively thinking about where potential problems could arise.”

Maintenance regime

Similarly, Swisslog’s head of customer support Ian Channing says: “By providing a planned maintenance regime, customers can enjoy a guaranteed availability to satisfy their operational business model and just as importantly they can plan their financial expenditure to suit their overall business model.

“Over the past five years we have seen a dramatic swing towards all inclusive contracts. These enable customers to budget for the duration of their contract with no surprise bills lurking around the corner. Any failure in the equipment invokes a penalty which would be funded by the maintenance provider.”

Richard Price of Kardex agrees that customers are also much more interested in total cost of ownership. “Previously, companies had been looking for a one night stand rather than a long-term relationship. A system will last ten to 15 years so the company that customers buy from is as important as the product itself. Maintenance and service has always been critical. It is a key part of the equation and if it’s not then that company hasn’t got a viable proposition. It is a prerequisite to be credible over the long-term.”

When it comes to using automation to become more environmentally friendly, Price reckons people don’t seem particularly concerned by it. “It’s more of an indirect benefit as financial return is much more of a consideration. Of course companies are keen to be seen as green, but a lot of that has been put on the back burner in light of the recession because companies have to be 100 per cent sure about the business case for investment. You survive on financial efficiency, not green efficiency.”

Similarly, Andy Robinson of Autotech Controls, says: “we’re not seeing any real impact of environmental projects. Green issues are often mentioned in a project but they are rarely the main driver in the decision to invest in new infrastructure. However, environmental impacts must be considered during the implementation and design phases, and we are currently working on some automotive, airport and logistics projects where the environmental factors are a key consideration.”