Understanding just how automation technology can be deployed within the warehouse to best effect can make a significant impact on a company’s performance.
Results of a survey published in January by analysts, Aberdeen Group, indicate that top performers have already built-out their inventory control and order picking processes, and are now turning to innovations in put-away, replenishment, and returns processing to stand-out above the competition. Those companies that have made large investments in capital equipment such as parcel sortation and AS/RS have, according to the report, consistently reaped benefits through reduced labour costs and improved levels of on-time shipments.
Although the results predominantly reflect activity in the US (75 per cent of respondents), 10 per cent and 8 per cent were polled from Europe and Asia, respectively and offer some significant findings regarding best practice.
It seems best-in-class companies have moved beyond using bar-code scanning and are now using pick-to-light and voice technologies to reduce labour costs and improve picking accuracy. But interestingly, the report concludes that ‘Despite the strong correlation to improved performance, overall adoption rates for warehouse automation remain fairly low. Some technologies still suffer from outdated misconceptions about up-front cost or lack of flexibility. Piece pick operations are a key sector with tremendous untapped potential to improve their bottom line through utilising warehouse automation to a greater extent.’
This point about automation reducing flexibility is an old stumbling block. However, according to David Armstrong, logistics director at food manufacturer, HJ Heinz, speaking at a Supply Chain Standard roundtable in January (an event sponsored by automation company Swisslog), ‘You can design the system to do pretty well anything from full truckloads to small packages if you have the money and can show the payback. But high regular volumes show an easy payback on automation – for the ‘tail’ you are generally better going into partnership with a company that has that as it’s core business, keeping your own ‘core’ clean: or you have to build in a lot of flexibility.’
A clear message that came out of the roundtable discussion was the need for an automation project to be viewed as a wider business change programme that stretches back to factories/suppliers and considers the manufacturing standards, packaging, palletisation of goods, labels and codes. As Armstrong clearly indicated, ‘This has to be a complete business change programme, bought into by the packaging buyer, the factories, the customers, your commercial guy who has to sell the benefits of a different way of working: full pallet deliveries, or creating more space in the customer’s back room. If the argument is just about the warehouse, it will fail’
Automation forces supply chain integration. You have to talk to suppliers and customers. It can’t be a shortterm strategy; you need to look far ahead, which implies that a significant warehouse project will need not just ‘sign-off’, but real understanding, across functions and right up the chain of command.
There are plenty of recent examples of companies that have tackled these issues and moved to embrace technology in order to deliver competitive advantage, through lower operational costs and improved customer service. The John Lewis Partnership, one of the UK’s leading retailers, is presently investing €68m in an automated distribution centre at Milton Keynes – awarding a €27m contract to automation company, Knapp, to supply the logistics systems. The operation will involve automatic stacker cranes, goods-to-man order picking systems, pick to light technology and conveyor systems. (Incidentally, Knapp has just unveiled an interesting new concept in automated storage and retrieval systems. The ‘Spider’ uses minicranes on multiple levels which through its smaller size and lower weight offers higher rates of acceleration and deceleration, reducing power needs and costs. The system can be configured up to 24m in height and with as many aisles as required – each crane aisle is served by integrated load lifts that can transfer totes vertically between the various AS/RS levels or feed picking stations.)
In contrast, retail competitor, Debenhams, has chosen a more manual route to expanding warehousing capabilities to cope with an ambitious shop opening programme. The company has recently doubled its conventional warehousing operations in Peterborough, taking on a Prologis facility alongside its existing warehouse. Perhaps the company may consider introducing automated processes sometime in the future? I, for one, would be interested to know.
Reasons for adopting automation vary. For Danish grocer, Netto, the sums for going down the path of automation stacked up well.
Netto’s market approach is to sell recognised brands at lower prices than the competition. The range of SKUs is shallower than other grocery retailers, so the company competes on the efficiency of its supply chain. High volumes of product through-put lends itself to the application of warehouse automation.
A DC of two terminals
Plans to build a new distribution centre at Koge on the outskirts of Copenhagen started in 1999 and the highly automated facility, one of the largest grocery distribution centres in northern Europe, was completed in October 2003. The new centre consists of two terminals: A Dry Terminal that handles ambient temperature products, and a Fresh Terminal that handles frozen and chilled products. Both terminals are similar in layout and equipment usage – both operate over two floors with receiving and shipping on the first floor and picking and sorting on the second.
The materials handling equipment deployment was orchestrated by Daifuku Europe in a deal worth €27 million, utilising its AS/RS technology in ambient, freezer, and chill environments – in all, totalling 32 S/R machines. Playing a critical role in transferring pallet loads were Daifuku’s 40 high speed sortation transport vehicles (STVs) which have a capacity to transport 697 pallets per hour under the dynamic control of the warehouse management system, using spread spectrum radio to communicate with the STVs. Three automated picking devices have also been provided. Each terminal has been equipped with a 56 chute tilt-tray sortation system supplied by Crisplant (now part of FKI) and all conveyors were supplied by Univeyor.
In all, Netto’s Koge distribution centre has been designed to ship out orders to all of the company’s stores in Denmark in three to four batches per day, handling in the region of 56 stores and up to 27,000 cases per batch.
Significantly, the whole supply chain has been adjusted to tune in with the automated facility at Koge.
Cold store and freezer environments make a good case for automation. Low temperature conditions make finding labour difficult. At Preferred Freezer Services they have just signed with FKI Logistex for the supply of a further 42 Condor very-narrow-aisle automated storage and retrieval cranes, brining to more than 100 the total number of Condor cranes in operation in Preferred Freezer’s full-service public refrigerated warehouses. The high-bay VNA system is a hybrid crane, which stores and retrieves pallet loads in very narrow aisles.
An important element in any automation project is its ability to integrate smoothly with wider warehouse control and enterprise wide software systems. SAP is undoubtedly the most prominent enterprise systems provider in Europe, so ease of integration with SAP is a must.
Direct Wines (better known as Laithwaites, or The Sunday Times Wine Club) has just placed an order for an automated case conveyor system from Univeyor, based on its ability to interface with SAP.
‘Interfacing with SAP management systems is something with which we’re pretty comfortable’, says Mike Vernon, general manager of Univeyor. ‘Our PC based control system, Unicontrol, is specifically designed to communicate with other high-level systems, and the information it gathers is translated into simple commands for the PLC based conveyor control system.’
The mail-order wine company is constructing a new 180,000 sq ft distribution centre in Gloucester that will handle over four million cases of wine a year.
A system with built in flexibility
Arrow Electronics, a leading distributor of electronic components, has completed the second phase of its Distribution Logistic Centre in Venlo. The €21m investment in sophisticated and felxible systems has increased the capacity of the operation by 120 per cent.
Even before the state-of-the-art Logistic Center had been fully commissioned in 1999, the decision was taken to further expand the DLC by doubling its surface area and capacity.
The entire system technology of the existing DLC had already been designed according to a ‘stand-alone’ concept with fault-proof and individually tailored system components. All the software for all functional areas is interface-enabled and is capable of a high degree of interaction with the technology.
Vanderlande Industries had been the general contractor for the handling technology and control systems for the Spoerle Electronic distribution centre in Dreieich, Germany, in 1990 and had been responsible for the first building phase of the DLC in Venlo in 2000. The Arrow Europe logistic planning team and Vanderlande Industries therefore decided to continue their successful cooperation with the second building phase.
At its Venlo location, Arrow makes use of automation technology to ensure reliable, safe and timely delivery to over 20 countries within 24 hours. A great number of European customers are located within an 800-km radius from Venlo and can be reached by truck within a day.
Every day 2,500 shipments leave the DLC, which already has software interfaces to Arrow Nordic, the Benelux and the Alpine countries, France, Italy and Eastern Europe. The potential of the system, which is built to handle 10,000 shipments a day, is far from exhausted. When the UK operations were taken over in September 2003, shipments doubled to over 5,000, with an extra 80,000 stock locations occupied.
Vanderlande Industries’ Vision Logistics Software, coordinates all movements within the DLC. This Warehouse Control System is the interface between order management and the individual components of the operational material flow level at Arrow.
In order to ensure 24h service, different transfer times apply to the different countries. The batches are prepared after receiving the data, taking into consideration such conditions as staff, cut-off times, urgency, charges, MHDs, date codes, serial numbers, COC handling, final departure times etc.
Depending on staff resources, the warehouse management software manages all orders and gives priority to those with tight deadlines.
The DLC, which was conceived for a total of 300,000 articles, already houses 60,000 articles on some 450,000 locations on a built-up surface of 32,000 m sq and an additional platform surface of 18,000 m sq. The articles go through parallel zone picking with consolidation by an automatic warehouse system or a static/dynamic buffer system.
The software application enables fast and safe recording of delivery data, reconciliation in the goods registration system and allocation of articles and quantities to the loading units planned for storage and transport. If goods do not have to be reconciled with an order, only their article numbers and quantities are entered.
Shipments which are destined for only one customer are sent straight to the shipping area (dock-to-dock). Single-article pallets are stored automatically in the high-bay storage and mixed pallets are allocated to the unpack stations on the basis of the actual loads. After unpacking they are placed in the shelving bay locations, supported by wireless data communication.
Intensive picking in the shelving area is supported by wireless stateof- the-art data technology. After picking, goods with special handling requirements are sent to selected employees, whereas urgent orders are always transmitted to the picking operator who is the nearest to the goods.
In the pallet area, goods are picked according to the goods-to-man principle. The pallets are automatically routed out of the highbay storage and allocated to free depalletiser (pick) locations.
Single-article totes with goods for customer orders consisting of several items are scanned at the socalled ‘Magic Point’ (matching the article to the tote) and buffered in the automatic consolidation storage. As soon as the last delivery note item has reached the automatic consolidation storage, the order is released and is supplied to the packing stations on the basis of the actual load.
Totes with goods for an order with only one order item are sent directly to the relevant packing location without being stored in the article consolidation storage.
To meet customers’ increasing demand for solutions adjusted to their specific needs investments were made in the systematic development of ‘customized solutions’ in the special handling area.
After the most cost-effective way of shipment is calculated automatically, individual shipping labels for the different carriers and customers are generated on a total of 48 regular and special handling packaging locations, covering everything from special imprints to labels for the shipping containers. This is made possible by specially installed software features, which generate layouts, logos, shipping documents, general conditions of sale and delivery, invoices and many other labels and documents in the relevant national language for the country of destination.
The mix between the degree of automation and staff utilisation can be adjusted dynamically. This enables a high degree of flexibility which makes it possible to make optimum use of synergies.
The next step is that laser scanners register the deliveries which are ready for shipment and these are directed to one or more shipping conveyors. The Distrisorter is very flexible and optimally suited to the wide range of package sizes and weights from 0.1 to 50 kilograms.
Packages and items to be shipped are registered by Vision even during loading and booked out of the system as the risks are passed on to the carrier. The data is reported to the transport service provider by means of wireless data transmission interfaces to ensure a continuous exchange of data between the carrier and the warehouse.
‘Flexibility is a standard feature here’ is how Markus Helmke, operations development manager at Arrow, accurately describes the situation. The DLC’s readiness for its customers is based on a clever combination of automated and manual process design. Extraordinary degrees of freedom have been created here with support from flexible software interfaces enabling the DLC to react to new customers, changed requirements and new products with optimum flexibility. At present, the DLC is serving three customers in parallel and this number is expected to grow in the near future.
On the right track
Music retailer, HMV, has invested in automation to meet the expanding fulfilment needs of its online business. Now over 40,000 items can be dispatched daily using high speed sortation equipment.
Leading multi-channel music, DVD and games specialist, HMV, has invested in an e-fulfilment distribution centre in Guernsey capable of automatically dispatching 40,000 items daily – and this number is set to grow significantly this year. HMV trades from over 240 stores in the UK and Ireland as well as from online store hmv.co.uk and music download service hmvdigital.com.
The packing and sortation system, supplied by systems company, SDI Greenstone, has been designed to deliver items bagged by postcode for collection by the Guernsey Post Office. Comprising four packing machines with an 120-dropstation sorter and an induction conveyor system, the installation streamlines dispatch of purchases made through HMV’s hmv.co.uk online store.
’The brief to SDI Greenstone was to devise a process which eliminates manual product handling,’ said Gideon Lask, HMV e-commerce director. ‘Once the products are fed into the packaging system they don’t need to be handled again until the mailbags are sorted at the destination depots.’
HMV’s package and dispatch operation had previously been extremely labour-intensive with products being handled several times through the process. Products were hand-picked, manually packaged and labelled before being manually handled once again by operatives sorting them by postcode and then placing them into mailbags. The new automated system can pack and sort products at a rate of 6,000 pieces per hour, bringing considerable efficiency gains to the operation.
SDI Greenstone designed the new DC process by integrating four packaging machines with sortation equipment comprising an 120-dropstation, doubletray bomb-bay sorter with specially constructed chutes to accommodate Guernsey Post Office mailbags. Packaged merchandise – DVDs and CDs–- is fed directly from the automated packing machines commissioned by Jacob White, Packrobat and ALS, which also apply customer address labels to a predetermined position on the package.
Order details read by an inline scanner are uploaded to the HMV host system to indicate that a shipment has been made. The postcode element is linked to a three-digit dropstation number and the scanner instructs the bomb-bay sorter to drop thepackage at the correct dropstation.
The incorporation of a specially designed diverter allows packages to be sent to an inner or outer circle of sorter trays so the packaged products can be dropped to either position. Full mailbags are placed on either one of two take-away conveyors which carry goods to be marshalled in rigid stackable cages before being collected by Guernsey Post Office.