What are the considerations SMEs make in choosing the right materials handling equipment for their operation?
Small companies are no different to big businesses in their desire for improved operational efficiency. But achieving this can be difficult.
To begin with, the funds are not always available for small businesses to invest in certain equipment. That’s why it’s so crucial that a business chooses the best, and most reliable equipment they can from the outset. Picking equipment that is long lasting is a clever way to make the most out of the investments that small businesses can make.
A way to help ensure that the right equipment is chosen, is to visualise how the warehouse should be. Hyster has a warehouse simulation service which is able to map out typical materials handling scenarios. This helps recommend how equipment can be used in the best possible way, and flags up the need for any additional equipment. As well as this, telematics can tell if equipment is being under or over used.
Automation can bring great benefits to a warehouse – and is beginning to be used more and more in larger businesses. It’s seen as a sure-fire way to improve efficiency and speed up processes. But what SMEs need more than anything is flexibility – is this something that automation can deliver?
“SMEs are not going to invest in automation or robotics for the sake of it, whatever the capital outlay,” says Mike Hilton, account director, TGW Logistics. “There has to be a raft of commercial, economic and operational reasons behind such a move, together with a firm idea of the range and value of benefits to be gained from adopting the right solution.”
If the move is really worth it, then the total cost of ownership versus the predicted advantages of a system will show that. But it’s important for a business to understand that the real price of automation, or other materials handling equipment, is often more than just the upfront price. Return on investment for automation generally appears only two to five years after it’s installed.
“Smaller companies often want to move towards automation, but face the issue of the quantum leap,” says Edward Hutchison, managing director at BITO Storage Systems. “This involves investment, but the right solution is often a combination with a scalable system.”
Return on investment is a key consideration when deciding whether or not to invest in materials handling equipment.
“Generally – but not always – larger companies, with larger operations and a sizeable workforce, stand to benefit most in terms of implementing automated labour-saving solutions as the reduction in head count will be much greater than that in a smaller company investing in the same technology,” says Mike Alibone of SSI Schaefer.
In the earlier days of a small business, you give the picker a piece of paper and they walk around and pick that particular order, says Hutchison. What BITO Storage Systems has found is that they need to scale up and move to a consolidation of these orders. “They need somewhere where they can take all of these products to a consolidation station, put them into right pigeon holes,” says Hutchison. “Once that order is complete they need to make the packer aware the order is complete, so it can be packed and dispatched.”
Space constraint is probably one of the really key challenges faced by a growing operation. A lack of storage and operating space in smaller warehouses can lead to congestion. “[This slows] down goods-in processing in particular and lengthening the period of time it takes to replenish items which may be out of stock,” says Alibone. “Similarly, lack of, or poorly utilised, space restricts the possibility of implementing even basic materials handling equipment solutions which would otherwise make an operation more efficient.”
Of course this is something that larger companies could also experience – but it resonates a little more with the smaller businesses that are getting to grips with growth.
In order to create an operational model that can successfully reflect a small business’ current and future requirements it is useful to analyse any data available. “Comprehensive, careful analysis of the available historical business data, taking a holistic view of the entire business and generating a solution that, if required, can be developed over time as business progression and capital budgets allow,” says TGW’s Hilton. “Automation can range from simple conveyor technology, through to fully automated solutions including automated storage and retrieval machines, shuttles, picking modules, conveyors and sorters. All are designed to reduce the amount of manual handling in any given environment.”
Other issues that need to be taken into consideration are health and safety, ergonomics and the repetition of tasks, as well as the most effective way to replenish, pick and transport products.
“Allied to this will be considerations of where a business is in its warehouse development, in terms of its throughputs and types of activities,” says Hilton. “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.”
TGW is seeing more enquires coming from SMEs. These are driven by a need to work smarter in order to counter the issues they are anticipating or to accommodate the growth they are experiencing. “A growing awareness of the advances made in automation and robotics, combined with the increase in demand for the technologies and the consequent reduction in unit costs are also having an impact,” says TGW’s Hilton.
As well as this, the use of AGVs is becoming more popular since these modes of transport have become more technologically advanced. “With the growth in online ordering we are seeing more requests for fully integrated systems which can process all types of orders, from wholesale to store replenishment to end-user deliveries,” says Mike Alibone, SSI Schaefer.
Hyster is seeing more SMEs seeking advice relevant to their particular industry before specifying trucks, so that they can select the best solutions for their individual application. And this is driving demand for its tough electric trucks. “In certain operations, Hyster electric trucks can provide a robust and reliable option for both indoor and outdoor handling, while keeping costs under control in industries that may have previously used IC trucks,” says Russell Baker, territory manager, UK & Ireland, Hyster Europe. “Electric trucks also contribute to reduced emissions.”
What are SMEs looking for from their materials handling equipment?
Consumer demand, and the growing presence of e-commerce are continuing to put pressure on the supply chain.“It must now reflect a 24/7 consumer culture,” says Steve Shakespeare, director – customer service, Jungheinrich UK. “SMEs, much like larger companies, will be looking for solutions that can drive efficiencies, to not only minimise costs but to optimise operations.
“Whether an organisation is looking to optimise space by using higher racking and very narrow aisle (VNA) trucks, or streamlining order-picking processes in line with more complex individual item orders servicing next day or in some cases same-day delivery SLAs, SMEs will be looking at ways to stay competitive.”
But it could be argued that it depends more on the application than the size of the business when it comes to materials handling equipment. “Both small and large companies alike can have the same demanding operational requirements and be facing similar challenges,” says Russell Baker, territory manager, UK & Ireland, Hyster Europe. “However, we generally find that reliability is crucial for SMEs, alongside a low total cost of ownership.”
Smaller businesses often have smaller teams to manage their handling operations. So they want as much support from the dealer as possible.
TGW’s Hilton says that smaller businesses want the same as any larger company. “The ability to deliver on their promises to customers in the most efficient, cost-effective manner possible – now and in the future,” he says. “To turn their supply chain from a necessary evil into a competitive asset and to successfully meet the challenges, for example labour availability, size of location, market demands and expectation, faced by every business.”
TGW is also seeing the need to provide simple start-up solutions that have the capability and scalability required to evolve with the customer’s business in the future. And these customers in particular are being careful to select a solutions partner they feel can work with them over the long term and can help their operation to grow successfully.
“They also have high expectations with regard to the space-saving aspects associated with any new system implemented,” says Alibone. “While the installation of automated materials handling may reduce the labour overhead, increase throughput and raise the level of picking accuracy, the economy of space aspect is deemed of equal importance by many operators.”
As well as this, higher storage capacity through a denser storage medium and a higher footprint may enable many businesses to ‘sweat the asset’ they have, according to Alibone. This allows them to stave off a move to new premises for a significant period of time.
“Any supplier able to offer an efficient, space-saving storage system as an integral part of an automated materials handling solution is going to be viewed favourably,” says Alibone. “As a single source supplier, at SSI Schaefer we do just that.”
This article first appeared in Logistics Manager, January 2018