Intralogistics to boost the SME offer

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Deciding on the right intralogistics solution can be a challenge for small and medium companies looking to balance cost, efficiency and flexibility.

This article first appeared in Logistics Manager, January 2017.

This article first appeared in Logistics Manager, January 2017.

Small and medium sized businesses face particular challenges when it comes to intralogistics operations. On the one hand they need systems that are cost effective for the scale of their operations. On the other hand, the need for flexibility to respond to changing market conditions is particularly acute in the SME sector.

Edward Hutchison, managing director of BITO Storage Systems, says: “SMEs often find themselves going head to head with the big players. This is particularly true in e-commerce where small retailers will be competing with the online giants. Smart application of intralogistics operations can go a long way to closing the scale gap between different sized companies by allowing SMEs to provide competitive logistics productivity and efficiency.

“The challenges faced by SMEs include providing smooth material flow, minimal floor space occupation, maximum utilisation of storage volume and immediate product availability. They must do this with an eye firmly fixed on costs. This means investing in the optimum order picking solution, which minimizes overheads as far as possible, while maintaining the agility to respond to any changes in business circumstances,” says Hutchison.

And Ron Farr, manager – warehouse solutions at Hyster, says: “Often the challenges for SMEs arise as the business develops and grows. Businesses can be tempted to carry on doing what has been working so far, but on a larger scale, and this isn’t always the best solution for efficiency and productivity in the application.”

Chris Bates of UniCarriers UK says: “For many SMEs the storage and picking of items represent their core customer focus and order fulfilment makes or breaks their business reputation. Others, especially in the manufacturing sector, require intra-logistics capability for raw materials supply, production flow and finished goods distribution. But in all cases a balance has to be met between utilisation of space and item selectivity.

“Equally it is important to recognise that those working in this environment may have to multi-task within their organisation and their time spent supporting the business’ intra-logistics may not be their primary responsibility. This means that the management of personnel in a potentially hazardous environment needs to be taken into account. Training, licence management, pre-operational checks, for example, are all areas where a diligent supplier can support their SME customer. “SME managers need to engage with suppliers who understand that their true value is in recognising the unique pressures these businesses are operating under and provide solutions that extend beyond the simple supply of hardware. Suppliers need to listen, listen, and listen,” says Bates.

Nigel Somers of Cat distributor Impact, points out that suppliers can offer many benefits to SMEs looking to improve their operational efficiency – not least in terms of expertise and knowledge relating to materials handling and associated equipment. To illustrate, Impact’s sales managers know to look for situations where one truck with a number of attachments can do the work of two – saving the customer money in terms of capital outlay, and potentially through streamlined operations.”

And Farr highlights the importance of consultative support and advice to businesses to help them achieve the ideal warehouse layout for efficiency and low cost of operation. In addition, the supplier can advise customers as to which is the optimal solution.

Rob Vesty of Pyroban focuses on the safety issues: “In various sectors, such as food and drink, chemicals, pharmaceuticals or cosmetics, operations may be handling flammable or combustible materials. These operations must assess and classify their areas under the ATEX Directive and seek the correct explosion protection conversion for forklift trucks and materials handling equipment.”

“Training, correct servicing and safety audits are essential to ensure ongoing safety in Zone 1, 2, 21 or 22 areas. Even a small operation with just one forklift truck carries big risks – it only takes one spark to cause an explosion.”

Somers points out that SMEs function differently to larger companies, and as such it’s important that their intralogistics operations are tailored to suit. “Impact, for example, aims to provide SMEs with a materials handling fleet ideally suited to the needs of the operation. To illustrate, many customers find a battery changing system boosts productivity, while others value the use of a range of attachments, to reduce manual handling or decrease the potential for damage to goods,” he says.

Hutchison believes that a good solution for SMEs is 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 speed up picking cycle times. There are added benefits of reduced manpower, and improved space saving.“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.

Suppliers offer a wide range of financial options, and it’s important that SME executives select the right package – or mix of packages – to fund their business’ intralogistics operations and materials handling fleet alike. Bates says: “Cash flow requirements can be considered and when an off balance sheet operational lease is beneficial a rental agreement can be arranged. However, many SMEs are in constant change as the demands of their customers or behaviour within their market shifts causing them to refine their own systems. This is where a true partnership approach with a supplier comes into effect and providing contractual flexibility or future proofing system design can save a fortune in rental costs or hardware investment.

Impact’s Nigel Somers highlights some common options:

  • Outright purchase – but executives should think about cost, and question if the money could be more productively spent elsewhere. Perhaps a purchase and re-hire agreement may be preferable, so as to release funds back into the company that might lead to a better return on investment.
  • Lease purchase through a third-party finance company or bank.
  • Contract hire with maintenance through a third-party finance company.
  • Contract hire with maintenance using the asset provider’s funding – which gives greater flexibility in the event of changes in application.
  • Short-term rental to meet seasonal peaks, or for a limited period of time – meaning no long-term investment, and offering a predictable cost.”

Should you shop online?

There is a trend to buy products online rather than through traditional sales channels – but how useful is it for intralogistics products?

BITO’s Edward Hutchison says: “The UK is a leader when it comes to e-commerce, so it comes as little surprise that online has become a vital channel for SMEs seeking intralogistics solutions. You only have to look at how all the catalogue-based suppliers have gone digital over the last decade to get a sense of the shift from traditional channels to digital.

“BITO is due to launch a new ‘web shop’ early in the new year that will comprise two main sections. The ‘e-shop’ part of the site is for BITO products including shelving, bins and containers. In addition there will be supporting products such as trucks, trolleys, lockers and pallet trucks.

Impact’s Nigel Somers agrees that online purchasing is definitely a trend, “but not one I feel has spread in any great measure to the intralogistics market. A far more common route to selecting materials handling equipment is for companies to research goods and services online, before purchasing.

“When you buy online, you’re buying a truck at a risk – it may simply not be fit for purpose, for example. We recommend that any company operating materials handling equipment carry out a site survey, to make sure you’re getting the right truck for the job, in terms of both capabilities and, crucially, health and safety.

“While some materials handling equipment is indeed purchased directly online, this tends to be of a lower value, and SME executives should be careful what they buy and from whom – and should always seek to acquire product warranties and service records.

“Intralogistics is about selling solutions, and requires a free flow of information between the SME and its nominated supplier. Naturally, this is difficult to do online, and requires face to-face-meetings, site surveys, and follow-up planning sessions.”

Pukka Herbs expands

Pukka Herbs, which has been growing at 30 per cent a year, brought in consultancy Go Supply Chain to determine its requirements for warehousing over the next 5-8 years and to design an appropriate solution.

The supplier of organic herbal teas and Wellbeing products was stretching the limits of its 9000 sq ft of warehouses at Hawkfield Business Park, Bristol. “We were stuffed to the gills and needed to find somewhere bigger,” says David Anderson, head of projects and IT.

A bigger warehouse that suited the plan was found: a 19,000 sq ft facility at Quadrant Industrial Estate in Bristol. The building that would expand Pukka’s capacity to just under 1400 pallet spaces – doubling the number of pallet spaces (650) in its existing warehouse.

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