Warehouse automation: does one size fit all?

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After making the decision to invest in automation, businesses are often faced with the question of how much automation is really required. Is it a case of one size fits all? Surely bigger is better, or is it a case of less is more? Maria Highland investigates.

Automation has been making its way across the industry for years now, with many major retailers incorporating automation into their operations to reap the benefits that come with it. Notable benefits include picking accuracy, operational efficiency, reduction in labour costs and human error. But to what extent do you need to automate your operations? In fact, do you even need to invest in automation? Answers from industry professionals point to yes. Having a variety of warehouse operations automated can have a multitude of benefits. “Investing in automation is driving greater system optimisation, availability and capacity; all of which contribute to an increase in overall efficiency. For a logistics industry that is experiencing increasing demands, automation is shaping the way companies are planning ahead,” says Beumer Group logistics systems director Brian Hansen. “Automation is playing a huge role in making supply chains smarter and more efficient,” agrees DHL accelerated digitalisation lead Simon Woodward. “Automation of repetitive and physically strenuous tasks frees up scarce labour to be assigned to more complex and meaningful tasks.” Indigo Software supply chain consultant Mike Chadwick supports this, noting that the main benefits of automation are lower labour costs and fewer issues due to human error. He explains that “labour costs is an increasingly important issue, due to the diminishing access to low cost labour – many manufacturers are struggling to find employees.” Automaton enables operatives to become more efficient as time is no longer wasted doing anything unnecessary, freeing up their time to focus on offering other value adding tasks. This means that “warehouses can introduce additional services for example,” says Chadwick, “whether they are serving external clients as 3PLs or internal customers. In the case of 3PLs, this means having the ability to broaden services and differentiate as a service provider.” Likewise, having a flexible automation solution in the warehousing can also provide any needed additional capacity at peak times. The physical flexibility and adaptability of an automated system is a key benefit for many companies, especially those that are experiencing growth. It is normally such companies that turn to automation when they can no longer keep up with demand and require a solution to increase productivity and efficiency in the warehouse. Hansen notes that companies often turn to automation when “they face the challenge of multiple channels of distribution and need flexibility.” He explains that “service levels are becoming an increasingly important priority for retailers, with customers having standard expectations for one-day delivery availability. Most logistics businesses want to fulfil 95 per cent of orders in one day or less. With that, automation solutions need to be designed to handle high volumes quickly and accurately.” SSI Schaefer business development and marketing manager Mike Alibone explains that with “the seemingly unstoppable growth of e-commerce, business operators may be faced with little choice other than to introduce automation to their operations to meet customer delivery promises. If orders cannot be picked quickly enough to satisfy demand then loss of customers becomes a stark reality.” Investing in automation in an e-commerce environment can be particularly useful. For example, “if a company is looking at running 24 hour operations, which very common in an ecommerce environment, automation can be a good development,” says Chadwick and “if a company has an order profile where people are purchasing goods all the time, automation is a sound investment.” Automation can also answer to issues of warehouse capacity and company expansion, matched by a need to move to larger premises. “Instead they can consider automation,” suggest Chadwick, “which will allow them to better use their existing space rather than face the expense of opening a larger or additional warehouse. For example, automated environments can have narrower aisles or multi-layer conveyor systems running in the same space, allowing utilisation levels to be maximised. Given that property prices are currently very high, companies are seeing a better payback from automating and staying put vs moving or opening an additional DC.” Catering operations to match increased consumer demands and a growing business needing maximum efficiency requires knowledge of which aspects to automate to help to achieve this. Automating certain warehouse operations can help to save time and speed up operations. For example, “picking is the most expensive aspect of warehouse operations and the obvious one to benefit from automation such as goods to person picking,” suggests Chadwick. But there are advantages for other operations too, he adds. “For instance, inbound receipting of stock and automated goods receipting avoids having operatives manually checking incoming items. Inventory checking is another good example and stock records can be updated automatically, avoiding the need for perpetual inventory (PI) checks.” Alibone also recommends automating two areas in particular: “long single-item pick-walks and bulk stock movements using human-operated MHE, both of which are time-consuming and can be replaced by much faster goods-to-person systems.” He also suggests automating pallet cranes, shuttles, AGVs and conveyors, as “automated transport in the form of AGVs as well as simple conveyor systems also saves on conventional human labour commonly used for moving products from point to point in large warehouses.” Alibone also notes that other “associated benefits associated with automation can include automatic stock replenishment and general housekeeping,” he adds, such as “pallet cranes can also automatically perform complex house-keeping tasks when not putting away stock or providing product for picking, therefore representing further time saving.” Looking to take this further, automation does not just end with automated picking and inventory systems. “Automation technologies will continue to impact many aspects of warehouse operations,” says Hansen. “With IT developments, we see 3D visualisation providing operators with fast and easy access to real-time data from every section of the sortation system. Operators can now easily navigate and inspect the material flow in detail, leading to more informed decisions for optimising internal processes. Flow analysis of historical parcel flow and routing provides insights which can improve workflow and productivity.” Another “interesting solution on how automation could benefit warehouse operations end-to-end,” continues Hansen, “would be to combine multiple technologies to create a system that involves automated item picking and an automated sorting system. By extending automation to new areas within the warehouse and beyond, the logistics industry can further drive down cost and increase its competitive edge with later order cut-off times with faster and more flexible deliveries.” “Investing in new technologies that speed up the movement of product will undoubtedly bring cost saving benefits,” says Woodward. But automation is “a mid-term investment which can typically take two to three years to deliver a return on investment,” he warns. “However, once in place, automation can drive accuracy and efficiency while reducing the cost to serve. Automated product lines significantly boost the product flow and allow teams to use their time more effectively.” Hansen notes that an “important basis for the implementation of any automation process is to also invest in people, to make sure that the processes around the automation equipment can be just as efficient and reliable.” Therefore, before investing in automation certain factors need to be considered. To invest in automation without weighing up the cost and benefits may not be the best course of action. For example, “businesses need to agree which technologies are worth investing in, and how they can train and support employees to work smarter once the technologies are onboarded,” suggests Woodward. Correspondingly, Chadwick outlines that It is essential to understand how the system will support the company’s current logistics processes and whether the existing software systems will work seamlessly with an automated system. He also recommends ensuring “that any new automated technology will be able to communicate with a legacy ERP or WMS for instance, because they need to be able to share data in real-time. If there is any gap in communication, problems will occur.” Keeping that mind, this raises some issues regarding automation and whether a fully new system to be introduced into the warehouse and whether this is cost effective. “With automation being a key part of how new technologies are shaping the way we work, it is naturally an area that all businesses should carefully consider, not only in implementation, but in terms of quality of solution and how it fits to the individual business,” says Hansen. When it comes to sortation for example, says Hansen, “high-speed sortation increases efficiency and allows a greater traffic of items to pass through the system per shift. This allows retailers to leverage larger pick wave(s), increasing the picks per zone which means in most cases, automation is very cost effective.” But if a company is looking to invest in automation solutions for the first time, Hansen recommends considering “the amount of money earnt per item and how the costs and benefits of automation would affect this. Secondly, looking at the distribution network surrounding the process; if the new system allows more items to be processed at a quicker rate, can the network handle the higher capacity? Finally considering the operational costs per item before investment and how these would be affected. Based on this information, we can calculate if automation will be affordable for the business.” However, Hansen does not recommend the same solution for every business as each operation has its own set of unique business needs and requires “a personalised solution that is optimised for the way it operates.” Correspondingly, he believes that “there is no reason why smaller warehouses cannot invest in automation if it makes good business sense to do so and the effects have been carefully considered. Smaller warehouses can be just as advanced as their larger counterparts, and in that sense quite developed within their business environment.” However, sometimes automation is not the way forward says Hansen. If that is the case and “the calculations do not tell us the decision is worth the investment, then we can recommend looking at optimizing other processes in other parts.” Therefore, identifying how to optimise processes when automation is first introduced is a key for successful implementation, and the automation system needs to suit the business as whole. All business operations can benefit from the introduction of varying degrees of automation but where “no two business operations are identical, automation is very much a prescriptive solution, the final shape of which relies solely on the uniqueness of the operation it is prescribed for,” explains Mike Alibone. Luckily, where operational demands from various businesses are so varied, technology has had to respond with equally diverse solutions and there is always a solution available to improve warehouse operations – even when automation may not be the best option.

Knapp supplies Marc Cain with automation
The international women’s fashion brand Marc Cain has invested around €35 million to improve its logistics capacity, including automated warehouse systems from KNAPP value at €12 million. The retailer’s Bodelshausen, Germany logistics centre “had well and truly reached the limits of our capacities in the regional warehouses,” said Marc Cain logistics manager Robert Boland, which resulted in order lead times for returns and new items were long. Construction of the distribution centre centralised six facilities at the Bodelshausen site which was desperately needed, said Boland. The new 7,100 sq m building had mezzanine floors which provided a total usable floor space of some 24,500 sq m. Knapp’s automated solution is a combination of its OSR Shuttle solution and the roll adapter technology of KNAPP subsidiary, Dürkopp Fördertechnik, alongside its KiSoft WMS and KiSoft WCS software. This enables Marc Cain’s complete range of flat-packed and hanging goods to be handled seamlessly. Over three million items of clothing pass through the warehouse each year and up to 35,000 articles are picked on a daily basis. “We were looking for someone who understood textiles who could offer us an all-in-one solution. With KNAPP, the whole package of technology, software and references just fitted,” says Boland. The solution provides Marc Cain with error free picking. Foldable crates, which can be lidded, sealed and strapped were especially developed for Marc Cain. Flat-packed items are supplied in these foldable crates and at goods-in, the delivered quantity of items is verified by weighing the containers. The goods are then scanned and transported by conveyor to KNAPP’s OSR Shuttle system which has over 84,000 storage locations for flat-packed goods. And the Pick-it-Easy Shop workstations are specifically designed to cater for the demands of the fashion and retail sectors, suggesting a suitable size of carton into which the goods should be picked, while pick-to-light displays, and touch screens enable efficient and error-free order processing. Marc Cain’s logistics centre also includes an RFID coding solution which works simultaneously with its automation. The centre stores 500,000 hanging garments are stored over five levels which divided upon delivery into metre-long groups and allocated to a separation hanger. Each label is automatically scanned during transport and checked against the delivery note. Then, the garments are automatically transported to the hanging goods storage system while picked hangers from the storage system are allocated to a roll adapter at an automatic allocation station. RFID coding ensures that all items identified and traced in the system and that items are sorted into the correct sequence automatically by the roll adapter system. Then the hanging goods are made ready for dispatch at three pack stations.

Nestlé and XPO to build £55m warehouse of the future
Nestlé and XPO Logistics are to co-create a £55m 638,000-square-foot digital distribution centre at East Midlands Gateway Logistics Park in Leicestershire equipped with robotics and automation. The custom designed warehouse will house Nestlé’s consumer packaged goods and function as a test bed environment for XPO technology prototypes prior to global release. The digital distribution centre will include advanced sorting systems, robotics and automation co-developed with Swisslog Logistics Automation. The site’s digital ecosystem will integrate predictive data and intelligent machines for maximum efficiency. The XPO-owned facility will also include sustainability measures such as energy-saving LED lighting, environmentally friendly ammonia refrigeration, air source heat pumps for administration areas and rainwater harvesting. Nestlé director of supply chain David Hix said: “This is a world-first investment for Nestlé that builds on a century and a half of proud history in this country. Our partnership with XPO will encourage innovation and experimentation in our UK logistics operations and help futureproof our business. We will be able to be even more responsive for our customers across our brands, which include some of the most recognisable in the world.” Richard Cawston, managing director supply chain at XPO said: “The new East Midlands centre will operate as both a think tank and a launch pad for XPO innovations, with far-reaching impacts on the way business is done. We look forward to an inventive collaboration with Nestlé.” The centre is scheduled for completion in 2020. Its central location enables direct access to the M1 motorway, East Midlands Airport and includes an onsite rail freight terminal.


This feature first appeared in the September issue of Logistics Manager.

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