Warehouse Technology: to Automate, or not to Automate

By the sheer nature of the go-to-market strategy in many beverage organizations, making a business case for automation in the warehouse has been difficult. You will notice that I said in the warehouse. Automation has existed for decades on the other side of the wall in manufacturing, and today is rarely given a thought when new production or filling lines are installed.
So why is it that most companies continue to experience an increase in warehouse costs as a percentage of the cost of goods sold, but still fail to consider automation in the warehouse? Do we under-appreciate warehouses because of complexity? Maybe. Is it because companies cannot justify automation because of their go-to-market strategies that stress stem time to the first delivery point to many facilities, thereby diluting shipping volume in any one facility? Probably. Or, is it that because automation in the warehouse has received so little attention, because few people understand it? Actually, the answer is all three. At least it used to be.
To truly understand whether automation technology makes sense for you, it is important to understand the different types of technology.
Warehouse Management Technology
In the October 2003 issue, I discussed Warehouse Management Technology (WMT). This subject is important to mention again for several reasons. The most important is that WMT is a form of automation. It automates the organization and dissemination of information within the warehouse based on a set of rules the user defines. WMT manages three areas really well: inventory, space and resources. The basis for inventory control rests on your rules of inventory management that could include first-in/first-out (FIFO), first-expiry/first-out (FEFO), or some other approach. Managing space depends on a set of rules that define the type of products that are suitable to store in specific storage locations. You manage resources, including people and equipment, on the basis of their capability, which is primarily driven by type of equipment; priority, which is the next most important task;  and proximity, who is physically closest to perform the task. So in a conventional storage and handling environment, WMT is considered automation.
Numerous WMT packages that offer varying levels of capability for varying levels of cost are available in the marketplace. There are WMT packages in which the person can tell the WMT where they put product and the WMT keeps track, which is commonly referred to as a stock locator system. There are others that tell all the people exactly what to do and when to do it. I refer to this as task management.
Is WMT right for you? My professional opinion is absolutely yes, with one caveat. No one solution fits every situation. It is critical that you perform two tasks and perform them well. First, you must optimize your warehouse process. Do not systematize poor processes. Second, develop a thorough functional systems description (FSD) so you understand what you are buying and so does the supplier.
Unit load handling and storage technology
When they think of automation, most people visualize products moving without people or forklifts. Unfortunately, these mental pictures often meet with a negative response as people have experienced poor attempts at warehouse automation. I have been involved in several projects where my role is to make existing automation serve the current business demands. My comment in the previous paragraph about not systematizing poor practices and doing a thorough FSD holds true here as well. Current and future business demands as well as optimal work processes should be well thought out as part of the automation planning process.
In beverage warehousing, there are two primary types of automated material handling and storage technologies to consider: unit load handling systems and case handling systems. Options for unit load handling and storage systems are numerous and include automated guided vehicles (AGVs) and automated storage and retrieval systems (AS/RS).
Today’s AGVs are vehicles programmed to drive to designated points, taking designated paths, and perform designated tasks requiring repetitive movements over extended distances. AGVs are typically justified by eliminating congestion in warehouses where there are repetitive trips taken over long distances.
You will find traditional AS/RS single-deep or double-deep racks for storage within high-rise warehouses. Instead of forklifts, unmanned vehicles, commonly referred to as stacker cranes, travel up and down the aisle and into the rack structure to store and retrieve product. AS/RS installations typically have small footprints with aisles as narrow as 4 feet wide since forklifts do not travel through them.
Another type of AS/RS technology, offered by Retrotech, is Activ. This is a high-density AS/RS for high-throughput, high-turn unit load handling applications. Activ can move loads vertically or horizontally on the X, Y and Z axis, and can continuously reprofile inventory for upcoming waves of work. Most Activ users require only 30 percent of the space they would need in a conventional warehouse, saving building costs. Also, as SKUs continue to grow, you can add additional power drives to improve flexibility and throughput without adding equipment.
Case handling technology
Individual case selection and mixed pallet building have the distinction of traditionally being the most labor-intensive activity in beverage warehouses. With such a wide variety of case sizes and package types, traditional wisdom claims that automated case handling is impossible. Only recently has technology (actually combinations of technologies) allowed for successful automation implemented for case handling. Individual cases can now be stored in towers and released automatically onto conveyors in a pre-determined sequence based on customer order requirements. You can now allow for the accumulation of individual cases as they wait for entry into mixed-unit load palletizers.
Companies should never start with automation as an improvement project but should finish with it as a way to improve performance. Automation can deliver significant results with correct application and support. BI
Ned Bauhof’s “beverage team” has executed more than 100 projects in 85 locations in 10 countries. Ned is a principal with York, Pa.-based St. Onge Co., a material handling and logistics consulting firm specializing in the planning, engineering and implementation of advanced material handling, information and control systems supporting logistics, manufacturing and distribution since 1983 (www.stonge.com). Ned can be reached at 717/840-8181 or by email at NedBauhof@stonge.com.