MANAGEMENT Warehousing 36 Link January 2011 Au<strong>to</strong>mating the conventional Order sizes are shrinking while the frequency of orders, as well as SKU counts, are growing By Jeff Hedges
Current trends and practices in the industry are requiring a change in the way refrigerated and cold s<strong>to</strong>rage facilities operate. Order sizes are shrinking while the frequency of orders, as well as SKU counts, are growing. At the same time labor, space and energy costs are still growing. Couple this with the looming issues around Health Care Reform, CFAT, Truck Driver Certification and where current legislation is on Card Check and FoodSafety, and further operational costs can only continue <strong>to</strong> rise. With all of these issues, it is more and more difficult for companies <strong>to</strong> maintain their traditional profit base, let alone receive board level approval for large capital investments. There are no two refrigerated or cold s<strong>to</strong>rage facilities alike. Operational issues around commodity, distribution and import/ export environments present vastly different handling requirements. Therefore, the point solutions for one may not work well for another. However, all refrigerated and cold s<strong>to</strong>rage operations share a common incentive <strong>to</strong> drive down costs associated with L.E.A.D.S. (Labor, Energy, Accuracy, Damage & Space). In general, refrigerated and frozen food warehouse and distribu<strong>to</strong>rs look for shortterm, rapid payback solutions that can be implemented within existing facilities. The problem is that educating the market on available au<strong>to</strong>mation options has traditionally been poor and hyper focused on large scale au<strong>to</strong>mated systems rather than smaller scale solutions with justifiable ROI / IRR. When it comes <strong>to</strong> material handling au<strong>to</strong>mation, there is a general industry perception that if you are going <strong>to</strong> consider au<strong>to</strong>mation it has <strong>to</strong> happen when you are planning a new, very large greenfield project. There are, in fact, many au<strong>to</strong>mation “pointsolutions” that can be implemented within an existing facility. They provide a justifiable Operational issues around commodity, distribution and import/ export environments present vastly different handling requirements ROI, will adapt <strong>to</strong> changes in your business conditions and have proven successes in refrigerated and frozen environments; effectively reducing your operational costs by 20-30%. With au<strong>to</strong>mation you can do more within your existing footprint, expand and add au<strong>to</strong>mation or build new. Each approach has its own unique justification based on your unique operation. This past year, in conjunction with the Global Cold Chain Alliance, I led a research/ survey initiative <strong>to</strong> better understand where the Public Refrigerated Warehouse (PRW) industry was in its readiness <strong>to</strong> implement au<strong>to</strong>mation. One of the more interesting findings was that there appears <strong>to</strong> be tremendous opportunity for au<strong>to</strong>mation point solutions for existing facilities within this segment of the refrigerated and cold s<strong>to</strong>rage industry. This is a finding that we are now seeing as a trend throughout the industry as a whole. One of the problems this industry faces, though, is that end users have traditionally received little guidance and training on what type of au<strong>to</strong>mated technologies are available <strong>to</strong> them. To date the majority of implementations within this industry tend <strong>to</strong> begin with WMS and maybe some conveyor and then jump <strong>to</strong> large ASRS type solutions. There are many au<strong>to</strong>mation solutions that fall in between creating a spectrum of opportunities that are typically overlooked and worth understanding. Au<strong>to</strong>mation point solutions can provide ways <strong>to</strong> eliminate lost or damaged goods, increase picking efficiencies, reduce travel time, eliminate rack and product damage, drastically reduce multiple handling scenarios, increase accuracy and reduce errors. Some technologies can completely au<strong>to</strong>mate these processes, others serve as aids <strong>to</strong> help workers and opera<strong>to</strong>rs perform more efficiently. Think about what it would cost you <strong>to</strong> add an additional 25,000 sq ft <strong>to</strong> your facility. Then take that figure and cut it in half. I would contend that there are more than a few au<strong>to</strong>mation scenarios that you could implement within your existing facility <strong>to</strong> essentially “free-up” that exact amount of space; all for half the cost of an expansion. How?....through better and more efficient space utilization. Typically conventional s<strong>to</strong>rage solutions demand a much larger square footage per load than au<strong>to</strong>mation Warehousing MANAGEMENT 50% cases of facility expansion could have been avoided if more dense s<strong>to</strong>rage and handling solutions had been considered solutions. In 50% of most cases a facility expansion could have been avoided if more dense s<strong>to</strong>rage and handling solutions had been considered. There have been some recent developments in Au<strong>to</strong>mated Guided Vehicles (AGV) technology that are worth mentioning. Successful installations of Fork AGV’s <strong>to</strong> replace counterbalance and VNA vehicles have been completed for multiple end users throughout North America. The AGV’s offer the ability <strong>to</strong> operate in most any size aisle and can lift up <strong>to</strong> 35’, all without an opera<strong>to</strong>r. S<strong>to</strong>rage in<strong>to</strong> multi deep racking capabilities are expected soon <strong>to</strong> be realized. For the refrigerated and cold s<strong>to</strong>rage industry, AGV’s are now successfully being beta tested in freezer and cooler environments, a big plus for introducing au<strong>to</strong>mation in<strong>to</strong> existing facilities. The other advantage that this technology offers is it is not a fixed asset, allowing it <strong>to</strong> be moved and installed in<strong>to</strong> another facility if desired. Another technology development is the deployment of stand-alone tray handling ASRS mini-loads for buffering and staging slow moving SKU’s. The base design is a free-standing structure that would replace an existing aisle of pallet s<strong>to</strong>rage. The key advantages include reduced labor, reduced travel time for pickers, and the ability <strong>to</strong> free-up valuable pallet space currently used <strong>to</strong> s<strong>to</strong>re low volume, low case count SKU’s. This technology is currently operational in freezer and cooler environments in North America. There is an old proverb that essentially advises that you must “Learn <strong>to</strong> walk before you run”. In <strong>to</strong>day’s refrigerated and cold s<strong>to</strong>rage facilities, the desire <strong>to</strong> incorporate au<strong>to</strong>mation could be best advised by these words “Au<strong>to</strong>mate the conventional before you build new” Jeff Hedges is Direc<strong>to</strong>r, Business Development; Dematic January 2011 Link 37
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