Simple, automated order fulfillment technology not only improves service levels, but also pays for itself in a short period of time, less than two years in many cases.
Simple automation is the installation and integration of automated order fulfillment systems within your operations. It can improve order fulfillment operations in four important ways, and in the process, it can achieve a rapid return on investment (ROI) through cost reductions.
Simple automation reduces costs through:
Reduced Labor Requirements. The single biggest cost in warehouse and distribution center operations is labor. Simple automation improves picking rates by as much as 600% per operator, reducing the need to add labor to meet increased demand.
Increased Throughput. Improved operator productivity increases system throughput, speeding order turnover and extending order cutoff time.
Improved Order Picking Accuracy. Automation with the use of supporting technology such as software and pick-to-light systems, improves order picking accuracy up to 99.99%+.
Space Savings. Automated order fulfillment systems can recover between 30% to 85% of floor space by utilizing the vertical cube of the facility. This saved space can be converted to income producing operations, reducing the need for brick-and-mortar expansion.
Improved Inventory Visibility & Management. Even simple systems can significantly improve the quality of information about inventory status and stock keeping unit (SKU) location.
Improved Ergonomics Reduce Lost Time Injuries. The warehouse labor force has the highest turnover rate, the highest absenteeism and the highest lost time accident rate in the order fulfillment operation. Automated systems reduce bending, stretching and reaching by presenting stored items to the operator at the correct ergonomic work height, reducing workplace injuries.
At first glance, it might seem easier and less costly to add labor to meet market demands, or to increase storage capacity through brick and mortar square footage expansion, but these options often prove to be bad business decisions. Increases in both throughput and storage density can often be better achieved through simple automation of the order fulfillment process, and the rapid ROI can justify the implementation of this technology.
Choosing the Right System
There are a number of automated technologies available. Each offers specific parameters in the sizes and types of inventory they handle most efficiently, as well as storage density, and throughput rates. When considering an automated system, here are some guidelines to keep in mind.
Velocity. Is the system designed to handle slow, medium or fast moving inventory items?
Throughput. How many lines per hour or orders is the system capable of handling?
Storage Density. How many active SKUs can be stored in the least amount of space?
Space Utilization. Does the design of the system take advantage of unused space or otherwise recover space required for the existing order fulfillment operation?
Acquisition Cost vs. Cost of Ownership. Does the cost of the system fit within budget guidelines, figuring in a proper ROI? More importantly, what is the true cost of the system year 2, 3 and 4 vs. other alternatives? Depending on the application, there may be more than one possible solution, and the best solution is often a blend of two or more technologies.
Determining the Best Solutions
A-Frame: An A-Frame is an automated dispensing/picking system used for high speed split case order picking. It can be configured in a Pick-to-Belt, Pick-to-Tote or Pick-to-Shipper mode to suit a wide range of customer requirements for split case order picking. In its Pick-to-Tote configuration, the A-Frame system can handle up to 4,200 orders per hour (the number of lines per order is almost irrelevant). The system requires no labor, other than replenishment. Portable models are available to meet smaller scale, promotional or seasonal order fulfillment demands.
Floor Robots: Floor robots pick up and deliver stored items on portable storage shelving to an operator, who then picks the required item. The robot then returns the unit to storage. Throughput rates range from 100 to 450 lines per hour/per operator. This system offers good storage density, and capacity can be increased by adding robots. Programming, equipment and ongoing maintenance costs make these systems expensive.
Horizontal Carousels: Horizontal carousels are a series of bins that rotate horizontally around an oval track, delivering the stored item to the operator. They are designed for picking slow to medium moving items and cases, with throughput rates from 150 to 550 lines per hour/per operator. Horizontal carousels are commonly integrated in multiple units in a pod or workstation to enhance productivity and throughput. They offer good storage density at relatively low cost.
Mini-Load System: This system handles slow moving smaller sized inventory from 100 to 250 pounds, stored in trays, totes or cases. It is optimized for high density storage with throughput rates ranging from 60 to 100 lines per hour.
Pick-to-Light Flow Rack: Sections of gravity flow rack are used to queue fast moving inventory. A light display ranging from a simple "gumball" to alphanumeric displays indicates to the picker which SKU and what quantity needs to be picked. This system allows one operator to replenish inventory from the back while the other operator is simultaneously picking. Carts or conveyor is used to transport the orders from one bay or zone to another.
Robotic Carousel Systems: These systems use a robotic extractor to retrieve items or totes as they are queued in horizontal carousels. A single robotic extractor can service three horizontal carousel units stacked in a tier, selecting the required items from one unit while the other two position for the next picks. These systems offer very good storage density with throughput rates from 200 to 700 lines per hour/per operator. They are cost effective for handling small, medium and large quantities of slow to medium moving items.
Shuttle Technology: Shuttle technology is used for the buffering, sequencing and picking of items stored in plastic totes or cartons weighing under 125 pounds. Shuttles travel on rails at each storage level and are equipped with inserter/extractor devices that remove/replace stored items. These systems are expensive; however, they handle large quantities of inventory at throughput rates of 200 to 700 items per hour.
Vertical Carousels: Vertical carousels are cost-effective, self-contained systems of shelves or carriers that rotate vertically. Stored items are presented to an operator at an ergonomically optimal height. They provide high storage density and are designed for small item order picking of slow to medium moving inventory. Throughput rates range from 100 to 275 lines per hour/per operator.
Vertical Lift Modules (VLMs): This cost effective system offers excellent space utilization and storage density. Slow and medium moving items or cases are stored in columns of trays in the front and back of the unit, accessed by an automatic inserter/extractor. Sensors analyze the heights of the items stored in each tray. Integrated controls dynamically adjust the trays' stored positions to minimize wasted space. Throughput rates range from 125 to 375 lines per hour/per operator.
Classifying Inventory
It is important when considering order fulfillment automation to understand the nature of your inventory. Clearly, some systems are better at handling fast movers, other more attuned to handling medium and slow movers. Classifying your inventory will help define more precisely your automation options.
Start by classifying inventory by picking size (pallet, case, each) and by velocity of movement (very fast, fast, medium, slow, or very slow). Certain similarities will appear. For example, when comparing velocity, create groups of similar SKUs together. Cross reference the labor associated with picking each of these items against their order frequency to create a cost-to-pick graph. This is critical information in helping determine the ROI for a specific system.
The most dramatic improvements in order fulfillment optimization come from applying solutions to entire categories or classifications of inventory, rather than just a few SKUs. This is because of the 80/20 rule that illustrates that 80% of a facility's picks come from 20% of its inventory. Dig into this 20% of inventory and look for similarities again. See if there is another 80/20 within every 20% until you define five to 10 classifications. This now becomes actionable to determine the best technology and solution.
Selecting the Right Partner
Consult with an experienced systems manufacturer or integrator. They will help you analyze your order and inventory data to determine the best solution with a proper ROI (return on investment). Likewise, always understand where your potential partner's "true interests" lie when doing final evaluations.
Never fall in love with a technology. Often a little of something is good, but a lot of it works poorly. Apply the best technology to the right classification of inventory. How will you know it's right? When the ROI matches the business plan's net need.
The integrator may also suggest upgrading your Warehouse Execution System (WES), Warehouse Management System (WMS) or Warehouse Control System (WCS) software to take full advantage of the cost savings associated with automated systems. Today's software can help streamline the picking process and improve inventory management, resulting in more cost savings.
By implementing automated order fulfillment systems to handle fast, medium and slow moving inventory, a warehouse or distribution center can achieve significant gains in throughput and order picking accuracy while reducing costs. Those cost reductions can pay for the system quickly, under 18 months in most cases.
Ed Romaine is Vice President Sales & Marketing for SI Systems &
Chairman of the Automated Storage & Retrieval Systems (AS/RS) Product Section. He has spent over 30 years involved with organizations looking to optimize their distribution, manufacturing, and warehousing operations. Focusing on customer's processes, systems and business model, Romaine has helped dozens of organizations improve profitability by reducing labor, floor space, errors and inventory while improving accuracy, inventory turns and cut-off times. Contact him at romaine@sihs.com or 610.559.4043.
