Certainly one of the most welcome challenges that could be faced in business is strong growth. We all want it but must adapt to its opportunities and challenges appropriately. In a manual fulfillment environment, the opportunities to meet the challenges growth presents, such as increased and perhaps widely varied product order demand, range from simply expanding existing manually intensive operational processes to adopting varying degrees of automation.
So, how do you determine the right direction for your operations? Once determined, how do you proceed? What are the key Project Roadmap components on which to focus, and how do you leverage the missteps of others to avoid making them yourself? These are but a few of the questions that well address in this multi-part guide and case study of a rapidly growing fulfillment operation that chose to respond to growth by adopting automation. The first part will cover some basic questions surrounding the challenges of moving from manual to automated fulfillment.
Is automation always the answer?
Absolutely not. Although arguably reasonable in general, each situation must be evaluated individually on its own merits. There are many factors to be considered and its not enough to focus on only the process areas immediately impacted, without considering overall impact to other areas of operation.
What are the considerations for determining automation adoption vs. expanding manual operations?
At a high level, the considerations when comparing expansion of manual operations vs. automation adoption range from the obvious issue of costs to others such as facility, operational and labor force impacts. Each area for consideration has multiple components and needs to be weighed and compared in order to answer the question for each situation.
Direct Cost - Direct cost is clearly one of the most significant considerations. The initial purchase of the physical equipment is probably the most visible and largest, however other related, relevant costs should be factored in which can include physical installation, spare parts, maintenance and other operational expenses.
Facility - The existing facility and internal layout must be evaluated in the context of any potential changes required to support automation. In other words, what physical modifications will have to be made and will the infrastructure readily support those modifications?
Operational - Automation adoption will drive process change, the range and extent depending on the nature of the automation itself. Careful analysis is required to ensure that the efficiencies gained in one area due to adding automation do not create new bottlenecks elsewhere, or if it does, then to ensure that either the overall benefit outweighs the disadvantages or that a workable mitigation strategy, such as revamping other operational processes, will be executed.
Labor Force - Tight or inflexible labor markets may justify automation whereas plentiful, relatively inexpensive labor may make it more difficult to justify. Then there is the question of the sophistication level of the automation and local labors supporting skill sets.
All of these items carry either implied or direct costs and this side of the equation must be balanced with the anticipated benefits brought by automation adoption, not all of which will necessarily be readily quantifiable. Regardless, incorporation of tangible and intangible benefits must be considered to arrive at a true comparison.
How does one arrive at the real cost for automation adoption?
In order to get to the real costs of adopting automation, it requires doing the homework to establish a clear problem statement complete with objectives and target outcomes and to explicitly communicate these items. This will provide the basis and initial assumptions on which the Business Case will be built, including alternative solution scenarios, associated costs and benefits and success metrics. As this forms the basis from which your project will be planned and evaluated, this is an extremely important step and worthy of careful consideration.
In addition, it will be necessary to incorporate the project lifecycle costs and ongoing operations and maintenance, including materials, consumables, parts replacement, etc. Be sure to add anticipated costs for the physical installation of the automation equipment, including data and power cabling, training, systems integration and process change analysis and implementation.
Next, obtain budgetary costs from the two or three providers that are perceived to be the best fit for the project. Seek their input on anticipated complete lifecycle costs, however do your own homework here as well. If the organization has a strong Project Management Office (PMO) organization with realistic historical cost data, then leverage that in your estimations. Talk to several customers of the anticipated providers about their experience and their costs. Utilize professional operations consultants with a strong background in systems implementation (and dont forget to add a comfortable contingency!)
What about those offers of free consulting and selection assistance during the sales cycle wont that save money?
Anything is possible. In situations where there is already a strong working partnership built on mutual trust demonstrated over the course of several projects, then utilizing free or included consulting and selection assistance could be a solution to gathering the necessary information to complete the Business Case, again depending on the nature and extent of the automation under consideration.
In any case, careful review by strong internal operations and project resources is critical. The sage advice caveat emptor comes to mind.
How should a project like this be structured?
In the end, the scope and complexity of the initiative will drive the specific project structure and organization for each individual situation. Given that, however, the following presents a high-level best practices overview.
Operations Analysis and Business Case Development - In addition to the aspects discussed above, this step will help identify the operational process and facility layout improvement opportunities that should be addressed prior to automation adoption to ensure maximum benefit and success. The focus is to ensure that the facility and processes are properly prepared for adoption under both current and anticipated future sales and fulfillment levels.
This process step will help define realistic cost and benefit figures to support the Business Case and provide the Project Foundation as a guide for follow-on project phases.
Solution Requirements Definition and Evaluation - Activities in this step build upon analysis completed and information gathered to refine and define the commercial, functional and technical requirements that will drive solution determination and the corresponding Request for Proposal (RFP).
Detailed Project Planning - Once the solution is identified and the vendors selected, the next step is to complete detailed project planning based on input from all affected parties. Out of this Project Roadmap effort, fully integrated project and resource plans will be developed itemizing all tasks associated with successful deployment.
Detailed Functional Design - This project step continues the drill down into the project needs by performing detailed analysis on how the intended automation equipment and the various associated processes will work together most efficiently and how they will interact with other touch-point processes and systems. Typical outputs include fully defined Functional Specifications and Test Plan documents.
Detailed Technical Design, Development, and Unit Testing - Building upon the functionality defined in the previous phase, the activities in this step begin by translating the Functional Specifications into detailed Technical Designs that then form the basis for all required software development and integration testing to ensure the solution is ready for implementation testing and deployment.
Automation Deployment - Beginning with additional in-place integration and full systems testing, the activities in this step also include facility preparation, training program preparation and execution, potential parallel operational testing and full-shift start-up support.
Post-Implementation Support and Audits - An effective auditing program complete with Post-Implementation Support and Enhancement will ensure that the solution continues to adapt to changing business and operations climates, providing extended value and beneficial use.
Be sure to join us in the next installment as we address questions surrounding the feasibility of tackling these kinds of projects internally, what level of planning and resource commitment is required from the client side, how long will it take, and what is involved in switching over to automation. The third and final portion of this series will include an interview with the client and insight into their experience and the challenges and benefits associated with their project.
Dennis Dearth is Director of Technical Services for TranSystems|ESYNC. TranSystems|ESYNC is a supply chain strategy, design and implementation services company that helps clients develop supply chain strategies, optimize logistics networks and operations and, when appropriate, deploy technology and software systems. For more information, contact Dennis at firstname.lastname@example.org, call 419.842.2210 or visit http://www.esync.com/.