Some days, it seems everything is stacked against you. Order turnaround times get shorter as volumes increase. Finding enough of the right people with the right skills is a tough chore. And to cap it off, you need to find new ways to shrink fulfillment costs.

That's when automation in the distribution center (DC) can look very attractive. But when is automation the right choice? When will automation become the best practice that results in a competitive edge?

Best practice automation means taking manual labor and the human factor out of warehousing only when—and "when" is very much the operative word here—a machine can do the job with greater efficiency, safety, and/or accuracy at acceptable cost. The magnitude of a DC's order volumes and throughput needs help determining when this "when" is reached. And with today's tight delivery deadlines, real-time data and decision making are very much a part of best practice automation from inventory storage to picking and order movement.

Quite simply, materials handling automation is appropriate when equipment can process items more effectively than people can, says Terry Brod, senior technics consultant, Siemens Dematic (616-913-6200).

Automation applies when high accuracy and speed are factors too. Generally, automation fits best when the number of orders, activities, and stockkeeping units (SKUs) are in the medium to high range, and a manual process requires considerable labor, Brod explains.

Two major factors drive the move to automation in many DCs, adds Steve Mulaik, consultant and partner, The Progress Group (770-804-9920). "Either inventory or SKUs grow so large that pick tours are really long or volumes are so high that congestion makes it very difficult for people to walk around and pick orders efficiently. At this point you have to start introducing automation," he says.

The need to move high volumes also may combine with a very short delivery window or a critical response time to push a DC toward automating. "Late evening cutoffs for next morning deliveries," says Don Derewecki of consultant Gross & Associates (732-636-2666), has led to "widespread use of automation in such industry segments as wholesale drugs. In many cases the only way to satisfy customer requirements is with automated picking technology with sufficient throughput capacity to permit processing huge numbers of lines overnight." These DCs are "natural applications for A-frames and pick-to-light technology," he adds.

Pick-to-light technology, moreover, "can deliver a 40% to 50% productivity increase in typical installations, and an even greater gain in pick accuracy," says Stephen Legg, president, Real Time Solutions, an FKI Logistex company (510-985-6300).

Some decisions to automate handling will be easy to make and justify. Quick decisions can be made in situations with human and environmental factors, says Mike Kotecki, senior vice president, HK Systems, (262-860-7000). Included is taking workers out of a food freezer or out of a hazardous workplace with automation. In urban areas with high land costs the decision to build up to the DC's ceiling with an automated storage and retrieval system (AS/RS), vertical carousel, or other space-saving system is more readily made than it is in rural areas. And for high cost items prone to pilferage, such as auto air bags, warehousing them in a lights-out, fully automated unit makes great sense, and economic cents as well, the HK exec adds.

Ergonomics plays a role in automating, says Juergen Baumbach, director, logistics design and engineering, Swisslog North America (800-764-0300). When job content involves a lot of heavy lifting and repetitive motions, he says, "this definitely is an area to look at automating." Using robots for palletizing cases instead of manually building these loads is one trend now in DCs.

"Successful automation will pay attention to ergonomics to maximize picker productivity," adds Gary Gould, president, Remstar International (800-639-5805). It will also recognize "potential OSHA regulations which, if not followed, could make a DC non-compliant." Semi-automated vertical carousels and vertical lift modules (VLMs) present work to operators in their "golden zone," for example.

One best practice is "to constantly apply Pareto's Law of 80/20," says Gould. "Constantly look at work zones and analyze what will happen if you pull the twenty percent of fastest movers out of the existing process and put them into a more efficient system."

If a new system for the fastest 20 percent of stockkeeping units (SKUs) can meet one of various efficiency objectives —such as more throughput, space savings, reduced shrinkage, better inventory turns, and the like—then evaluate it for return on investment (ROI) or internal rate of return (IRR), says Gould. "The calculations are simple and the answer becomes a simple business decision." Well-applied carousel and VLM systems typically provide fast ROI/IRR, he says, and they are sometimes easier to win corporate funds than some more costly types of automation.

High labor content areas of a DC are obvious places to see if automation fits, says Swisslog's Baumbach. Examine those jobs with a high labor turnover rate or with a lengthy training period to see if they might be automated, he suggests." If the turnover rate is greater than fifty percent, consider automating."

Repetitive operations with a standard interface between the load handled and the machine are automation candidates too. AS/RS can take over for the forklift operator handling pallets in rack, for example, says Baumbach. In high-volume printing plants, automatic guided vehicles (AGVs) often bring heavy paper rolls from warehouse storage to the printing presses, for example.

"Best practices for handling unit loads are fairly well developed in many industries," notes Larry Strayhorn, president, Diamond Phoenix (207-784-1381).

But "best practices for item picking," Strayhorn declares, "is really in its infancy." When thinking productivity gains, he suggests looking closely at split- or open-case picking. That work may be only 5% of the materials flow in the retail DC. But it may be as high as 75% of the labor expended on order picking.

"Look at your highest labor costs," he recommends. Manual picking to paper tickets may yield only 20 to 40 picks per hour. Automation changes that dramatically. "Pick rates can go up exponentially," he says, to 300 to 900 lines per hour with a 99.9% accuracy rate using horizontal carousels, pick-to-light technology, and radio frequency data terminals.

Regardless of the materials handling automation being used and the reasons for it, all of the experts agree that use of automatic data capture (ADC) technology is a best practice by itself. They really go hand in hand, points out Brod of Siemens Dematic. "The (handling) automation cannot function efficiently without the ability to identify and track items," he says.

But it isn't just the efficient and automatic collection of more accurate data for automated systems that results in a best practice, says Rick Bushnell, consultant and founder, InsightU, a Web-based, supply chain educational organization, (215-489-1722). It's the automatic connection of that data to all operations within a warehouse's four walls and to the supply chain that's vital.

In many respects, "warehousing operations today are the same as they were twenty years ago," maintains Scott Cobb, vice president, product marketing, supply chain solutions, Symbol Technologies (800-722-6234). "But what's changed today is the acceleration of activities. Everything is real-time, end-to-end," he declares. And that requires ADC technology with real-time capabilities.

Managers need "to throttle all that happens throughout the DC in real-time," adds Legg of Real Time Solutions. That means intelligent information systems linked to automated hardware turning it into "intelligent metal," he explains. When, for example, a problem develops at a pack station, the intelligent system automatically reroutes in-coming totes to another pack station. Or the system slows an upstream activity to avoid a bottleneck. Or, in systems with high-speed sortation, real-time data help keep the sorter well fed at all times, Legg says.

There are significant benefits from ADC technology that can lead to best practices in operations, says Clark Richter, manager for logistics business development, Intermec (425-348-2600). Use of ADC systems can reduce labor hours in receiving, picking, and shipping orders and in kitting operations, for example. ADC usage can increase accuracy too by eliminating most human errors. Typically, inventory accuracy climbs from 70% or more before ADC to 99.9% post automation, Richter explains.

Any best practices connection involves using ADC devices, warehouse management systems (WMS), and hardware control software as well. "High levels of information systems support—both from a warehouse management system and from hardware control software that interfaces with this WMS—are required to take full advantage of automated systems," says Derewecki of Gross & Associates.

Matching that WMS to specific needs is critical too. "All too often companies run with a batch-type WMS," says Cory Flemings, vice president, sales and marketing, Knapp North America (770-383-3358). A batch WMS prints out pick tickets the night before items are picked. "There is no way of knowing if product is available in the pick position due to a lag in the replenishment cycle," he adds, or to other factors. "Fundamental to any solid automation practice is a good, real-time software package running the warehouse."

Given the right set of circumstances and the right mix of equipment and software, automation can be a best practice that will clearly put a distribution center in the competitive forefront.

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