The way Jim Tompkins sees it, operations managers have two options when it comes to meeting customer requirements.

"They can build a huge pile of inventory and service the customer from that," says the president of consultant Tompkins Associates (800-789-1257). "Or they can become more responsive to customers by reducing lot sizes and lead times while increasing the velocity of order fulfillment."

As might be expected, he sees little future for the former. The latter, Tompkins says, is not only the better choice, but it's also where real-time materials handling shines.

"Real-time systems are all about shorter moves of smaller lots with fewer buffers and greater reliability," Tompkins adds.

In other words, real time changes materials handling in significant ways to maximize use of the information available to make decisions on the fly.

The emphasis in a real-time materials handling system is on continuous flow. The end result is systems with a new mix of manual and automated equipment capable of immediate responsiveness to planned as well as unplanned events. This will require end users and suppliers alike to rethink not only the mix of equipment but the effectiveness of certain traditional types of equipment. In addition, the high degree of integration required of handling and information systems alike will require a new approach to creating these real-time materials handling systems.

"You use real time to manage the flow of goods in a particular manner," says Jeff Dixon, manager of the supply chain solutions group at Siemens Logistics & Assembly Systems (877-725-7500).

Dixon describes a catalog and e-commerce DC that was designed to fill an order in one hour. "This facility was structured around real time," he says.

Early in a typical day, orders are batch picked. But as the day goes on and the DC hits two activity peaks late in the afternoon and early evening, discrete picking takes over. By picking only for specific orders at those times, orders are filled in an hour. Further-more, it's done by mixing manual materials handling (shelf picking) and automation (cross-belt sorter).

"The success here," says Dale Hoberman, an operations consultant in Siemens' supply chain solutions group, "is the tight integration of real-time processes by pulling together different types of equipment to support changes in those processes."

Clearly, one of the leading practices today is lean manufacturing. In interviews for this story, lean came up time and again as a driving force in the development of real-time materials handling. That's not surprising given lean's need for replenishment of raw materials and work-in-process every few minutes or less.

But lean has also been a trouble spot. "Materials handling has been a stumbling block in lean," says Bruce Tompkins of Tompkins Associates. "Lean requires handling quantities of one. It's not a matter of going for the least handling. The companies that are doing well with lean understand this shift in materials handling and what's needed for real-time operations."

While there might be more handling than managers are accustomed to, there are several advantages including continuous flow, multi-tasking, reduced footprint, better use of assets, and tighter integration of steps in various processes.

"You want to maximize flow," says John Garrett, manager of business development, software for Daifuku America (800-253-1003). "You want limited staging and buffers. It's better to equalize all processes across the entire shop or warehouse floor and keep them all active. Real time does that."

Or as Larry Strayhorn, president of Diamond Phoenix (207-784-1381) puts it, "We're talking about waveless operations that run all day long at full throttle."

He goes on to say that continuous flow has a cascading effect too. With everything moving all the time, there's less buildup of inventory anywhere. That allows a smaller building footprint. Continuous flow also results in constant use of materials handling equipment. And with those assets working all the time, there is less chance of over- investing in materials handling equipment that stands idle, says Strayhorn.

Green Mountain Coffee (January, 2005, Modern - Joltin' Java DC) is an excellent example of this, he adds. If the company didn't operate in real time, the building would have been twice its current size (56,000 square feet). In addition, says Strayhorn, there would have been a need for accumulation conveyor upstream to the sortation system.

And what happened at Green Mountain is not an isolated incident. Real time typically has an impact on buffers, points out Jim Apple, partner at consultant The Progress Group (770-419-3812). Historically, buffers have been used to optimize the capacity of sortation systems. "Now, with more fully dynamic assignment of spurs and workstations and with real-time control of the picking and flowing of products, the physical buffers should go away," he says.

Dynamic replenishment is another area where real time opens up new possibilities, says Garrett of Daifuku America. He describes a scenario in which a warehouse management system (WMS) allocates inventory to an order. If there is a shortage of one or more items, replenishment is initiated before the order is released to the floor. "The idea is to never pick a short order with the intent of holding it as a short," says Garrett.

Real time also enables the performance of multiple tasks simultaneously, says LaMar Leishman, director of logistics at Daifuku America. As replenishment is underway, other activities such as picking and cycle counting can be performed, saving time while maintaining a maximum state of responsiveness.

While the potential of real-time handling systems is great, so is the challenge of making them great. While tight integration with related information systems is central to that success, so is integration of all materials handling components. Getting there may well require its own real-time approach.

"We need system and sub-system suppliers to not just interface but co-design," says Mike Kotecki, executive vice president at HK Systems (800-457-9783). And that requires all to spend more time analyzing data for specific operations to determine precisely the performance criteria that the materials handling system must meet. "We need to build systems that place the AS/RS, sorter and palletizer, for instance, in one mode to handle a particular order mix now and a different mode for a different mix later," says Kotecki. And the switch from one mode to another must be entirely transparent.

Data analysis also figures in the automation/manual handling equation.

While most people tend to think automation rules in real time, there's a real danger in thinking that people need to be removed from these systems, says Bill Tyng, a systems consultant at Forte (513-398-2800). He points out that if real-time information is delivered to people, they are just as important to the operation as any automated system, and can be just as effective in the right settings.

Jim Tompkins says much the same, but comes to it a little differently. Real time, he says, is all about speed and flexibility. To combine the two characteristics most effectively at the facility level, he says, automation is the call. But at the cell level, manual handling is best.

"If information can be delivered quickly, then the system needs to move the items quickly," explains Bob Silverman, president of consultant Gross & Associates (732-636-2666). "Automated materials handling provides the speed to respond."

The trick is to maximize the flexibility of that speedy response. That's where controls come in, says FKI Logistex's Gary Cash (877-935-4564). "The controls themselves need to adapt to new information as it arrives," he says. That requires a high level of flexibility in the controls not to mention tight integration of them with all key components from handling equipment to information systems.

Clearly, these are the early days of the next generation of real-time materials handling systems. While some operations have already made strides here, most have not. The great challenge now is to determine how materials handling operations should be changed to take full advantage of the information available to them.