Leveraging automated materials handling systems

As manufacturing and distribution supply chains become more complex, companies like Schaefer Systems International are finding new ways to think about and justify materials handling automation.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 8/23/2007

You know the supply chain is hot when third-party logistics providers (3PLs) start advertising on television sitcoms. Entertainment shows, after all, have traditionally been used to sell detergent to housewives. 

“Now, you watch your favorite television program, and you see companies like UPS and DHL selling supply chain solutions in primetime,” says Cory Flemings, executive sales manager, Schaefer Systems International, the North American subsidiary of SSI Schaefer.

What that says to Fleming is that companies like Schaefer Systems, which provide automated materials handling systems, need to rethink the types of solutions they’re providing and who they’re selling to in the future.

Fleming identified several trends he believes are changing automated materials handling today.

3PLs are a force to be reckoned with: “It used to be that I went directly to a major corporation to sell an automated materials handling system,” says Fleming. “Now, I knock on the doors of the 3PLs because they’re providing entire supply chains. That’s a paradigm shift for our industry, and it’s going to change the game.” Some of those changes can already be seen in Europe, for instance, where Schaefer has built a single automated distribution center that’s being used by two unrelated customers. They use their combined volume to leverage the automation. “I don’t think that concept is coming to the U.S. any time soon, but wouldn’t it make sense for two or three pharmaceutical manufacturers who are sending their finished goods to the same customers to build a super warehouse managed by a third party to reduce their logistics costs?” Fleming asks.

In fact, Supply Chain Solutions, a third-party sequencer of parts, is already doing that for the office furniture industry in Grand Rapids, Mich.

The Green DC: These days, green is more than the color of money. “One of the things we’re hearing talk about is the green distribution center,” says Fleming. He’s the first to concede that at the end of the day, the green DC may end up as just another fad. Still, Fleming believes the automated materials handling industry has a green story to tell for those who will listen. “We have been building conveyor systems with automatic turn offs to save energy for years,” he says. “What’s more, you can put a high bay warehouse on a much smaller plot of land than a conventional warehouse, and when you go up, you’re that much closer to your product from a fulfillment standpoint.” With the attention being paid to green, “there’s a great argument for these types of facilities,” Fleming says.

P2P picking: This was a new acronym to us. It stands for product-to-person picking systems, a concept that’s catching on in Europe, but can also be seen in the Staples DC featured in Modern. P2P picking turns conventional picking on its head: Instead of an operator going to a storage location to pick a part, the system brings the part to be picked to the operator. “We have developed systems in Europe that deliver 1,000 totes per hour to a picking station and also automatically take away the totes with orders as they’re filled,” says Fleming. “By stripping out all the other ancillary functions that a picker ordinarily does, there are huge opportunities to improve picking performance.”

New handling unit:  Receiving, storage, picking and shipping have traditionally been optimized around three units: pallets, cartons and eaches. Fleming is seeing the emergence of a fourth unit: the layer of product. “We’re seeing more of an emphasis on systems that can palletize, depalletize, store and pick an entire layer of product at a time,” says Fleming. In a mini-load system, for instance, that might involve a storage tray that can handle the number of cartons it takes for a single layer of a pallet. “If you’re selling to a big box retailer, it’s much more efficient to move a layer of product at a time than to handle seven or eight individual cartons,” says Fleming. “We’re seeing more interest, and there are solutions out there for that.”