Annual user conference tackles automation

HK Systems' annual conference provides a forum to dispel stereotypes about materials handling automation.

By Tom Andel, Editor in chief -- Modern Materials Handling, 9/21/2007

The theme of this year’s Material Handling and Logistics Conference, hosted by HK Systems in Park City, Utah, was “Stage an Evolution.” Judging by the program content, the evolution had as much to do with the mindset about automation as about automation itself.

Several presenters said their success in applying automation depended on taking a fresh look at technology and bringing in fresh sets of eyes to help justify it.

That’s especially important when it comes to automatic storage and retrieval systems (AS/RS). Dick Ward, who served as executive president of Material Handling Industry of America for 20 years and has managed the AS/RS, AGVs and Integrated Systems and Controls Council for MHIA, presented findings of a series of three studies the MHIA commissioned to determine perceptions of AS/RS reliability and application.

Ward said that over the years AS/RS has been seen as intended “only for managing large inventories” and as being “unreliable, with too much downtime.” In contrast, the survey respondents reported, for the most part, that their goals were exceeded. What were those goals?

The top goal had to do with space efficiency. Following from that, in order of importance, were:

• increased throughput,
• reduced labor costs,
• speed/time to access inventory, and
• accuracy.

All of these elements contribute to ROI, and survey results indicate that 26.1% of respondents’ ROI expectations were exceeded. Another 69.6% said their system met expectations.

Being world class 
Meeting the expectations of materials handling professionals is a tall order, considering the environment in which they work. In today’s global markets, logistics operations have to be world class.

Ed Frazelle, president and CEO of Logistics Resources International and founder of The Logistics Institute at Georgia Tech., led a session on what constitutes world class warehousing and materials handling.

According to Frazelle, it means managing more:

• transactions,
• SKUs (thanks to more marketing),
• customization,
• international orders,
• value added services,
• returns,
• consolidation and assembly, and
• security.

 “The most cost effective way to get up to world class performance is to have the right metrics,” Frazelle said.

Being real
McKesson, one of the largest global distributors of pharmaceuticals, did not have great success with automation in the past. It has 30 DCs, each with different degrees of automation. These are piece-pick operations that process 40,000 to 130,000 lines per night for next-day delivery. Deciding on the right degree of automation, McKesson has learned, requires the realistic perspective of company veterans, plus the people in finance responsible for managing budgets.

“In the past we tried to sell projects after the fact,” said McKesson’s vice president of distribution operations, Erich Wachendorf, “but having finance on the team from the start keeps them informed, from data analysis and concept design.”

For McKesson, a key business objective was to maximize throughput. This allows more time in the transportation channels to cover the necessary geographies dictated by the nature of their business.

“Do a reality check of your data,” Wachendorf recommended. Look at every technology on the market, then once an appropriate class of equipment is identified, do a deeper data dive to predict how much labor is required by each method and what kind of parts and maintenance support is available.

He concluded that A-Frame technology looked to be the best approach for McKesson because, although it wasn’t the least-cost solution, it required less labor.

His most valuable lesson: “Invest in simulation,” he advised. “It will help you modify and check the design while predicting how subsystems will work together. It’s worth five times its price because it will find the bottlenecks.”