Automation: Sorting it out with Interroll

The idea that the world is flat has been a topic of business conversation since Tom Friedman’s book appeared a few years ago. Friedman’s thesis is that the proliferation of technology and communications means that we’re all competing against one another, no matter where we live. Global events and global competition affect us at the local level.

We’re seeing that play out in the materials handling world in North America. In recent years, more global providers have entered the US market, bringing new ideas, solutions and technologies to end users here. Meanwhile, US-based providers like Intelligrated, Hytrol, Manhattan Associates and RedPrairie are looking beyond our borders for growth.

Similarly, US-based end users are grappling with the same issues as their competitors in other parts of the world. So, what are some of the leading issues impacting automated materials handling, regardless of where you live? That was the topic of a conversation I had with Dr. Heinrich Droste, a managing director of Interroll Automation GmbH. With production facility around the world, including locations in the US, Droste and I talked about three topics that are impacting automated materials handling systems here and abroad.

E-commerce: Online sales reached an estimated $572.5 billion worldwide in 2010 and are growing at double digit rates. Duetsche Bank estimates that online sales just in China will surpass $200 billion by 2014. The most successful ecommerce companies are those that have paid the most attention to their logistics. “How many companies did we see that had a nice Internet platform for ordering but failed because they forget about logistics?” Droste said. “The customer expectation is to get the right product delivered within a maximum of two or three days. It costs money to fill orders that fast and it’s a challenge on all continents.” That is leading to investments in automation, including flexible sortation systems like cross-belt sorters, that can handle a wide range of product sizes and packaging materials, such as poly bags.

Megacities: The world may be getting smaller, but cities are becoming bigger. That is already having an impact on materials handling and logistics servicing our largest cities. “China may be a very large country but its population is concentrated in a few urban areas,” Droste said. “A square foot of land is so much more expensive in Europe, Japan or Hong Kong than it is in Kentucky. As a result, we have to use automation to build very condensed distribution centers.” In fact, he added, Interroll just worked on a project in Hong Kong where the justification for the project was predicated on saving space, not reducing labor as is common in North America. With cities like Los Angeles, New York and Miami growing ever larger, Droste expects that dynamic to be more of an issue – and more of a justification for automation - in North America in coming years. “Space savings, energy savings and ergonomics all come into play with this mega city trend,” says Droste. “The high cost of land and labor couple with the demand for a worker-friendly environment will leader to higher rates of automation near cities compared to rural areas.” 

Quality is job 1: No one argues that automated systems lead to more consistent and more predictable processes. That translates into fewer errors and a higher level of quality. Historically, there has been a trade off between the acceptable standard of quality versus the cost of achieving a higher level. “In Europe and Japan, where the workforce is older and labor is very expensive, there has been a demand for quality processes and high level of quality in materials handling automation,” Droste said. In Scandinavia, for instance, end users demand high throughputs, high speeds and very low noise levels. Energy savings is a must. “You cannot do that with cheap equipment,” Droste says. “But they are investing over the long term and there’s a high payback then.” In China and Eastern Europe, where there is still access to young, inexpensive labor and lower quality standards are accepted, automation is less prevalent unless a safe and secure process is required. The US has historically been somewhere between the two. Droste believes that is changing. “You’re seeing trends in America that I believe will lead to higher quality installations,” Droste said. “The workforce is aging, which means more ergonomics, usable space is becoming limited and there is an absolute demand for getting the right product at the right time to the right customer. That means you need a very safe and reliable distribution process.”