Other Voices: Put a dash of S.A.L.T. in your DC
August 15, 2012
Editor’s Note: The following column by Cory Flemings, a partner with abco automation, is part of Modern’s Other Voices column. The series, published on Wednesdays, features ideas, opinions and insights from end users, analysts, systems integraters and OEMs. Click on the link to learn about submitting a column for consideration.
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Have you ever considered what is required to justify automation?
I like to use the acronym, S.A.L.T., as a way to think about the issues to consider before automating your warehouse. S.A.L.T. can also provide the justification to go forward with an automated materials handling project.
S stands for Space. Now space seems like an obvious consideration. In warehouse operations, we’re always worried about having enough space. The problem is that once you realize the walls are closing in and the rivets on the walls are starting to pop, it’s too late. That’s because it takes anywhere from 9 to 18 months to go through the entire building process. If you are adding automation to a project, the design, engineering and implementation work can also take 9 to 18 months. So as you start to see your walls closing in, allow yourself planning time or you’ll find yourself behind the eight ball.
A stands for Accuracy. This is another area to consider when you are calculating the return on your investment in automation. I remember asking a warehouse manager once how accurate were his processes? He said they were really good. His orders were 98% accurate. Then he told me he shipped out 65,000 cases per day. Doing the math on my calculator, that meant they were shipping out 1,300 cases a day with some kind of an error. At $40 a box, which is an industry average cost to handle a returned item, you’re talking about $13 million a year in reverse logistics costs due to inaccurate orders. If you have a two-year return on investment, you can payback a $26 million investment in a shiny new material handling system through improved accuracy.
L stands for Labor. I once visited a warehouse in California that reminded me of the Indianapolis 500 as fork truck drivers whizzed down the aisles. The vice president of distribution pulled me aside and said, “Before you get too involved in the details, I am trying to figure out how I get something from the receiving dock into that pick face, where that man over there is picking, with as few people as possible.” Automated storage and retrieval systems, automatic guided vehicles, automatic re-supply systems are examples of automation that can reduce the amount of labor in a facility.
There is an additional reason labor is such an issue in distribution today. As we move distribution centers further and further away from population centers, people are getting harder and harder to find. For example, we have been told by one grocery retailer that only 50% of the people who apply for a warehouse job can pass a background check. In the Southeast, he said that only 25% of applicants can pass both a background check and a drug test. If you’re having trouble finding labor you might want to consider automation.
T, the last letter in our acronym, stands for Throughput. Automated materials handling technologies can improve throughput, especially for those who might say they just can’t get enough orders through their facilities fast enough, no matter how many people they throw at the problem. A-frames, for example, can fill 1,200 to 1,800 32-piece orders per hour of small stackable products. That’s a lot of volume. Shuttle systems and carousels working with pick-to-light or pick-to-voice technologies can fill somewhere between 600 and 1,000 order lines per hour in a goods-to-person system.
Automation isn’t for everyone. But by adding a dash of S.A.L.T. to your considerations, you can determine if it will improve your operations.