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Thinking beyond labor to justify automation

By Bob Trebilcock, Executive Editor
December 03, 2010

Over the years, the reduction of head count has been the way companies justified an investment in automation. While getting rid of labor is still the most common metric used in the return on investment calculation, one of the emerging trends I came across reporting an upcoming story on materials handling automation is that some companies are thinking beyond labor to justify automation. Or, they’re thinking beyond simply reducing labor to justify their investments.

Here are a few key takeaways I came across during my reporting.

Be all that you can be: Many companies are already running barebones operations and have little fat left to cut. Instead, they are looking at automation to enhance the labor they have. That may explain the use of goods -to-person picking systems that combine automated storage with pick-to-light or voice-directed picking to reduce the amount of walking on the part of associates. “The goal is not to eliminate the human component,” says Tom Coyne, CEO of System Logistics. “It’s to help the associate reach their potential by eliminating walking, reading, waiting or any other extraneous process.”

Get flexible: There’s a reason that the AGV industry is having one of its best years ever, says Bill Casey, president and chief operating officer for SI Systems: flexibility. “We have manufacturing customers that want the ability to pick a solution up and take their investment with them if they need to expand or move their operations,” says Casey. AGV’s provide that flexibility.

Think beyond the four walls of the DC or factory: Automation has typically been a way to reduce costs inside a factory or distribution center. Some companies that own their own supply chains are looking at automation to reduce other supply costs.

For instance, one of Witron’s customers is using a highly automated storage, sequencing and palletizing solution to build store-ready, aisle-aligned pallets. The customer estimated it saves the equivalent of half an associate a day doing replenishment in each store. That doesn’t sound like much, until you consider that the customer has nearly 400 stores in the region served by that DC. More importantly, automation allows it to build taller pallets than can be built by hand. “They’re saving 20 to 40% on transportation costs because they’re getting more cube on each truck,” says business development manager Sean O’Farrell.

A TGW Systems customer in Europe that uses automation to pick and pack women’s apparel in counter ready display cartons, and then build pallets or roll carts according to the department or section of the store where the displays will be used. “The store associate simply opens up a tote, puts the cartons on the counter and they’re done,” says Larry Strayhorn, president.

While these examples are still the exceptions and not the rule, they illustrate how automated materials handling is evolving in the factory and the DC. I’ll be writing more about this is The State of Automation, a Big Picture in the December issue of Modern.

For more insight on automation click here.

About the Author

Bob Trebilcock
Executive Editor

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. More recently, Trebilcock became editorial director of Supply Chain Management Review. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.


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