Materials handling automation: HK’s new take on automation
A 570,000 sq ft automated distribution center put together by HK Systems in Mossville, Ill., is blurring the line between OEM, systems integrator and materials handling end user. It’s also a showcase for what could be a new model for the materials handling industry in the future.
Here’s what I mean: End users are reluctant to invest in materials handling automation for a couple of reasons. First, they’re concerned about what might happen if their needs change. Will they be stuck with a very expensive solution that may no longer work for their business? Second, there’s always that big question: Will it work? There’s a corollary to that question that haunts managers in the dead of night: Will I lose my job if it doesn’t?
Meanwhile, 3rd party logistics providers may have the skill sets to make an automated system work. They’re hesitant to put in automation because they never know how long they’ll keep any one customer in a facility. It’s easier to throw up some pallet rack, lease some lift trucks and implement a warehouse management system than to bolt conveyor, sortation and automated storage to the floor.
Enter HK. Like many systems integrators and OEMs, HK has developed an outsourced preventative maintenance business. Install one of their systems and they will maintain it for you. The Mossville system, which was installed to deliver parts and components on a just-in-time basis to a nearby Caterpillar diesel engine plant, takes that idea to the next step: HK not only designed and installed the system, they also run it, with HK Production Logistics running the facility as a 3PL. That shifts the risk that the system won’t work today, or will be out of date tomorrow, from the end user to HK.
“Over the years, we have put in a number of automated systems for Caterpillar,” explains John Hines, president of HK Production Logistics. “On this project, they asked us to not only suggest a solution, but asked if we were interested in running it for them. We saw it as taking our outsourcing business one step further.”
Well, more than one step further. In addition to designing and implementing the solution, employees who used to work for another logistics provider went to work for HK Production Logistics. “There were experienced people who knew how to get the material in and out of a conventional warehouse,” says Hines. “We taught them automation.”
How did it work? HK bought an existing facility that included a 44,000 position automatic storage and retrieval system (AS/RS) that had been out of commission for about 20 years. The building had been vacant for more than a decade. “We retrofitted the building, put in new cranes and controls in the AS/RS system, cleaned up the racks to make them functional and then started moving material in,” says Hines.
In addition to retrofitting the AS/RS, HK also installed a new ERP system and integrated the facility’s software with Caterpillar’s production system.
That was a year and a half ago. Today, the facility operates like a sequencing center in a just-in-time, just-in-sequence automotive environment. HK receives and puts away in the AS/RS materials, parts and components from Caterpillar’s suppliers.
Meanwhile, the facility also receives a demand signal from Caterpillar that tells HK what parts are going to be required at a particular time on the line. Material is retrieved from the AS/RS, kitted and then delivered just-in-time to the manufacturing plant, literally located about 500 feet away. Material is delivered in trailers that are designated just for that purpose. HK is delivering about 200,000 subassemblies each month.
Right now, this is a one off. That may not be the case for long. “We have other proposals out there,” says Hines. “We’re hearing from people who are interested in automation but don’t think it’s their core competency. On the other hand, we’re very familiar with automation and can make it happen.”
