Technology

Automating the warehouse – considering the choices

By Gian Schiava

March 2013

Is the warehouse of the future fully automated?

At recent materials handling exhibitions like Logistica (Netherlands) and Manutention (France), the number of suppliers providing automated warehouse solutions has increased significantly. Will the warehouse of the future become a high tech building with hardly a human to be seen?

Gian Schiava digs into the pros and cons of warehouse automation.

Let’s begin exploring this topic by examining how goods are moved around the warehouse and define what we mean by warehouse automation. When warehouse operators physically travel to where the goods are located in the warehouse, we call this ‘man-to-goods’. While this can be done using advanced machines like turret trucks in combination with barcode scanning, we do not consider this to be warehouse automation. However when systems are used to bring ‘goods-to-man’ we cross the borderline. This is automation. There are many solutions on the market to help achieve this, like mini-load cranes, horizontal or vertical carrousels, shuttle systems, sorting systems and many more. In most cases these systems are combined with conveyors, further reducing the need for human intervention.

The second thing we need to bear in mind is that many companies don’t fully automate their logistics operation. Some only automate certain warehouses or perhaps stock with high turn-over. So a mixture of a sophisticated orderpicking combined with conventional pallet racks is not unusual around Europe.

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Image courtesy of Rocla Oy

When to automate

Let us have a look, then, at the reasons a company might consider automating the warehouse. Probably the biggest driver is the ever increasing cost of labour. Wages are spiralling downwards due to the financial crisis, but this may only be temporary. In the longer term, the population in most European countries is ageing and labour is likely to become much scarcer. On both counts, automation is a solution.

“...A mixture of a sophisticated orderpicking combined with conventional pallet racks is not unusual around Europe.”

Space is another major issue. The automated warehouse does not require wide aisles to accommodate forklifts moving to store and retrieve goods. A narrow corridor is sufficient for a shuttle or crane. Moreover, shuttles and cranes work at greater heights than trucks. So by decreasing the aisle width and increasing the racking height you can pack more goods into an automated warehouse. In practice, this means the whole operation can function very efficiently in a smaller and less costly space. Or, if storage requirements are increasing then automation can make warehouse expansion or a move to larger premises unnecessary.

Next – to err is human. In a manual warehouse errors are unavoidable. Although we check accuracy with techniques such as barcode scanning or voice recognition, the human order picker can still make an error. Machines do not. They do exactly what they are told every time. Automation therefore leads not only to fewer picking errors and greater customer satisfaction, but also to lower costs.

“- to err is human. In a manual warehouse errors are unavoidable. Although we check accuracy with techniques such as barcode scanning or voice recognition, the human order picker can still make an error. Machines do not.”

The last main reason for choosing to automate is to increase productivity, particularly as customers are placing their orders later and later. While cut-off times at 14.00 hours were once considered normal, nowadays orders are still accepted at 18.00 or even 20.00 hours. And e-commerce is only enhancing this trend. The later the cut-off times, the shorter the lead time on the warehouse floor. If at a given moment only a few hours are left to pick hundreds of orderlines, some form of automation is almost inevitable.

There are many secondary and less compelling reasons for automation, such as reducing overall energy consumption. And the fact that automated systems are becoming more affordable makes them all the more attractive.

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Image courtesy of Rocla Oy

But it’s not that simple!

If the drivers for automating a warehouse are so clear, then why are there still so many conventional operations?
First of all, warehouse automation still requires serious investment with a long pay-back period. In these harsh economic times a large number of companies are simply striving to survive while loans are difficult to obtain.
In general we see pay-back periods for automated systems varying from four to five years. So if in doubt, at least do a ROI calculation before considering such an outlay.

“Warehouse automation still requires serious investment with a long payback period.”

The second fear is that automated systems may be less flexible, adding an extra layer of constraint. Demand, for example, is difficult to predict, and you do not want to build a 10 million Euro warehouse only to discover that, because of shrinking sales, you have far greater throughput capacity than you need. Big distribution automation projects probably make most sense for companies that are either growing or can predict demand accurately.

With a manual warehouse, it is not that difficult or expensive to move racking, change warehouse flows, or introduce other changes. In a warehouse with extensive systems or kilometres of conveyors making these types of changes is often difficult and costly.

Furthermore, automation requires standardisation. For example, in an automated pallet warehouse, goods need to be stored carefully on the pallet. Boxes cannot protrude into the aisle and it’s essential that goods don’t fall off. Shrink-wrapping helps but adds more to the overall costs.

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Source: Rocla Oy

There is another way

The pros and cons above are not arbitrary. What may be a big problem for one company may be irrelevant to another. However, ‘to automate or not’ is not the only question. Logistic managers across Europe have a very demanding job, working to keep costs down while simultaneously trying to increase performance. And that isn’t likely to change in the next few years.

So if making an investment is not an option, it pays to have a closer look at the warehouse and see where bottlenecks can be eliminated and productivity can be improved.

“Logistic managers across Europe have a very demanding job, working to keep costs down while simultaneously trying to increase performance.”

Companies are changing all the time, so why would their warehouses stay the same year after year? Take a closer look at the pallet racks. Can you decrease aisle width and work with reach trucks in order to increase storage capacity? Are your trucks carrying goods both ways or driving without loads half of the time? Is your aisle length and direction still what it needs to be? You may be surprised at the productivity gains to be made if you approach this process thoroughly.

21st century warehouses

Today, tomorrow and even the day after, we will see warehouses of all kinds. Automated, partially automated or fully manual, they all provide challenges and opportunities for improvement. A degree of warehouse automation should never become an aim in itself. It’s the goals of the company, both short and long term, that should be the beacons towards the future.

Automated Guided Vehicles

• AGVs really work well in applications with 2 or 3 shifts, reducing the pay-back period.
• AGVs are reliable. They do their work. Always.
• Pallet traceability is a big advantage, especially for the food industry.
• AGVs reduce the damage to goods and buildings.

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