Automation gains
August 1st 2008

Historically, the uptake of automated storage technology has been slower in the UK compared to mainland Europe. Paul Bradley, UK business development manager of MLOG Logistics, a leading supplier of automated high-bay warehouses and materials handling systems, discusses why this is the case

The UK has always been more conservative in the adoption of automated storage solutions compared with its European neighbours.

This can be linked to a number of factors, not least, the unrealistic return-oninvestment expectations of many UK companies, with a two to three year payback requirement not uncommon.

Such a requirement, has worked against automation in favour of more manual techniques, when an element of automation could actually achieve considerable longerterm productivity and efficiency gains. As a result, conventional warehousing operations have more often been preferred to automated high-bay solutions, limiting racking heights to a maximum of around 15 metres and relying on traditional material handling equipment (MHE) such as forklift trucks, reach trucks and VNA trucks.

Perceived barriers

On top of this, other issues such as traditional accounting procedures, outsourcing, and perceived inflexibility of the technology have added to the barriers preventing a greater uptake of automated solutions.

During the past few decades there has been a culture of outsourcing amongst UK businesses, with many companies choosing to contract out some or all of their warehousing operations to focus on core activities. With the resulting competitive tender processes and relatively short contract periods, there is little incentive for third party logistics operators to adopt automation unless a significant return on investment is achievable within the initial agreement.

There is also a general perception in the UK that automated high-bay warehouses are most suited to specific high-volume storage applications with high levels of throughput and a relatively stable stock profile.

Therefore, automated pallet storage applications in particular have historically been restricted to larger organisations, often from within the manufacturing sector.

Even the reduction in costs (in real terms) of automated MHE equipment over the past 10 years, resulting in lower cost systems particularly for smaller operators, has not been enough to dramatically increase or diversify demand for automated handling technology.

On the Continent however, there has been a more widespread adoption of automated storage and retrieval technology (ASRS) in organisations of all sizes. In fact, ASRS installations are relatively commonplace, even at heights similar to conventional manually operated warehouses, often with low numbers of storage and retrieval machines, perhaps fulfiling operations such as small production buffers or spare-parts stores.

Despite a perceived lack of enthusiasm within the UK for greater levels of automation, there is much to think about when evaluating the costs versus benefits of the technology in an effort to overcome mounting supply chain pressures. When considered in relation to such factors as land cost and availability, labour costs and a shrinking labour market, environmental responsibilities, lifting restrictions and other Health & Safety legislation, singles replenishment, and next-day deliveries, then the case for automation begins to become much clearer.

Companies with a large stock holding requirement can certainly benefit from the reduction in footprint that companies such as MLOG Logistics can provide through product storage and retrieval at heights in excess of 40 metres. This may be particularly beneficial in key strategic geographic locations where the cost of land may be at a premium. In addition, there are many other measurable benefits available through the adoption of automation that contribute to payback such as improved picking accuracy, better stock traceability, reduced buildings costs, reduction in overheads and a general improvement in operations.

Measuring success

However, system success should not be judged by payback alone. What price can be placed on satisfied customers that come back time after time? Success must be judged by business efficiency and productivity gains; a well motivated workforce resulting in low staff turnover, plus reductions in errors and damage to name just a few of the less tangible benefits that directly result from automation, and which still contribute to the bottom line.

There are a number of factors that have traditionally stifled the uptake of automated storage solutions. The combination of "shortterm- ism" dictating unrealistic paybacks, partly as a result of widespread outsourcing, and perceived system inflexibility in the context of what is seen to be an increasingly dynamic and uncertain market economy have certainly had an impact. However, with increasing demand to streamline and optimise every aspect of the supply chain, greater warehouse automation may be one way to increase productivity whilst reducing overheads.