Proving a point
September 1st 2011 Gordon Smith, founder and CEO of SDI Group urges UK warehousing professionals to
priortise automation projects with proven benefits to maximise return on investment
Asharp focus on projects with proven return on investment,
and not dithering on the procurement process, is the best
path to automation success, according to Gordon Smith,
founder and CEO of SDI Group. The manufacturer and systems
integrator of automated systems, including garment hanging, for
the fashion retail industry, has a 15 year record of British
engineering, with more than 500 projects completed worldwide.
After recession eliminated 50% of the company's pipeline
three years ago, SDI restructured and is now firmly back on the
trail of growth, with a broader European focus and with German
acquisition PEP Fördertechnik fully integrated.
That said, Smith urges caution among customers to ensure
that best return on investment is delivered. "In the UK, there has
been a trend towards spending more capital and going for high
speed sorters and in our market we don't think it is the right
product. The ROI tends to be compelling if you can keep your
capital costs down."
Three years after the recession, Smith still sees the need to
change cost base as the key driver, especially in the High Street.
He thinks most logistics operations can cut out a lot of cost
simply by looking at picking, for example, as he estimates 50-
60% of labour cost can revolve around this process.
"You can do a lot with low level mechanisation, but you must
understand your flows and processes. Take the individual
sections - receiving, putaway, picking, packing, shipping - look at
the people and processes involved and test them. Ask what you
want in an ideal world and if you can take small steps towards
that without upsetting the CFO by requiring large amounts of
capital," says Smith.
It requires leadership to break the norms at distribution
centres, adds Smith, which can be in short supply in a risk-averse
environment, but there are examples when bold decision making,
nevertheless grounded in reality, have paid dividends for retailers.
He says the discount retailers, among others, have often led the
way because of their strong ownership of the supply chain, and
their relentless drive to lower costs in logistics by spotting trends
and backing them once the ROI argument stacks up.
"TK Maxx came over here and in 15 years they have really
grown. They used hanging sortation very effectively, and
understood what could be achieved with AS/RS. The best examples
are companies that moved smart and early. They have applied
proven technology to specific processes and really worked it.
They didn't do endless analysis, they acted and rolled out
quickly. At the same time, they haven't tried to build enormous
sites with everything automated," explains Smith.
Smith argues that retailers that moved early to automation,
choosing the processes where ROI stacked up best, have "gained
10 years in productivity" over those running mainly manual
sheds. He points out this means these retailers can increase
volume very quickly with the same staff, and avoid escalating
labour costs over Christmas.
Smith is enthused about the solutions SDI is offering and
believes they can improve processes and increase productivity for
UK customers.
SDI has unveiled the Flexible Sorting Unit (FSU), a mid range
sorter, at a "good price point", which is able to serpentine around
(and up and down) customers' facilities.
"Lots of customers need to fit sortation into older premises,
and they just don't have straight lines. This has become a very
strong product for us. It is also low maintenance, and runs on an
energy efficient modular drive system."
Smith is equally excited about a sortation system that allows
garments to be sorted in single units.With this product, the time
it takes to receive, pack and ship a product can be reduced, with
obvious applications for store replenishment and ecommerce.
"Where retailers would have to close down a sales window at say
4pm to ensure products got into the trucks, they can now extend
that by two or three hours. They can also reduce investment in
the larger systems by 30% and build more afterwards if needed.
The amount of steel going into a dc is reduced," explains Smith.
Smith sees 'e-tail' volumes just starting to get to the point
where automation is justified and sees e-tailers gaining confidence
in automated solutions. SDI has worked with Vente-privee in
France, which is regarded as a leading edge online retailer.
In an era of ever increasing procurement departments, and
ever dwindling engineering teams, SDI is a proud UK-based firm
with engineering at its heart. Smith says SDI can bring its wealth
of retail logistics experience to bear on any warehouse or dc.
"We don't shift metal for the sake of it.We will work with you
to understand your processes and develop site specific solutions
that are proven and will deliver
return on investment." More articles from SDI Group UK Ltd: | 
