Automate for efficiency

21 January 2013

Efficient handling and storage is fundamental to achieving an effective supply chain, says Mike Hilton, head of business development at TGW Logistics.

Efficient handling and storage is fundamental to achieving an effective supply chain, says Mike Hilton, head of business development at TGW Logistics

Akey metric for many retailers is the cost an item or carton incurs as it travels through the retailers' supply chain. When one considers the many millions of items being stored at any one moment in time, then the saving of one penny per item / carton can add up to a considerable financial benefit.

Without doubt, automated material handling can help retailers to achieve the required performance, accuracy and efficiency levels. There are some sectors within the supply chain that will always rely on automation. In apparel for example, the business demands made on garments on hangers (GOH) operations cannot possibly achieve the necessary service levels without some form of mechanisation or automation, dependant on the volumes stored. However other retailers need to assess their need before deciding if and when to install automated handling and storage equipment.

For those retailers that are considering a move to automation, it is important that they work with systems integrators to build up a profile of their business in order to understand their unique requirements â€" now and into the future.

This involves profiling products, including weights and dimensions, as well as the storage medium such as tote, pallet or carton.

Automation allows for the picking, sequencing and dispatching of orders in several load types. When the load type has been established, the transactional data must be analysed in order to identify order volumes over both peak and average periods. Unsurprisingly as volumes grow, a greater level of automation and mechanisation will be required to meet volume demands and throughput growth.

Accurately predicting future order volumes as well as seasonal and promotional peaks is a major challenge for retailers and can often make it difficult to efficiently align the warehouse operation with actual throughput. Therefore a flexible and cost-effective system is required to facilitate the timely replenishment of stock at stores. Equally, any automated system implemented today, must and should have built in scalability to meet the users future business model.

Although speed is a constant priority, the ability for orders to be picked in a 'store-friendly' fashion is equally important, particularly for the food sector. These retailers will require pallets or roll cages that are made up of a mixture of category similar products that can be delivered to store â€" enabling the store operators to load shelves in the in the most efficient manner.

Here is where automation can provide a big win, in that it can sequence the product selection to improve operational efficiency at both ends of the supply chain.

Likewise, flexibility is key among the requirements of multichannel retailers who need an adaptable solution to meet the changing demands of a constantly evolving market.

Traditionally retailers have benefited from a high degree of predictability when distributing stock to their own retail outlets. There is usually a large quantity of items to be delivered to store, each with fixed destinations and delivery schedules.

In contrast there is no one solution fits all system that can meet the requirements of e-retail. Managing multiple, small and 'unique' orders and packing them to meet the customer's high service level expectation creates numerous logistical challenges for the multichannel retailer. Eretail demands a more singles orientated picking environment and therefore requires a completely different sortation or orderpicking process.

This process begins with the storage and handling of stock in different mediums in automated pallet, carton and tote stores.

Automated sequencing buffers and highspeed automated mini-load or shuttle devices then granulate and consolidate orders into multi-channel deliveries ready for onward distribution.

While system scalability is essential to satisfy increasing SKUs and order volumes, order accuracy must also be maintained.

Research has found that manual picking accuracy and pick rates within the warehouse can drop towards the end of a shift. Unlike manual order picking that has the potential for human error, an automated storage and retrieval system (AS/RS) can maintain 100% accuracy 24/7.

While there may be a need to resource labour more efficiently, there may be some parts of the country where labour can be sparse, such as near motorway networks.

Both situations can result in retailers needing to reduce their reliance on manual labour in favour of an automated solution.

A reduction in labour cost is usually a key metric in calculating return on investment (ROI), which for automated warehousing solutions can often be between two and five years.

Global retailer Gap found that its process of picking single items was proving to be labour intensive and related to a disproportionate amount of their operating budget. TGW has designed a solution that will eliminate the need for standard picking and automate case handling to provide a Goods-to-Person approach that will double the overall productivity of each worker.

We also believe that many retailers are also driven towards automation because of a desire for greater visibility throughout their supply chain.

Customers expect greater visibility of the status of an order, so any warehousing operation needs to tie in with a tracking solution to ensure that real-time data for individual consignments is available.

A scanning solution can support an effective order processing solution, enabling operators to track orders within the warehouse operation. This will provide greater visibility to the retailer in terms of order status and wider service levels to respond to incoming enquiries from customers, delivery partners and internal stakeholders. This is particularly beneficial to the pharmaceutical industry where thousands of SKUs require complete traceability back to the warehouse.

There are several motivating factors that inspire retailers to automate; ultimately they are all seeking the same objective â€" an accurate and efficient supply chain.