Business Logistics Term Paper
decaydemon
TermPaperExample2.docx
LMGT 1321
May 1st 2015
Warehouse Automation
Introduction
Automation warehouse refers to techniques, methods, and systems that facilitate the operation and control of processes in order to reduce human intervention.
In order to remain competitive, many companies have to find ways to cut costs and save money. Warehouse management technology can save money by automating the receiving process. Receiving and process is one of the most labor intensive, non‐value added processes in a warehouse or distribution center. Automated receiving can significantly cut operating costs, and it provides a way to streamline the entire distribution process, further reducing costs.
Background History
Term warehouses have been around for many years, there is a record since European explorers started to ship and trade routes between their territories and other regions. As business grew up, it was mandatory to create a simple system to store their goods at the shipping ports.
Centuries later, the introduction of massive transportation like railway system began to facilitate greater amounts of cross-country movements, rail warehouses were needed in order to stock. At the same time, the modern world entered in a sustainable growth; the necessity to stock and keep goods were needed in other areas such as construction, transportation, storage facilities were built in more convenient areas, which were in somehow closer to the future use of the products being stored.
In recent years, the warehouse model was used to keep and store foods, like corn, alcohol, at the same time valuable commodities and several other sensitive materials
How warehouse automation process works?
Many products pass through a several steps in traveling from the time is receiving to shipping, and each step adds cost. While the main objective of any automation project is reduced labor cost, the reasons to automate receiving go beyond labor savings. Manual receiving is also in somehow slow, in order to compensate, facilities must store more product in inventory to ensure that an adequate supply product is ready and available for shipping when it is needed. Another reason to automate is that most facilities have limited capacity. Making the receiving process more efficient as possible lets a company ship more products without having to expand or build items/goods in additional distribution centers; by shipping a product to a customer as quickly as possible will increases revenue and profit.
Courtesy www.Barcode.com
Receiving and shipment
In its simplest form, receiving consists of unloading products from a truck, determining how many of each item was received in the shipment, recording the receipt in the warehouse management system while matching the goods to a purchase order, labeling or marking product for storage or shipment, and moving products to another part of the warehouse or distribution center. The process is complicated by many factors, including sorting through and separating freight deliveries made up of many different products of various shapes and sizes. Automated receiving systems automatically record incoming products, labeling and sorting them for movement to storage or the shipping department. Automating the process can make all these steps faster and more efficient, providing the framework for cross‐docking, which enables product to flow through the facility as quickly and efficiently as possible.
Equipment in an automated line can scan incoming boxes, send the data to the WMS to record receipts from suppliers, determine if there is demand for the product, label the product for shipping or put‐away, confirm the accuracy of the process, and then route and deliver the boxes either to storage or to the shipping area. In an automated process, a conveyor extends directly into the truck, and the only physical labor is placing cartons on the conveyor. This puts less physical stress on workers, enabling them to unload more cartons in a given time. An extendable conveyor offers the potential for the greatest efficiency gain, and the reduced labor costs quickly offset the conveyor cost. In an automated process, bar codes are scanned automatically, and the system performs the data look‐up to determine the proper allocation of each package. Automated receiving improves efficiency by greatly reducing or eliminating the handling and movement of pallets from place to place. Labels are applied automatically to each carton, scanned and verified before the carton is sent either to storage or to the shipping area (cross‐docking).
Automated receiving and labor costs
Automated receiving systems provide labor savings, increased productivity, increased accuracy, improved response time, and lower operating costs. Once objectives have been identified and prioritized, critical concept and design requirements will come into focus. A system usually consists of two to ten distribution lines, so that the failure of one line does not disrupt movement of packages through the facility. In addition, a back‐up manual process should be in place for emergencies. System design usually addresses two issues: material handling and information flow.1
A number of studies have identified factors contributing to the success or failure of a large system deployment. These include the clear formulation of business needs and benefits, involvement of top management, proper planning, adequate funding, and partnership with competent technology providers, and integration into the company’s existing supply chain management, customer relationship management, and enterprise resource planning applications.
Recommendations for successful implementation of automation technology include an initial review of the experiences of other companies to provide insight into the effectiveness of different methods and procedures, making sure that the system offers the flexibility to adapt and evolve by taking advantage of the information it can provide. Integrating real-time intelligence into existing systems can impressively reduce error rates and improve productivity. The solutions selected should meet global standards. To insure somehow flexibility, another recommendation is to avoid being locked into a single vendor’s products. 2
Possible drawbacks
The biggest potential downside for companies considering an automated warehouse is cost. Construction can be more than twenty million dollars, and if a company is not growing, it could well be postponed. If the company might be sold within the next five years, it may not be worth the investment. Maintenance costs will be significant as well, because conveyor belts, pulleys and robots require more attention than a forklift. A dropped box or jammed conveyor belt could cause issues. Unlike robots, human beings can think and resolve problems. Products have to be modified and packaged differently in order to be stored in this new type of warehouse. Smaller companies may not be able to influence suppliers to change the way they package.. The company’s influence on the supply chain will determine how big the risk would be to change.
Distribution centers are the base and foundation of a supply network, with a single location stocking a large number of products. Some companies operate both retail and direct-to-consumer distribution out of a single facility, sharing space, equipment, labor resources, and inventory as applicable. Since a large retailer might sell tens of thousands of products from thousands of vendors, it is impossible to ship each product directly from each vendor to each store. Many retailers own and run their own distribution networks, while smaller retailers may outsource this function to dedicated logistics firms that coordinate the distribution of products for a number of companies.
Flexibility is needed in automation technology due to changing demands in the distribution center environments. With more challenging delivery requirements, shorter contract durations, increasing client demands, and increased product variation, robotic industrial trucks prove to be the right answer for large footprint distribution centers watching labor costs by using unmanned robotic industrial trucks.
Robots in the horizon
Repetitive jobs such as hauling palletized goods in large warehouses or distribution centers can be replaced with robotic industrial trucks that automatically transport pallets from the receiving docks to various locations within the reserve racking. The focus is on the horizontal transport of pallets to quickly clear the receiving dock and increase productivity of the forklift operators who put the pallets into the racks. Warehouse managers utilize robots to repetitively move goods long distances in order to free workers for value-added jobs.3
Semi-automated systems require manual de-palletizing of products. Products are placed into horizontal or vertical buffering systems. Once the item is being placed into the buffering system, the product waits to be picked and released into”mixing center" acting like a sorting area. After the product is picked, it streams through the mixing center, then moves on to the palletizing area, and then off to the delivery truck. Fully-automated systems automatically de-palletize by a gantry or robotic de-palletizing system. The product is then delivered to the horizontal or vertical buffering systems, in a true "hands-free" operation. The primary advantage of full automation is a further reduction of operator personnel. 4
Source: www.amazon.com
Typical manual processes such as receiving, picking, packing, and shipping are tough, particularly when heavy or hazardous products are involved. Add in less than ideal working conditions, such as extremely hot or cold climate seasons, and these manual processes become even tougher for employees. Unfortunately, this often leads to employee turnover and inconsistent fulfillment both in quality and on-time delivery.
The increasing use of robotics in the industrial sector often creates some safety concerns for employers and workers when these robots interact closely with humans without physical barriers or safety fencing. To combat these concerns, The National Institute of Standards and Technology is currently working on merging elements of safety standards for AGV’s with close-proximity robots. So as the new world of mobile robotics begins to emerge, so are the safety standards associated with them.
With current advances in the dexterity of End of Arm Tooling (a.k.a. the “hands” of the robots) as well as the vision sensors, those robots will be able to take on more and more of the tough jobs within the industrial environment. In the next 10 years, logisticians will see an increase in mobile robotic applications within distribution centers helping to improve productivity, accuracy, and overall throughput of order fulfillment.5
What are the important benefits of the automated system?
Some automated systems provide improved product security, some systems help with processes in terms of value added, some speed up on order selection, other reduce the required space in order to store their inventories. By creating a list of the important benefits, several companies can expect to realize smart purchase of an automated and reliable system.
Can any of these benefits be accomplished through traditional methods? Once companies have their benefits list, they could find what they might be able to accomplish by working smarter. For example, by reducing selection time, they can reach timing goals.
Will automation impact my operational flexibility? The key thing about people is that companies can always add more of them during certain busy periods to get the work completed. This is not necessary the case with some automation systems. Most of them are basically designed based on fixed maximum production rates. To make an analogy with a faucet, as the amount of water you need to move increases, the flow rate can’t exceed the rate of the faucet being turned fully open.
Will the operation benefit as much as the featured case study example? A common mistake when purchasing automation is to assume that companies operation will benefit in the same way someone else’s. Factors such as physical product characteristics, customer order profiles, and unit demand quantities can have a dramatic impact on the success of an automated system.
What is the real cost of operation for the automated system? Nowadays, everyone focuses on the initial investment cost of automation, but there is also on ongoing personnel, management, and maintenance cost. Companies can make sure to consider the cost to operate, maintain and repair the equipment. They can rely with a colleague who has had a system for several years. They can also consider how much labor resource will be tied up monitoring automated equipment and fixing problems every single. If they need to dedicate someone to a particular area, such as feeding boxes and clearing jams on an automated box maker, which may not be available to do other things.
What are the implementation risks?
In many situations the actual problem may be totally unexpected, and therefore very difficult to predict ahead of time. To defend against unknown risks insist that the vendor perform exhaustive testing with a particular product and sample order profiles. Also companies can consider getting the help of an expert who has seen a variety of past implementation shortcomings already.
Keep in mind that improvements from automation are almost always situation-specific and often depend on operational changes that can be implemented with or without the automation. If companies still want to move forward, they could make sure that vendor to exhaustively test their system with their product and order profiles.6
The Benefits of Automation in the Distribution Center
Automated storage and order picking systems can deliver substantial operating savings in the DC while at the same time improving the quality of order fulfillment.
Summary of Major Benefits of Automated Storage and Order Picking Systems
1. Reduced labor costs
2. Reduced dependency on labor availability
3. Improved space efficiency
4. Improved ergonomics and safety
5. More resilient to changing order profiles
6. Extended facility Life
7. Higher quality fulfillment
8. Reduced Labor Costs
Conclusion
In general, the justification or business case for an automated system will be based on comparing the automated option to one or more alternatives. The alternative may be to just continue as is, however, where an operation has outgrown its current facility; the comparison may be between moving now to a new manual site versus automating the existing site to prolong its life. Where an operation to move to a new site in any case, the comparison may be between building a new manual site versus building a new automated site. An automated system will require significantly more initial investment than a manual system however potential associated savings in building and land costs need to be taken into account. Automated systems also require much higher maintenance costs including preventative maintenance, spare parts and breakdown support which together can run to 5‐10% of the initial investment per annum.
Where do the savings come from? Reduced labor costs, including recruitment and training costs; savings in land and building costs; improved capacity to meet future demands; fewer lost time Injuries; higher staff retention; and improved customer service
The higher productivity associated with automated system leads to lower current labor costs and this is a key driver in determining the feasibility of the higher investment. The savings in labor costs are very much dependent on the labor rate and the throughput of the system. However, the case for automation is much stronger for operations that run 3 shifts in a high labor cost area. In considering a labor rate for the business case evaluation, all associated costs including overtime payments and management, recruitment and training costs should be included. These can be substantial for large manual sites, especially where there is a scarcity of labor and/or a high turnover of staff. In most cases, automated systems require a much smaller footprint than manual systems. This may translate into direct cost savings from an immediate reduction in space usage or alternatively, it may allow a building expansion or a transfer to a new facility to be deferred. These savings should also be calculated and factored into the business case. Finally, the business case for an automated system should consider not only the “hard” numbers such as labor and building cost savings but also the “second order” benefits of a safer, more ergonomic environment with improved delivery flexibility and response times. Although sometimes difficult to quantify, these benefits include less lost time through injury, increased staff retention rates and higher customer satisfaction which leads to increased sales.7
Bibliography:
1."Automated Receiving: Saving Money at the Dock Door".
http://www.werc.org/assets/1/workflow_staging/Publications/798.PDF
2. Attaran, Mohsen. “Critical Success Factors and Challenges of Implementing RFID in Supply Chain Management”. Journal of Supply Chain and Operations Management, Volume 10, Number 1, February 2012. California State University, Bakersfield, CA, USA
4.“Large Distribution Centers Automate with Robotic Systems Applications”. Thomas R. Cutler. http://www.automation.com/automation-news/article/large-distribution-centers-automate-with-robotic-systems-applications
6."6 Questions to Ask Before you Consider Distribution Center Automation"
7.http://news.ssi-schaefer.us/Portals/84540/docs/Benefits%20of%20Automation%20Whitepaper.pdf
