You run an eight-hour picking and packing shift at your distribution center. A few workers called off and the remainder are running behind. You have to have your team work overtime to have a chance at keeping up. Your workers are unhappy and your extra labor costs eat into your profitability.
A customer places an order at 8 p.m. and expects to get it by 10 a.m. the next day. When it doesn’t show up on their doorstep, they lose faith in your business, cancel their current order, and make their next order with your competitor.
Whether you’re looking at the current pressures on supply chain management from the perspective of warehouse managers or their customers, both have one thing in common: a need for predictability.
You need to know that your system, including your labor, will perform consistently. You need to be able to rely on your hardware, software, and human capital for every warehouse function, from inventory management to quality control on finished orders.
And your customer needs to believe that they’ll get what they ordered on the timeline they were promised.
You already know that the right automation solution can improve productivity, reduce risk, and strengthen warehouse operations across the board. You know it can transform your labor challenges and create better jobs.
But how can you make sure you’re investing in the right automation, at the right scale, at the right time? When are you securing predictability — and when are you inviting more risk into your operation?
In this article, we’ll address three risks that materials handling leaders perceive when considering automation options:
1) Purchasing a system that won’t solve your current problems
2) Implementing automation that won’t pay off over time
3) Over-investing in complicated automation you don’t need
Risk 1: Purchasing a system that won’t solve your problems
It’s tempting to choose one automation solution and rely on it for all of your company’s needs.
And more importantly, you probably don’t want one single system or process.
A modern operation with multiple requirements for its materials handling will probably need a few systems working together. For instance, you won’t pick cases of product out of a vertical storage system that’s designed for split cases and smaller item picking. Yet both facilities require both of these processes, working in tandem.
That’s why ISD approaches your operations as a puzzle.
With our consultative approach, we offer complete flexibility when it comes to designing a custom automation solution that’s right for you.
We have a tested network of partners across hardware, software, and automated solutions, and we’ll only recommend products if we see those are the best fit for your space, budget, or needs.
And we’ll quarterback every aspect of your project, from procuring the correct equipment and systems, to full installation, commissioning, integration, training and ongoing support, so you have one point of contact across all of your integrated systems. Whatever happens, we’ll make it right.
“No one manufacturer does everything extremely well,” says Tony Morgott, ISD’s VP of Sales. “In the same facility, we might work with four different manufacturers of conveyors alone, because those are what fit best. We tailor the system to your operation, not your operation to the system.”
Risk 2: Implementing automation that won’t pay off over time
To address this risk to productivity, we asked Tony to walk us through a real-life ISD project that involved giving a would-be customer the hard news that their planned automation wasn’t going to meet its stated ROI.
“Customers need a partner who is going to be honest with them. One who will not recommend the easiest solution, but the right one,” he says.
In this example, a beauty distributor came to ISD for a competitive bid on an automation plan they had been quoted by another integrator. They wanted to check that they were getting a good price.
“We told them, ‘We can’t quote it.’ When they asked, ‘Why not?’, we had to say, ‘Because this system won’t work for you,’” explains Tony.
The competitor had planned a system that relied on carton flow because they perceived that the customer liked that. But they hadn’t analyzed whether that system made sense for the customer’s product mix.
“Carton flow is excellent for fast-moving and large items,” says Tony, “which worked for items like shampoo or gallons of hair dye. But they also sold stickers, nail polish, and nail files, which meant that in a lane of carton flow that is one foot wide, one foot tall, and eight feet deep, they weren’t utilizing 95% of the space.” The proposed plan included building a massive amount of conveyor and flow rack, spending over $1,500,000 on materials, installation, and programming, while using very little height of the vertical cube in the building.
Because that planned picking automation took up so much space so inefficiently, pickers were going to have to do a lot more walking. That would have reduced pick rates and required an extra shift just to meet existing orders, yet alone grow them. The cost of that extra shift would’ve cannibalized the ROI of putting in the automation in the first place, and the numbers for required labor were far too aggressive and unrealistic.
In this example, ISD came in and redesigned the entire system with a mix of technologies uniquely designed for each part of the distributor’s operation, inventory, and space.
The customer chose our system, and their CEO shared that he wished he had started with ISD instead of wasting time and money on an integrator who wasn’t thinking critically about their needs.
“Other companies will try to sell you what they think you want. ISD will come in, learn your operation, and collaborate on the right design for you. We don’t always recommend the easiest solution, but strive to create the right one,” says Tony.
Risk 3: Over-investing in complicated automation you don’t need
In warehouse automation, just like in other industries, there’s a misconception that more is always better.
A distribution center customer came to ISD after being told by another integrator that they needed to add more pack stations in order to meet their growth targets.
Those extra stations needed extra investment, of course. They would’ve meant hiring 25 more employees in order to staff them, and building a layer of mezzanine to house the additional labor, along with conveyor and routing system to deliver orders to those additional 25 pack stations.
Instead of automating each warehouse function individually and then dealing with the subsequent impacts, ISD took a top-down approach. We did a full analysis of their operation, including looking at their:
- Customer order profiles
- Inventory dynamics
- Spatial utilization
- Employee roles and productivity
After our research and investigation, our recommendation was to:
- Automate redundant tasks to reduce the chance of human error and improve efficiency
- Consolidate shipping and packing workstations to save on space
- Distribute skilled labor towards picking exception orders and ensuring quality control
By implementing ISD’s approach, the client doubled their capacity and saved $660,000 in unneeded labor costs yearly by not requiring the labor for the 25 additional pack stations. They also reduce the current packing labor content and recovered 30% of their floor space for future expansion.
Automation isn’t risky when applied correctly. The right partner can guide you towards creative solutions that are right-sized for your business.
Long-term partnerships built on predictability
Whether managing your labor force, your customers’ expectations, or the future of your materials handling operation, you need predictable systems and people you trust to design and implement them.
ISD’s business is built on true partnership. We’ve worked with some customers for decades. There’s nothing more satisfying than being relied upon to help a customer evolve their operation as their business grows.
If you’re looking for honest, creative experts who can help you identify opportunities and cut down risks, with clear and accurate ROI at every step of the process, reach out today to set up a call with our team.
