Warehouse Processes Need to Be Perfected Before Planning Warehouse Automation

Focusing on your warehouse processes is key, as there are a lot of different warehouse automation technologies out there in terms of automating a distribution environment. These can range from relatively simple and targeted technologies to highly mechanized, multi-million-dollar systems. These systems can be very powerful and provide unrivaled operational performance, but they also can bring an operation to its knees and push a company into very serious trouble operationally and financially. No different than owning a gun; it can save your life, or you can blow your toes off. Failed implementations, serious cost overruns, compromised operating principles, unattainable return on investment, etc. – these are unfortunately sometimes realities in the world of automation.

Warehouse Processes

But if these systems have a functional warehouse process that’s well defined with technologies that are mature, why would there be such a risk to implement them? Should implementing systems or automated processes be avoided? Of course not! warehouse automation, when properly matched and applied to a SPECIFIC set of operational requirements, can dramatically change the way a company operates, its ability to service its customer base, and significantly increase overall corporate net profit – independent of sales or margin contributions – making the operation a true profit center.

Warehouse Automation

Then why are there incidents of failed or inadequate implementations of all manners of automation? The answer is, very simply, the lack of a clear understanding of the TRUE requirements of the actual business model, as well as a lack of understanding of the limitations of not only the automation itself, but as importantly (if not more so), all supporting warehouse processes and functions around it as well.

Unfortunately, the typical method of procuring automation is to consider systems or equipment based on the perception and marketing of what appears to be a good fit, then prove whether those assumptions are true. Many times, the manufacturers, or even consulting firms that have their own agenda, are helping to determine and validate those assumptions, the very people that have a vested interest in providing/selling that solution. The “attraction” of the possibilities of the automation’s concept can start to mask the limitations it may have, especially if the system concept isn’t properly vetted against the true operational realities of one’s specific company and operational requirements. Even reputable automation manufacture and integration companies will bend operational scope to win a contract, possibly believing system “limitations” can be overcome to handle additional exceptions outside of their core operational scope.

Trade shows are notorious for providing lots of flash, impressive automation, and very generic but eye-opening operational statistics. This is squarely directed at generating interest and dialogue with potential clients and to give them an opportunity to sell how the system can fit a potential client – once again, the cart before the horse. The problem is that those impressive statistics that are marketed are very broad, usually using the best-case scenario (which most companies will not ever approach), and change dramatically based on the operational protocols and realities required by each individual client.

Systems Consultants and Systems Integrators

But even if a vendor/consultant does the prerequisite legwork and truly defines an automated solution that makes sense, what are the other things that they are not addressing in the operation? What are those critical processes and systems that are not part of the immediate scope of the actual automation but will absolutely define the success of any automation being implemented?

This is where the wheels start to come off – once live, the warehouse automation doesn’t function quite as predicted in terms of the expected results and of the overall FACILITY performance (not just the automation). The manufacturer blames the “external” warehouse processes and procedures that they cannot control (receiving, put-away, inventory management, replenishment, packing, non-conforming products, dock consolidation etc…), along with support systems that they did not install (WMS, WES, controls, external conveyors & other automation, etc.). The end client is pushing back, claiming promises of performance made by the vendor and that understanding the facility operation was the responsibility of the automation implementation team. Band-aids are ushered in, countless hours and cost overruns on services explode along with internal man-hours and resources consumed, only to be left with a system that may be truly underperforming based on the original goals.

KPIs and Warehouse Processes

The fact is that any company looking to automate does not have to become experts at automation, rather just expert at their specific operation, but well beyond just the normal KPI’s and cursory knowledge of basic inventory models and order profiles.

A company must be ready to take truly in-depth operational knowledge of the entire operation and be able to functionally apply it to any automation being considered, including WMS and most likely WES functionality. If done correctly, it will quickly be very clear where the automation is capable and where it may have serious shortcomings, what external systems may not support or integrate with the automation as required, where it makes sense to automate, and where it does not. Sometimes, the automation scope/footprint should be much smaller than anticipated and very rarely does automation, either a single system or multiple layers, serve all purposes in a DC. It is critical to define the requirements the automation will DEMAND of all systems around it, hardware and software, for it to perform as expected – both in terms of processes up and downstream of the actual automation – from receiving to packing and shipping.

In a perfect world, the vendor/manufacturer/consultant’s scope is to make sure you understand the automation they are presenting in order that you understand the true design capabilities and intent of the system, not to determine if the automation is right for YOUR specific business – that really is your decision. Certainly, you want their “perspective,” but it’s critical to maintain your independence and focus on how the automation will work in YOUR operation. You, as the client, need to apply the actual business model to determine the automation’s viability – relying on someone with a vested interest in providing the automation to determine that viability is a critical error.

Warehouse Automation – Key Factors for Successful

1. Operational Knowledge: A deep understanding of the company’s operations is critical to determine what warehouse processes can be automated and what cannot. This includes knowledge of inventory management, order profiles, service levels, and related operational requirements.

2. Supporting Systems: Many automation failures occur due to issues with supporting systems like WMS, WES, or other software systems. It is important to ensure that all external systems can integrate seamlessly with the automation to avoid performance bottlenecks.

3. Realistic Expectations: Setting realistic expectations about the capabilities of automation systems is crucial. Marketing materials and trade show demonstrations often present idealized scenarios that may not apply to a specific business’s operations. It is essential to critically assess whether the proposed automation system can meet the real-world operational requirements.

4. Thorough Financial Justification: Before proceeding with automation, a detailed and accurate financial justification should be developed. This involves assessing not just the upfront costs but also the ongoing operational impacts, including system maintenance and the potential for cost overruns.

Unless you have the operational acumen and thorough understanding of all facets of your operation, inventory and order models, and the warehouse processing realities and requirements, you are not adequately prepared to make assessments in terms of what any system must deliver; therefore, you are not prepared to research, specify, or implement – and certainly not able to develop a detailed and accurate financial justification that these systems require. It is important to note that many of these systems fail not because of actual warehouse automation but due to warehouse processes and their supporting systems that are connected to the automation, receiving, put-away, packing/shipping, WMS/WES/TMS software limitations, etc… along with the usual culprits like pipeline system processing limitations (peak days or seasons), space constraints, and system reliability issues.

By not defining the true operational requirements dictated by the inventory and order models, service level models, automation and external software systems, and limitations, volatility in the core business model, true project investment requirements, etc., it puts a company at undue risk for failed or marginalized implementations that can have catastrophic effects on a company (not to mention one’s career).

If you are currently looking at warehouse automation, considering moving in that direction, or simply curious of how to go about the warehouse process of defining your operation, please feel free to contact ISD and myself, and we can discuss in more detail how to prepare yourself, what information you need to gather, and the types of analysis that need to be performed