The use of technology to drive performance within the warehouse is well understood by those organisations dealing with large throughputs, expanding SKUs and increased complexity in picking processes. However, confidence to invest in automation requires clarity of future demand and an expanding market.
The financial crash of 2008-9 impacted corporate plans for big ticket investments and, of course, this included warehouse automation projects. According to David James, managing director of Knapp UK, the market went “right down” but recovered after a couple of years. “This financial year we achieved our order intake target here in the UK and as a group it will be a record year for Knapp in terms of order intake around the world.” James believes that postponed projects have started to come back online. “What we’ve seen in the last 24 months is a lot of spend. We’ve taken projects with Ocado, John Lewis, Boots.com – which has just gone live – and some of our competitors have also been quite busy too,” he says.
James observes that the current market is predominantly driven by the retail sector and in particular, by the growth of internet shopping. “After the last recession retailers realised their supply chains needed investment to cope with increasing demand, product range expansion and the significant changes required for multi-channel distribution,” he says. “We are seeing more and more interest from the online grocery retail sector.”
Tesco has invested in several automated online grocery fulfilment centres, with Vanderlande Industries providing an order consolidation and sortation system at its DCOS (Dot Com Only Store) in Aylesford and Dematic’s Multishuttle doubling the company’s current pick rates for online grocery orders at its new e-commerce distribution centre in Enfield. Ocado, too, has a new facility in Tamworth which is being automated by Knapp and TGW.
Investment
Much of the recent investment in automation by retailers has been driven by a desire to improve order picking processes. This is particularly pertinent to internet orders where retailers are required to deal with the complexities of managing single item picking and despatch, as opposed to their traditional areas of expertise which have tended to centre on store replenishment.
Dave Bull, business development manager at Dematic, explains the challenges facing many fashion retailers moving to a multi-channel format. “In fulfilling stores you know a certain branch will get a delivery on, for example, a Thursday and another on a Monday, so you can gear that picking operation accordingly – you have visibility of what you’ve got to achieve,” he says. “But with internet shopping the pressure is on getting the cut-off time as late as possible. We’re working on a project where the cut-off is 10pm, as they are trying to catch the mums once they’ve put the kids to bed.” He points out the tremendous advantage a retailer has over the competition if shoppers are able to order up until 10pm and still get their order delivered the next-day.
Achieving such a late cut-off places huge demands on picking, despatch and courier activity, as goods have to leave the building by 1am. “They get a massive peak for three hours a day, so they are putting in automation that will be working flat out for those three hours,” says Bull. He points out that companies are also looking to shuttle technology for gaining efficiencies in handling returns.
So what are the drivers for this increased use of warehouse automation within the retail sector? Knapp’s David James sees growth as a major driver. “Consumers want more choice, which necessitates more SKUs. There are more formats, more delivery methods, and there’s greater price sensitivity – whoever can sell the latest ‘must have’ item the cheapest and, more importantly, get it to you faster, wins. And consumers are increasingly buying online and receiving items at home or collecting at store, which increases complexity,” he says.
James also believes new regulatory requirements restricting the aggregated weight of items lifted by a worker over a shift will become a key driver for more automation within the warehouse.
So at what point does automation become viable? “Automation should be targeted,” says Brian Whale, logistics consultant at Swisslog. “It’s often the case that pockets of automation that address specific tasks provide a better ROI than trying to automate the processes of a complete warehouse.” However, he points out that while fast moving products can be automated, it can be equally or more effective to look at the slow movers too.
“Cost effective full automation is difficult to achieve as often manual processes are required to support an integrated automated solution,” he says. “Partial automation provides the opportunity to extend the life of an existing facility while also minimising short-term investment.”
Steve Richmond, director of Jungheinrich UK’s systems and projects division, believes Very Narrow Aisle (VNA) layouts increase storage density and lend themselves to scaleable automation. “These days automated VNA trucks can be almost completely based on a standard truck which is fitted with an ‘automation package’. By adding wire guidance and transponder technology and, by introducing additional sensors for profile checking, centring and various other safety-related functions, adding a bus bar and automation controls for the truck’s sensors and fitting an interface to the warehouse management system – the truck becomes fully automated,” he says.
“This makes automation scalable. Trucks can be supplied as manual machines, upgraded to semi-automated vehicles and ultimately to fully automated systems as requirements change,” says Richmond.
“Many companies are realising the potential benefits of automated VNA – particularly for two and three shift operations,” he says. “Productivity and efficiency is increased while labour costs are reduced significantly. Automated VNA machines work consistently 24/7 without degradation of work rate or lost time for battery charging or changing and work at a consistent, highly efficient rate throughout the entire shift.”
Dematic’s Dave Bull sees the wide appeal of a stepped approach to automation, especially for entry level companies with an internet operation where future demand is difficult to predict. “Growing companies may look to start with voice picking technology and, maybe, some basic conveyor systems to get picked items to a packing area – and these projects may be between half a million and a million pounds,” he says.
“A lot of systems are scaleable. Once you’ve got your software and infrastructure in place there are certainly cases where you can automate one area with a view to automate another area in the future,” says Bull. “Because of the uncertainty of the internet, that’s important because companies don’t necessarily know what their growth is going to be.”
“We have created a product solutions department to offer advice on smaller systems, from voice and conveyors, moving up to pockets of automation. But generally, because we are an integrator, we look at those pockets of automation with a view to what they could look like in the future,” he says.
Dematic recently supplied Chain Reaction Cycles (CRC), an online bike store, with a solution for voice picking, packing and conveying as well as a tailored warehouse management system in a scheme that is said to deliver a 50 per cent improvement in order picking efficiency. The company came across the technology on Dematic’s stand at the 2009 Logistics Link North Show in Doncaster.
Barry Dunn, operations manager at CRC says: “Our warehouse could no longer afford to be regarded as a dusty building for holding stock, it now has to perform productively so that goods are received, processed and dispatched with the minimum of errors. Mistakes that occur in picking are costly, both in terms of pickup/delivery costs and repackaging, as well as through penalties that come from customer dissatisfaction and loss of business.”
David James of Knapp believes: “The level of automation depends on the volume of activity. Manual solutions with order picking and some IT support are the lowest cost forms of automation – just providing paperless activities. But as volumes increase you start to see person-to-goods type solutions, with some mechanisation – batch picking and sortation. However, when you are looking at high volumes and really large order throughputs, that’s when full automation with shuttle systems and larger scale goods-to-man operations come into play.”
Performance
James explains that goods-to-man systems are complex and therefore more costly. “What you are doing is maximising the productivity of the order picker by virtue of the fact that they are not moving and therefore every thing has to be moved to and from them – and that means expensive kit. But with these goods-to-man systems we are achieving performance levels of many hundreds of order lines per hour,” he says.
Then of course, there is the perennial question relating to the flexibility of automated systems – are systems being designed to be more flexible? According to Swisslog’s Brian Whale, “AutoStore is a recent addition to our range of light goods solutions which demonstrates flexibility. It’s a good fit for multi-channel operations because it’s both efficient and adaptable for future requirements. Thanks to its high speed and capacity it can cope with a large range of throughputs, with in excess of three thousand order line picks per hour.” He points out that it can be extended by the addition of robots and pick stations.
Supermarket chain, Asda, has just agreed to take delivery of the AutoStore automated goods-to-man system for the intelligent storage and retrieval of small case lines at its Lutterworth site. The application will be the largest AutoStore installation to date and will be delivered in two phases. The design incorporates over 70,000 storage bins and 160 robots, linking eight ergonomic decant stations with a dozen goods-to-man picking ports. The system will enable Asda to manage several thousand different stock keeping units and offers the potential for phased expansion.
Case Study: The beauty of order picking
In February, Boots opened its Burton-Upon-Trent service centre which supports order processing for the 25,000 product lines of the pharmacy-led health and beauty retailer’s e-commerce operation, boots.com, along with its Christmas gift ranges and its international distribution. The company has invested over £50 million in the new centre which benefits from extensive automation from Knapp.
At the heart of the operation are two OSR Shuttle systems, which provide automated storage combined with goods-to-person order picking at ergonomically designed Pick-it-Easy workstations. One OSR Shuttle with 46,000 storage locations handles containers up to 15kg in weight and the other – with 25,700 locations – is for containers up to 25kg. Suited to slow and medium moving goods the shuttle systems process the majority of the inventory at Burton. Fast-moving products are picked in a flow rack area at workstations that use pick-to-light technology. A total of 26 dispatch ramps offer efficient sortation of deliveries.
Case Study: Two into one does go for Australian retail chain
Australia based clothing and household linen retailer, Best & Less, was presented with the opportunity to use automation when it decided to consolidate its two distribution operations into one facility. Expansion of business and the requirement to support fulfilment for 200 stores lead the company to look at sorter technology.
In 2011 the company invested in Crisplant’s low-energy LS-4000CB cross-belt sorter, powered by linear synchronous motors and controlled by a Crisplant Sorter Control system. Received stock is sent directly onto the loop sorter at one of two induction points where barcode labels are scanned automatically, acting as a receipt and informing the system which destination chute to deliver the box to.
Paul Viljoen, general manager of Best & Less, says: “One thing we have to consider is that with our current growth we are opening between six and ten stores a year, so handling the extra stock will require some modification to the system as we go along.
Currently the system has a capacity of approximately 4,000 items an hour with two induction points. A further four induction points can be added without a need to change the loop. The company can also add additional chutes and increase the sorter speed as necessary.
The use of technology to drive performance within the warehouse is well understood by those organisations dealing with large throughputs, expanding SKUs and increased complexity in picking processes. However, confidence to invest in automation requires clarity of future demand and an expanding market.
The financial crash of 2008-9 impacted corporate plans for big ticket investments and, of course, this included warehouse automation projects. According to David James, managing director of Knapp UK, the market went “right down” but recovered after a couple of years. “This financial year we achieved our order intake target here in the UK and as a group it will be a record year for Knapp in terms of order intake around the world.” James believes that postponed projects have started to come back online. “What we’ve seen in the last 24 months is a lot of spend. We’ve taken projects with Ocado, John Lewis, Boots.com – which has just gone live – and some of our competitors have also been quite busy too,” he says.
James observes that the current market is predominantly driven by the retail sector and in particular, by the growth of internet shopping. “After the last recession retailers realised their supply chains needed investment to cope with increasing demand, product range expansion and the significant changes required for multi-channel distribution,” he says. “We are seeing more and more interest from the online grocery retail sector.”
Tesco has invested in several automated online grocery fulfilment centres, with Vanderlande Industries providing an order consolidation and sortation system at its DCOS (Dot Com Only Store) in Aylesford and Dematic’s Multishuttle doubling the company’s current pick rates for online grocery orders at its new e-commerce distribution centre in Enfield. Ocado, too, has a new facility in Tamworth which is being automated by Knapp and TGW.
Investment
Much of the recent investment in automation by retailers has been driven by a desire to improve order picking processes. This is particularly pertinent to internet orders where retailers are required to deal with the complexities of managing single item picking and despatch, as opposed to their traditional areas of expertise which have tended to centre on store replenishment.
Dave Bull, business development manager at Dematic, explains the challenges facing many fashion retailers moving to a multi-channel format. “In fulfilling stores you know a certain branch will get a delivery on, for example, a Thursday and another on a Monday, so you can gear that picking operation accordingly – you have visibility of what you’ve got to achieve,” he says. “But with internet shopping the pressure is on getting the cut-off time as late as possible. We’re working on a project where the cut-off is 10pm, as they are trying to catch the mums once they’ve put the kids to bed.” He points out the tremendous advantage a retailer has over the competition if shoppers are able to order up until 10pm and still get their order delivered the next-day.
Achieving such a late cut-off places huge demands on picking, despatch and courier activity, as goods have to leave the building by 1am. “They get a massive peak for three hours a day, so they are putting in automation that will be working flat out for those three hours,” says Bull. He points out that companies are also looking to shuttle technology for gaining efficiencies in handling returns.
So what are the drivers for this increased use of warehouse automation within the retail sector? Knapp’s David James sees growth as a major driver. “Consumers want more choice, which necessitates more SKUs. There are more formats, more delivery methods, and there’s greater price sensitivity – whoever can sell the latest ‘must have’ item the cheapest and, more importantly, get it to you faster, wins. And consumers are increasingly buying online and receiving items at home or collecting at store, which increases complexity,” he says.
James also believes new regulatory requirements restricting the aggregated weight of items lifted by a worker over a shift will become a key driver for more automation within the warehouse.
So at what point does automation become viable? “Automation should be targeted,” says Brian Whale, logistics consultant at Swisslog. “It’s often the case that pockets of automation that address specific tasks provide a better ROI than trying to automate the processes of a complete warehouse.” However, he points out that while fast moving products can be automated, it can be equally or more effective to look at the slow movers too.
“Cost effective full automation is difficult to achieve as often manual processes are required to support an integrated automated solution,” he says. “Partial automation provides the opportunity to extend the life of an existing facility while also minimising short-term investment.”
Steve Richmond, director of Jungheinrich UK’s systems and projects division, believes Very Narrow Aisle (VNA) layouts increase storage density and lend themselves to scaleable automation. “These days automated VNA trucks can be almost completely based on a standard truck which is fitted with an ‘automation package’. By adding wire guidance and transponder technology and, by introducing additional sensors for profile checking, centring and various other safety-related functions, adding a bus bar and automation controls for the truck’s sensors and fitting an interface to the warehouse management system – the truck becomes fully automated,” he says.
“This makes automation scalable. Trucks can be supplied as manual machines, upgraded to semi-automated vehicles and ultimately to fully automated systems as requirements change,” says Richmond.
“Many companies are realising the potential benefits of automated VNA – particularly for two and three shift operations,” he says. “Productivity and efficiency is increased while labour costs are reduced significantly. Automated VNA machines work consistently 24/7 without degradation of work rate or lost time for battery charging or changing and work at a consistent, highly efficient rate throughout the entire shift.”
Dematic’s Dave Bull sees the wide appeal of a stepped approach to automation, especially for entry level companies with an internet operation where future demand is difficult to predict. “Growing companies may look to start with voice picking technology and, maybe, some basic conveyor systems to get picked items to a packing area – and these projects may be between half a million and a million pounds,” he says.
“A lot of systems are scaleable. Once you’ve got your software and infrastructure in place there are certainly cases where you can automate one area with a view to automate another area in the future,” says Bull. “Because of the uncertainty of the internet, that’s important because companies don’t necessarily know what their growth is going to be.”
“We have created a product solutions department to offer advice on smaller systems, from voice and conveyors, moving up to pockets of automation. But generally, because we are an integrator, we look at those pockets of automation with a view to what they could look like in the future,” he says.
Dematic recently supplied Chain Reaction Cycles (CRC), an online bike store, with a solution for voice picking, packing and conveying as well as a tailored warehouse management system in a scheme that is said to deliver a 50 per cent improvement in order picking efficiency. The company came across the technology on Dematic’s stand at the 2009 Logistics Link North Show in Doncaster.
Barry Dunn, operations manager at CRC says: “Our warehouse could no longer afford to be regarded as a dusty building for holding stock, it now has to perform productively so that goods are received, processed and dispatched with the minimum of errors. Mistakes that occur in picking are costly, both in terms of pickup/delivery costs and repackaging, as well as through penalties that come from customer dissatisfaction and loss of business.”
David James of Knapp believes: “The level of automation depends on the volume of activity. Manual solutions with order picking and some IT support are the lowest cost forms of automation – just providing paperless activities. But as volumes increase you start to see person-to-goods type solutions, with some mechanisation – batch picking and sortation. However, when you are looking at high volumes and really large order throughputs, that’s when full automation with shuttle systems and larger scale goods-to-man operations come into play.”
Performance
James explains that goods-to-man systems are complex and therefore more costly. “What you are doing is maximising the productivity of the order picker by virtue of the fact that they are not moving and therefore every thing has to be moved to and from them – and that means expensive kit. But with these goods-to-man systems we are achieving performance levels of many hundreds of order lines per hour,” he says.
Then of course, there is the perennial question relating to the flexibility of automated systems – are systems being designed to be more flexible? According to Swisslog’s Brian Whale, “AutoStore is a recent addition to our range of light goods solutions which demonstrates flexibility. It’s a good fit for multi-channel operations because it’s both efficient and adaptable for future requirements. Thanks to its high speed and capacity it can cope with a large range of throughputs, with in excess of three thousand order line picks per hour.” He points out that it can be extended by the addition of robots and pick stations.
Supermarket chain, Asda, has just agreed to take delivery of the AutoStore automated goods-to-man system for the intelligent storage and retrieval of small case lines at its Lutterworth site. The application will be the largest AutoStore installation to date and will be delivered in two phases. The design incorporates over 70,000 storage bins and 160 robots, linking eight ergonomic decant stations with a dozen goods-to-man picking ports. The system will enable Asda to manage several thousand different stock keeping units and offers the potential for phased expansion.
Case Study: The beauty of order picking
In February, Boots opened its Burton-Upon-Trent service centre which supports order processing for the 25,000 product lines of the pharmacy-led health and beauty retailer’s e-commerce operation, boots.com, along with its Christmas gift ranges and its international distribution. The company has invested over £50 million in the new centre which benefits from extensive automation from Knapp.
At the heart of the operation are two OSR Shuttle systems, which provide automated storage combined with goods-to-person order picking at ergonomically designed Pick-it-Easy workstations. One OSR Shuttle with 46,000 storage locations handles containers up to 15kg in weight and the other – with 25,700 locations – is for containers up to 25kg. Suited to slow and medium moving goods the shuttle systems process the majority of the inventory at Burton. Fast-moving products are picked in a flow rack area at workstations that use pick-to-light technology. A total of 26 dispatch ramps offer efficient sortation of deliveries.
Case Study: Two into one does go for Australian retail chain
Australia based clothing and household linen retailer, Best & Less, was presented with the opportunity to use automation when it decided to consolidate its two distribution operations into one facility. Expansion of business and the requirement to support fulfilment for 200 stores lead the company to look at sorter technology.
In 2011 the company invested in Crisplant’s low-energy LS-4000CB cross-belt sorter, powered by linear synchronous motors and controlled by a Crisplant Sorter Control system. Received stock is sent directly onto the loop sorter at one of two induction points where barcode labels are scanned automatically, acting as a receipt and informing the system which destination chute to deliver the box to.
Paul Viljoen, general manager of Best & Less, says: “One thing we have to consider is that with our current growth we are opening between six and ten stores a year, so handling the extra stock will require some modification to the system as we go along.
Currently the system has a capacity of approximately 4,000 items an hour with two induction points. A further four induction points can be added without a need to change the loop. The company can also add additional chutes and increase the sorter speed as necessary.
