Industry automation

Industry demands greater flexibility in automation

More and more businesses are choosing to automate their storage and order-picking systems. Traditional systems, however, are increasingly underperforming: they are rigid, inflexible and unscalable. As such, they are unsuitable for businesses operating in a dynamic market. A new generation of automated solutions is now providing the way forward.

Interest in automated storage and order-picking systems has been growing in recent years. This is apparent from statistics from the FEM Product Group Intralogistic Systems, the European-wide industry association for material handling. Despite the euro crisis, the number of orders in 2011 was thirteen percent higher than in 2006, when the European economy was still booming.

It is interest in unmanned storage and retrieval systems in particular that is strong. In 2011, the number of orders for these machines was no less than 24 percent higher than in the previous year, and had never been so high. The number of mini-load machines has dropped slightly, but is still significantly higher than in the years before the crisis.


René de Koster

Higher labour costs

The automation of warehouses is nothing new. It is an on-going trend that is likely to continue. "Just look at Albert Heijn, the largest supermarket chain in the Netherlands. The company recently announced plans to automate operations in all its regional distribution centres", explains René de Koster, Professor of Logistics at the Erasmus University in Rotterdam and chair of the Logistics Award jury, an innovation prize presented during the Logistica trade fair in the Netherlands.

The fact that the trend is set to continue is because businesses are putting forward new arguments. "It’s not just business reasons that are behind this development, demographic ones are becoming decisive as well", says Dr Michael ten Hompel, head of the Fraunhofer Institut für Materialfluss und Logistik in Dortmund. This view is supported by De Koster. Labour is becoming more and more expensive and scarcer, and the workforce older. "At the moment, Western Europe is managing thanks to the input of Eastern European workers, but that will cease when salary levels even out."

Resisting new warehouse construction

Bengt Olenmark and Claes Jönsson at Consafe Logistics argue that automation also provides a solution for companies that have outgrown their warehouse capacities. "By automating specific parts of their operations, they can extend the use of their existing premises and resist the need for additional warehouse capacity", explains Jönsson, who, like Olenmark, has an extensive track record with automation projects.

Another reason is the time pressure that more and more warehouses are being saddled with, not least thanks to the rise of online shopping. "Orders are becoming ever smaller, which eats up more capacity in manual warehouses. What’s more, these orders have to be picked within the space of a few hours in order for them to be delivered the next day". According to Olenmark, automation can be an aid to this.


Steve Banker

Small robots

Steve Banker also sees growing interest in automation, especially in the kind of solutions that increase the productivity without loss of flexibility. "Fork-lifts can be used throughout the entire warehouse, wherever you want. If you close one warehouse, you simply put the fork-lifts on the back of an empty lorry and use them elsewhere," explains Banker, analyst at ARC Advisory Group, a technology research firm that carries out an annual survey of the WMS market.

Banker cites Kiva Systems as an example. This supplier of intralogistic systems was sold to for 775 million dollars. The company supplies small robots that criss-cross the warehouse floor to bring modular compact shelving with the demanded inventory to the order pickers. If operations expand, you simply bring in a few more robots. "The world’s largest webshop has recognised the benefits of this technology. Over the next few years, will be using all the robots Kiva can produce in its warehouses."


Ten Hompel

Bringing in shuttles

Ten Hompel, too, sees a rising demand for flexible automation solutions. "The technological developments of the last few years are in response to this. Take shuttle systems for example, which use relatively more machines than the traditional mini-load systems. The capacity of shuttle systems can be raised to a certain degree by renting extra shuttles. Prime suppliers have recognized this new market and started offering the possibility for them to be rented during peak times."

De Koster agrees that the traditional automatic storage and order-picking systems don’t always come up to scratch, such as in webshop warehouses. "These warehouses are characterised by the erratic nature of their order patterns, with peaks on Mondays and dips in the middle of the week. The problem with the traditional systems is that capacity has to be adapted to the peaks. That normally isn’t the cheapest solution."

Major investment

Traditional automated systems have other drawbacks as well, such as the large amount of investments and long cost recovery times. "They are designed for a specific range of products and order profile. But what happens when the order profile changes? The system no longer works that well", contends Banker. "Usage and maintenance costs can also be high, plus the fact that you’re extremely reliant on the system supplier", adds Jönsson.

Another problem is that, to begin with, the capacity of the system is often slightly more than is necessary so that future growth will not be a problem. During the next phase the automation is optimally fit for purpose in relation to the demand. Eventually the demand might exceed the capacity of the system and costly workarounds must be implemented. "In practice this will mean that the system will structurally be insufficient", Banker believes. "And relocating the warehouse is often not an option, even though it would be more logical in terms of transport costs, as much too much has already been invested."

Ergonomic benefits

Automatic storage and order-picking systems – whether flexible or not – have other advantages, too, such as when it comes to ergonomics. "It often involves processes where human skills are indispensable and that still take place manually, while the processes surrounding them have been automated. Take order-picking as an example. With effective ergonomics and a well-designed layout, individuals can perform exceptionally well without making mistakes", Ten Hompel argues.

De Koster likewise emphasises the compactness of the automatic systems. It's often advantageous to build warehouses close to urban areas, but the fact remains that space is at a premium and expensive in these areas. "The more compact the storage system, the more attractive the investment opportunity." In this regard, Olenmark refers to Autostore, a storage system that is able to stack crates stored and retrieved using robots. "This system is not only as flexible as Kiva’s, but also highly compact."

Short or long term

Olenmark and Jönsson also suggest that stored items often run a lower risk in an automated warehouse. "If there are fewer human handlers, the risk of damage is also reduced", Olenmark contends. "Theft prevention is also sometimes given as an argument. In an automated storage system, the goods are in a relatively safe environment", adds Jönsson.

The appeal of automation differs from company to company. It all comes down to how quickly you want to recoup your investment. Is a pay-back time of five years acceptable, or does it have to be within three? “Companies with such a limited horizon will not be easily persuaded to automate. It’s much more appealing to companies with a long-term mindset. That’s the reason family businesses are more innovation-minded when it comes to warehousing than listed companies”, concludes De Koster.


To automate or not to automate?

Warehouse automation is done to reduce walking distances, speed up the transfer of information and reduce the number of mistakes. That’s what Prof René de Koster believes. "Automation becomes an interesting proposition when there are plenty of order lines, ample products and a lot of storage". Bengt Olenmark and Claes Jönsson argue that automation must lead to reductions in personnel. "The ultimate objective is cost savings", Olenmark believes.

Ten Hompel also explicitly specifies the complexity of processes. "For that reason, it’s difficult to identify a point at which automation becomes a viable option." De Koster likewise underlines the fact that the appeal of automation differs from company to company. Nevertheless, he’s bold enough to proffer a few figures. "If you process less than 5,000 order lines per day, I would be cautious about automation. Above that it becomes worthwhile. If you take the volume of the product range as a starting point, I think that automation becomes a worthwhile proposition from 20,000 to 30,000 stock keeping units (SKUs)."

Written by: Marcel te Lindert
Pictures Autostore: Lalesse Europe BV

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