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January 30, 2008

Automation vs. Manual

There are a lot of conveyor salesman that like to hoover around warehouses. They love to tout the productivity improvements that can be gained by installing their products. Throw in a nice little shoe sorter and you'll be able to take 4 people out of your shipping process! Add in a Pick-to-Light forward pick zone and you'll save 6 people on your picking! Wow! Why WOULDN'T I install this wonderful stuff?

There's a balance between operating manually and operating with automation and it is a fine line between justification for automation and throwing your money to the wind. It is all dependent on your operational needs for flexibility, knowledge of long term growth and cube throughput. Conveyor salesman will point to the Wal-Marts, Best Buys, Cingulars and other big companies as examples of businesses that use automation to lower their costs, increase their throughput capacity and enable cutting edge technologies. What they don't tell you is that those companies have an economy of scale in their DCs that enable them to know with a fairly high degree of accuracy what they'll need going through their facility in 3, 5 and 10 years. They add new DCs as opposed to growing existing ones.

So why wouldn't you want conveyor even if it cost justifies based on labor savings over a two year window? Answering "Yes" to any of the following questions may mean that automation is not right for you:

1. Are you going to outgrow it in 3 to 5 years and need to replace the whole thing?
2. Would you need to procure the technology systems to support the automation?
3. Is operational flexibility important in the processes that would be automated?
4. Is your business extremely seasonal?
5. Are your products or outbound boxes inconsistently sized?

There is a similar group of questions to ask yourself about whether conveyor is right for you, but this topic is about whether manual processes will work.

Manual processes have gotten a bad rap over the past few years from the six sigma, lean and just-in-time crowds. Automation has somehow become synonymous with efficiency. There is more to efficiency than meets the eye though. The text book definition of efficiency is the ratio of effective or useful output to the total input in any system. Or put into warehousing terms: the best combination of space, capital expenses and labor for the throughput required in the process.

One way to think about the problem is by changing the terms of the problem. Let's look at pallet storage systems. You can store pallets in any number of ways: floor stack, pallets rack with 12' aisles, double deep pallet rack, very narrow aisle pallet rack, AS/RS storage/retrieval systems, etc. There is a large set of alternatives. When you look at what you have and try to decide which to go with most people just end up going with what they know, traditional pallet rack with a forklift to pick from it with. Nice, simple and effective. But was it the best alternative for everything in your warehouse?

When you explain to people the conditions that effect how you should store pallets they are usually pretty good at understanding. They deal with pallets and storage all day long anyway so they understand the dynamics of it. Give them conveyor and all the sudden it seems like Greek. It's the same justification process, it's all about understanding the numbers.

For the average operation, manual processes are exactly what is needed. Your average human is quite capable of efficiently moving a box from one side of the warehouse to the other. A conveyor doesn't move that single box any more efficiently and the conveyor isn't going to do the processing at the other end either....that's a separate piece of automation. The trick is that conveyor can process regular, consistent volume more efficiently. If you need to move 400 cases in an hour then conveyor may be what you need. If you need to move 1000 cases....it may be even easier now to justify that automation. Ask yourself the questions above though, first.

Your conveyor system has to be designed for you busiest hour on your busiest day during the life of what it is expected to handle, which could be 5 to 10 years. If you have a peaking factor of 3 and are expecting 10% growth over the next 5 years- I'd really put some thought into whether conveyor is right for you yet.

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