What defines the success of an automated warehouse or distribution centre?

Pieter Feenstra
 
Every now and then you read a success story of an automated warehouse or distribution centre, but not all automation projects of this kind are an immediate success. The projects that are not an immediate success often do not make it to the press, as it might embarrass both the supplier of the facility and the customer.
 
It is, however, important to understand which factors define the success of an automation project in the logistics field. This is even more so because quite a few of these factors are not even related to the quality of the supplied facility or its supplier, the more obvious causes for a success. Rather, there are a lot of factors that have nothing to do with the supplier or the facility itself, like the products that are handled in the facility or the organisation that has to work with the facility.
 
If the factors that are described in this article are taken into account before, during and after the realisation of such a project, then success is not a coincidence or a matter of luck, but more a matter of good planning.
 
Design of the system
 
This is where it all starts. The design normally makes up only 1-2% of the total project value, but is crucial for its success and also drives the majority of the capital investment. In other words, without a proper design phase the success of a project is unpredictable and the capital investment might be much higher than it should be.
 
A good design needs close cooperation between specialists in the warehousing field and the ultimate owner/operator of the projected facility. This will ensure the combination of knowledge of automated logistics (by the specialist) and the knowledge of the operational environment (by the owner).
 
A whole article can be written covering just the design phase itself, as it usually consists of setting the strategic directions of the company, the analysis of current data (articles, flows etc.), and growth scenarios for a specific planning horizon, resulting in future data to be handled in the proposed facility. After that, different concepts will be developed (often including both manual and more mechanised concepts) and, based on upfront defined decision criteria (financial, qualitative etc.), one concept will be chosen and further developed during the detailed design phase.
 
It is crucial that sufficient attention is given to the design phase and especially the data analysis and growth scenarios. Often companies have a clear idea about growth in revenue and sometimes even volumes, but when it comes to growth in the number of articles (SKUs), orders and order lines, it gets more complicated. These last factors, however, are very important when evaluating different concepts. If detailed growth scenarios are not available or not predictable, the chosen concept must not be heavily dependent on this.
 
The supplier, the equipment, and the controls
 
It is obvious that as well as the quality of the supplier, the supplied equipment and the integration and controls of the equipment are crucial for a successful project. To make sure that one party is responsible for the overall technical facility, one option is to choose a partner who deals with both the design as well as the realisation (general contractor following a design-build approach). In this case the selected partner is accountable for both the quality of the design and also for the overall working of the completed facility.
 
Partners must be able to show references in the field and show a proven track record in both the design and the execution of automated projects. Talking to previous customers will help select the right partner for a specific project.
 
During the realisation of the project, the most important factor is the overall control of the facility, starting with machine controls through a layer of controls of the different subsystems, to the overall warehouse management system and visualisation system. The overall integration of the different components of an automated facility is often the biggest challenge, not so much the individual mechanical or electrical parts.
 
The products to be handled in the facility
 
The nature of products that will be handled in the warehouse is also very important for success. Often automated projects will have some requirements of the products (pallets, cartons), and these requirements must be met. The requirements often deal with pallet quality (no broken runners or sticking nails), load quality (within certain dimensions), and sometimes carton quality (in case of automated picking solutions).
 
A well-designed system will check the pallet integrity and their loads before they enter the automated part of the warehouse. This should prevent pallets getting stuck somewhere in the middle of the system, causing the system to come to a (full or partial) stop. Pallets and loads that do not fulfil these requirements will be rejected and must be corrected before they can re-enter the system.
 
The majority of rejects have to do with broken pallets (by manual handling), loads that are out of tolerance (for example, by having travelled long distances in a truck), and loose plastic wrap.
 
Even if they are rejected and do not cause system down time, these products might still require a lot of time (money) to be correct and/or adjusted. Nowadays systems are in place to avoid a lot of repair work, like systems to check empty pallets before palletising products (for example in the food- and beverage industry), and systems that automatically correct loads or exchange pallets. The tolerances within the facility may also have to be enlarged in order to reduce the number of rejects.
 
The operating organisation
 
At some stage the project supplier will have to hand over the finished project to the operating organisation, so they can start using it. This transition is crucial and is the factor that has the least to do with the technical factors described before. This has to do with proper change management, and is more than just supplying training and documentation.
      
The operating organisation will have to have a new look at their organisation and will have to find answers, possibly with the help of a change management specialist, to address questions such as: Will this system be accepted by our staff? Do we still have the right organisational set-up for this facility? Do we need other resources? How do we manage the transition process. Who are the process owners? What standard operating procedures do we need? etc.
It is very important to get the answers to the above questions right in a very early stage and have the operational resources, where possible, involved in the project, in order to create some ownership. In the end the equipment might be all working well, but if the organisation can not or will not work with it and get the maximum out of it, the overall project will not be a success.
 
Often it is this factor that gets underestimated and therefore does not get the attention that it requires.
 
Support of the facility
 
If the system is finally operational and is used, it will need to be maintained and supported in the proper way. This means that equipment needs preventative and corrective maintenance and the controls need regular check-ups and support in case of problems.
 
For the electro-mechanical part of the support, the format of the maintenance is dependent on the type of end-user. Often if the end-user is a retailer or a logistics service provider, the electro-mechanical support is outsourced to the supplier of the equipment. This can be done by either having dedicated supplier resources on site during operation, or by having a call-out service where the supplier comes to do preventive maintenance or is called out in case of problems. End-users who have their own production lines on the same site, like in the food and beverage industry, can opt to have the electro-mechanical service done by their already existing maintenance crew.
 
For the software and controls part of the facility, the supplier should be able to offer support on these system parts on a remote basis during all operational hours of the system. Due to the fact that the support can be done remotely, it does not mean that the support crew is actually present on the site.
 
Conclusion
 
Building an automated warehouse or distribution centre has many financial and/or qualitative advantages, and really can drive the bottom line result of an end-user. But it is important to look at the success factors and to ensure that these factors are properly addressed. If properly addressed, these facilities will have an even better financial result and will be fun places to work!
 
Pieter Feenstra is the managing director of Swisslog Australia. Visit www.swisslog.com.  
  
 
MREC HERE

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