Behind the Buzz About Flexible Automation

Tags: Materials Handling

Thanks to e-commerce, many distribution centers are now fulfilling a greater number of smaller orders—leaving some conventional materials handling automation systems behind the times. Is flexible automation the next frontier?

The explosion of e-commerce has profoundly impacted materials handling automation. Warehouses and fulfillment centers used to maintain a straightforward focus on shipping full pallets and larger units, but e-commerce created the need to ship goods at case, split-case, each, and even item levels. As a result, materials handling automation strategies and operations at many distribution centers (DCs) have undergone radical change.

Flexibility is the new materials handling buzzword. In order to more efficiently fulfill e-commerce orders, many retailers—and/or their third-party distribution or fulfillment center partners—are embracing a flexible approach to materials handling automation.

"Most traditional automation approaches are inflexible," explains Peter Blair, director of marketing for Kiva Systems, a warehouse automation technology provider based in North Reading, Mass.

"Companies design huge mechanical systems and invest significant capital to install automation solutions such as tilt-tray sorters and conveyor systems, which can't easily be scaled up or down," he says. "With this approach, a company has to project its growth over the next five to 10 years, and predict what products it will handle— then hope that strategy doesn't change much."

New School vs. Old School

Typically, DCs begin operating these traditional automation solutions below capacity to allow room for growth, then hit peak operating capacity after a few years. But they can quickly exceed capacity limits.

In addition, many traditional automation approaches are specific to certain types of packaging and product, and companies can be caught short if they begin selling products they hadn't imagined they would when they originally built or designed their warehouse.

"An automation strategy designed for shoe boxes will handle shoe boxes productively and efficiently," Blair explains. "But if a company adds jewelry or high-end gowns to its product mix, the automation designed for shoe boxes won't work as well."

Thanks to Internet retailing, the trend toward offering more SKUs, and the need to diversify product lines to attract consumers in an uncertain economy, retailers are increasingly adding to and changing their product assortment.

"It is no longer accurate that 80 percent of sales come from 20 percent of SKUs," notes Bill Leber, director of business development and marketing for Swisslog Warehouse & Distribution Solutions, an automated storage and retrieval systems manufacturer with U.S. operations in Newport News, Va. "Today, growth for companies comes from embracing new concepts and categories; new customer segments; and a multi-channel experience."

"All these factors have initiated a different way of thinking about automation, and flexibility has become much more important than it was a few years ago," Blair adds.

Robots to the Rescue

This shift means that DC automation solutions must be equipped to effectively and efficiently handle e-commerce order patterns—typically a higher volume of orders, each with a small number of items.

"Automation systems built around pallets and large quantities—such as conveyor systems and forklifts—are unsuited to picking orders at an each or item level," Blair notes.

To achieve the desired materials handling automation flexibility, many companies are turning to mobile robotic systems such as the ones offered by Kiva and Swisslog, which contrast sharply with traditional warehouse picking models. Instead of warehouse workers going to find the product, the product comes to the workers. "The approach is totally different," Blair notes.

workers stay put, ROBOTS DELIVER On Demand

A typical robotic automation system consists of mobile robot units toting moveable bins or shelves of products around the warehouse and to workstations. Workers at those stations remain fixed in place and can easily pick the items needed from each bin.

Once the necessary item has been picked, the robot moves on and the next one arrives. The solutions are controlled by high-tech software that interfaces with a company's warehouse management system or order management solution—or even a simple Excel spreadsheet—to give the robots instructions on what products to move, and to which locations.

Because robotic systems are flexible in design, size, and functionality, they are gaining favor over conventional manual and automated storage and pick systems for the small-quantity, multiple-SKU orders that are increasingly common in retail fulfillment.

In addition to handling e-commerce orders, the solutions are applicable for warehouses performing retail replenishment tasks, which are also largely piece-picking operations.

"Replenishment does not involve sending full cases to stores," Leber explains. "Instead, workers pick two of one product and three of another to replenish goods that have been sold. Robotic systems perform well in those scenarios."

The overall goal of robotic systems is to give distribution centers the flexibility and scalability required in today's brave new world of retail fulfillment. The following two case studies demonstrate how flexible robotic automation systems do just that.

Case Study: AutoStore Helps Komplett Complete Its Growth

After a solid decade of rapid growth, Komplett—a leading Scandinavian e-tailer of PCs and electronic equipment to consumers and businesses in Norway, Sweden, and Denmark—realized it needed to automate its distribution operation. The manual, conventional fulfillment system it used at its 270,000-square-foot central DC in Sandefjord, Norway, was unable to keep up with orders from Komplett's nine e-commerce portals.

The company was also driven by the desire for greater efficiency and the need to maximize storage space in its existing facility to accommodate an increasing number of products and orders.

After considering a variety of automation options, Komplett decided to implement a robotic solution called AutoStore, manufactured by Jakob Hatteland Logistics AS in Norway.

"The AutoStore solution works well for companies such as Komplett that require both dense storage and highly efficient piece and small-case goods-to-person picking," explains Leber of Swisslog, the exclusive North American provider of the AutoStore system.

AutoStore's three-dimensional grid system features self-supporting bins that independently operating robots move to pick stations. All robots have two sets of wheels that enable them to move along perpendicular axes, and reach any position, and any bin on the grid.

"The robots know their exact location on the grid at all times," Leber explains. "They count the distance up or down from their home station based on how many rows they pass. The picking station is at a certain grid location, so the software's traffic management system tells the robot the fastest way to travel from its home station to the product storage bin, then to the picking station."

A Place for Everything

Companies can determine the number of bins they want to install to meet current requirements, and can easily expand the grid in the future to accommodate growth and business changes—a feature that was key for Komplett, which went live with AutoStore in August 2007.

In its first phase, the company installed 16,000 bins, 26 robots, and 28 workstations; in 2008, it increased the size of its grid by more than 17,000 bins and 29 robots. Currently, it operates 33,000 bins, 55 robots, and 28 workstations at its Sandefjord facility.

"Workstations can be used for both putaway and picking," notes Pal Asbjorn Vindegg, Komplett's chief operating officer. "Typically, four to six stations are used for putaway, and the remaining stations for picking. But the actual number of stations we use depends on capacity demand."

Accommodating Shifting Demand and Lead times

Being able to scale based on demand was an important factor for Komplett, which experiences both long-term seasonal demand variances, and changes in short-term daily demand.

In addition, Komplett's lead-time expectation from order to delivery ranges from two hours to two days, with 95 percent of its orders delivered within 24 hours.

"To cope with this lead-time variation and still deliver high productivity, we need flexibility to adjust capacity and man hours from month to month, week to week, and day to day," Vindegg explains.

Storage density is another key advantage that Komplett gained with AutoStore. "Komplett can store a large number of goods in a small space because the bin stacks are next to each other," notes Leber. "Because no travel aisle is needed, no space is left unused."

The solution also frees Komplett from needing room for lift trucks, roads, or ramps—a feature that is particularly attractive to European operators such as Komplett. Real estate there is so valuable that European companies don't typically build the million-square-foot DCs common in the United States.

Positioned for Success

Another benefit of AutoStore is the system's ability to automatically optimize where goods are stored in the grid by keeping frequently requested items higher up for faster access times.

Since embracing AutoStore's flexible automation, Komplett has been able to increase order volume, reduce labor hours, and improve productivity.

The DC operation's efficiency increased by 30 percent, as measured by comparing the number of orders delivered with the number of man hours.

"After service levels, this is the most important key performance indicator in our warehouse operation," Vindegg says.

With the AutoStore solution as the heart of its warehouse operation, Komplett has expanded its product base beyond electronics to include kitchen, home, garden, and health and beauty products. In 2010, the company prepared and shipped 1.4 million orders—nearly 4.3 million items.

That means Komplett picks a product every eight seconds, on average, and dispatches an order every 24 seconds around the clock, every day, all year long. Its flexible automated system allows it to keep up with this demand.

Case Study: Quiet Logistics Makes Some Noise With Kiva Automation

As a third-party logistics provider (3PL) for a number of prominent fashion and apparel clients—including high-end e-commerce purveyor Gilt Groupe and European fashion brand Zara—Andover, Mass.-based Quiet Logistics is challenged with providing order fulfillment, returns processing, and value-added services for a wide array of products.

To face that challenge in a way that not only satisfies customer requirements but also helps Quiet achieve its own business objectives, the company has embraced flexible automation.

Quiet Logistics was an early proponent of the robotic mobile fulfillment solution from North Reading, Mass.-based Kiva Systems, and has now installed the system in its two Massachusetts DCs, as well as in Louisville, Ky., where it operates a dedicated fulfillment facility for Gilt Groupe. Its most recent Kiva implementation—at its Devens, Mass., DC— went live in September 2011.

"Kiva's system provides automation that allows us to hit the fundamentals of e-commerce— getting the right product to the right place at the right time—faster and more accurately, without compromising the quality of our operation," says Al Dekin, senior vice president of sales, Quiet Logistics.

In addition, the solution gives Quiet Logistics the flexibility and scalability that is critical for the way it serves clients.

"We need a solution that can scale quickly and provide capacity in real-time response to our clients' needs," Dekin says. "And because we serve multiple customers that all operate differently, it is crucial that we have flexibility to address unique customer requirements while using one common infrastructure."

Bots and PODS do the Work

Kiva provides that common infrastructure in the form of orange mobile robot units (called bots, or drive units) that move inventory on shelving units (called pods) to and from workstations around the warehouse.

The robots are connected to a wireless network that provides instructions for their moves, while sensor-based stickers on the floor help the bots guide themselves and determine where they are in relation to other bots, the shelves, and physical impediments such as poles or columns. Quiet Logistics operates more than 150 Kiva bots and several thousand pods in its three facilities.

"The power behind this system is the software," explains Kiva's Peter Blair. "It dictates how the robots work and orchestrates movement on the floor at all times. It also enables the operators to efficiently manage and prioritize their daily order flow, and helps managers better allocate staff for optimal efficiency, given fluctuating workflows by shift, by day, and by season."

Kiva's software also implements easily with order management solutions. At Quiet Logistics' facilities, the software is hooked into the 3PL's proprietary fulfillment management system, which runs the whole warehouse.

"This integration allows us to talk directly to clients' systems and manage all service levels and operational requirements for different clients across a common infrastructure," Dekin notes.

In addition to Kiva's software, the highly customized nature of its workstations and shelving systems appealed to Quiet Logistics. Workstations can be configured for left-handed or right-handed workers, or for picking directly into a shipping carton versus picking to a tote or onto a pallet.

Tailoring a Custom Fit

Shelves, too, come with myriad options. "Users can choose standard, square-footprint flat shelves to lay goods on," explains Blair. "Or they can configure more sophisticated units that contain multiple dividers for vertically slotted goods or mail-like slots for apparel that needs to lay flat. They can even use our garment-on-hanger (GOH) units, which are like moving closets."

Quiet Logistics worked closely with Kiva to design the GOH units, which meet the 3PL's need to fulfill orders from its many fashion customers. "It's common for the same apparel order to contain a GOH product and a flat-pack product such as a shirt or a pair of shoes. Merging those different items often poses a challenge," Dekin explains. "But with the Kiva setup, we are able to pick those orders using the common infrastructure, and just vary the type of shelving that the bots use to bring inventory to the pick stations."

Premium Packaging

The ability to retain that common infrastructure while customizing portions of the process has also been beneficial to Quiet Logistics because of the higher-end packing processes that are its specialty. Because the company serves premium apparel brands, it provides numerous value-added packing services that help e-commerce orders reflect the brand's prestige.

"We are responsible for completing the Web site or brand experience for clients," Dekin says. "If online shoppers buy a $500 dress, they expect it to be delivered in packaging and in a condition relative to its value. The garments must be folded properly and packed beautifully in tissue paper, or placed neatly in garment bags with high-quality hangers—and the presentation of the package itself must be pristine.

"We pick all the various order items through the Kiva solution, then distribute them to different packing stations to perform the value-add services for clients," he continues. "With that common infrastructure going to multiple packing stations, we can quickly and effectively support the needs of all our customers."

In addition, the solution is a fit because Quiet Logistics' customers maintain constantly changing inventory profiles. "We'll pack lots of shoes one month, then t-shirts after that, and mostly gowns the next month, so Kiva's flexibility is key," Dekin explains. "We don't have to worry about reslotting or reusing locations for products. If we sell through or pick all the units from one bin, we can reassign it to a different product that is coming in."

The company also doesn't have to worry about accuracy issues. The Kiva system makes the picking process simple and straightforward. It also minimizes the chances for human error, because the robots are responsible for bringing the appropriate inventory to the pickers.

"We have been pleased with the system's accuracy," Dekin says. "In fact, the only time we make a shipping error is if the manufacturer mislabels a product—which is outside our control."

What warehouse wouldn't want to be able to make that claim?