Forklift Facelift: Making Over DCs from the Inside Out
As important as lift trucks are to tactical activities in today's high-tech warehouses, their strategic value is becoming equally apparent. Businesses are looking at the long-term advantages of investing in lift trucks to revamp and streamline their warehouses and DC facilities to better utilize storage space and increase throughput.
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Unlike other material handling innovations that have radically altered the warehouse landscape—automated retrieval systems, warehouse management systems, RFID technology, and visibility and communication capabilities—the modernization of lift trucks has been progressive, and its impact more subtle.
When Englishman Eugene Clark first envisioned the forklift truck in 1917 it was as a way to enhance transportation within his own company. Almost 90 years later it remains a defining feature of warehouses and distribution facilities worldwide.
"Most equipment improvements in the last 25 years have been evolutionary rather than revolutionary," says Jack Kuchta, executive vice president of Gross and Associates, a Woodbridge, N.J., consultant that specializes in material handling logistics.
"There hasn't been a new concept in forklifts since turret trucks were introduced. There have been improvements in driver ergonomics, visibility, speed, and the ability to monitor operations, but the trend has been small improvements in user ability."
These incremental improvements, however, combined with state-of-the-art warehouse and transportation management systems and automated pick/pack, sort, and conveyor technologies, have had a marked impact on how businesses today approach their warehouse and distribution operations. The logistics renaissance of the past decade has given material handling logistics a much-deserved and much-needed voice in today's corporate boardrooms, and the lift truck market has been an open and welcome beneficiary.
"Industries with a high demand for efficient distribution have already realized that logistics is a key factor for survival in a very competitive market," says Dirk von Holt, president, Jungheinrich Lift Truck Corp./Multiton MIC Corp. and president of the Industrial Truck Association (ITA). "Many companies implemented the 'vice president of logistics' position into their hierarchies to support the strategic importance of logistics issues. The current technology push in the forklift industry is a reaction to the importance given to logistics."
An Economic Outlook
"During the 1990s and into 2000, most businesses were trying to keep up with demand. There was unprecedented growth in our industry brought on by consumer demand," notes Jim Malvaso, president and CEO of industrial truck manufacturer The Raymond Corporation, and vice president of the ITA. "Consequently, significant capital investments were made in facilities, forklift trucks, and warehouse systems."
After Sept. 11, however, businesses were forced to streamline operations and cut costs as much as possible. One consequence of these budgetary constraints was that companies became more wary about investing in new facilities.
"Capacity was no longer an issue, excess capacity was," says Malvaso. "While some sectors—grocery, pharmaceuticals, and home building in particular—continued to see reasonable demand, others were left to deal with the newly acquired capacity. Now, with the recent upturn in demand and favorable economic indicators, we again expect to see capital investments—first in the form of additional and replacement forklift trucks, followed by new or redesigned facilities."
In the past two years the lift truck industry has experienced modest annual increases in the number of units sold in the United States and 2004 promises much the same with projected growth at about 12.5 percent, according to the ITA.
"The collapse of the material handling market in 2001 and 2002 forced many companies to implement cost-saving measurements," says von Holt. "Companies went through capacity reduction and cost-cutting programs. Now, after all those measurements, further improvements are only possible through upgraded processes. Usually this involves equipment rather than building new facilities."
Toyota Motor Manufacturing's plant in Georgetown, Ky., is investing in material handling equipment and building new facilities, but for different reasons. "We're building new facilities to expand our production capabilities, not to upgrade what we already have," says Rick Noe, group leader at the plant. "If you are looking to upgrade your operation the trend is to look inside first."
Businesses today are similarly looking at investments in forklift trucks with an eye toward streamlining logistics activities and processes within their facilities. Manufacturers, for their part, now market and sell "warehouse solutions" rather than simply lift trucks.
"Increased pricing and less land availability are forcing many warehouses to go higher rather than wider in the expansion process," says von Holt. "New and better forklift trucks support those efforts.
"With the increase in lifting heights, and reductions in aisle widths, companies are facing the need for more reliable products. If a truck operating in a six-foot aisle with lifting heights of 560 inches fails, a whole production or distribution network might stop because no replacement is available," he says.
Raymond's Jim Malvaso notes a similar development. "It is not uncommon to see aisle widths as narrow as 60 inches or rack heights as high as 60 feet. Some grocery warehouses are storing and retrieving at heights of 442 inches and demanding ever-increasing capacities at those heights due to more innovative methods and flexibility in slotting and replenishment of pick locations," he says.
Technology has been the key differentiator. AC (alternate current) forklift trucks offer more power, allowing for faster acceleration and lift in tighter spaces.
"The new AC equipment, with fewer parts and lower service and maintenance needs, supports this trend by giving forklift users a more reliable choice," says von Holt. "It also enhances the availability of forklift trucks by more than 30 percent using the same-sized battery as before. Users can potentially reduce the need for two batteries to one for a two-shift operation."
The integration of technology, however, is better geared to electric trucks than internal combustion (IC) trucks, adds van Holt.
Controlled area network systems (Can Bus), for example, constantly check all electrical functions in a forklift truck and ensure the right distribution of energy to the appropriate components, making them much more efficient and productive.
Manufacturers have also invested a lot of money in research and development to enhance the ergonomics of lift trucks to make them as comfortable, efficient, and safe as possible.
"Productivity, cost of ownership—including energy efficiency and maintenance-cost reductions—operator ergonomics, and operator safety are squarely in the sights of manufacturers and lift truck users alike," says Malvaso. "The recent innovations in our industry are a direct result of those attributes. We have seen significant increases in overall operability due to the introduction of multi-function control handles, coupled with the introduction of motor control technology."
A New Value Proposition
While a forklift may offer very little strategic value in and of itself, at a macro level the advantages are markedly more visible.
"When a company changes its strategic approach to managing the supply chain, the location of the facility might be the most critical component," says Curt Rhoades, fleet services manager, Toyota Material Handling USA, headquartered in Irvine, Calif. "In this situation, the expense of a new building could be larger than the outlay for equipment. It is not always possible to change the location of the facility, however, and in those circumstances the current "cube" is enhanced to facilitate the existing logistics situation. In this case more money is spent on equipment."
The decision to reconfigure storage space within a facility, or look at different material handling equipment and processes, carries some important strategic considerations, says Rhodes. These are:
- Is the facility strategically located to provide the product to the end user when it is required (just-in-time inventory management)?
- Is the "cube" being utilized to its maximum potential? Is as much material being stored as is practical?
- Is the facility configured so that the material is handled as few times as possible (batch size vs. frequency)?
- What is the trade-off between speed and space? The optimum solution will be a blend of the two, based on the user's needs.
One way manufacturers are helping lift truck users answer these questions is by providing them with computer-aided design (CAD) layouts that show how they can reconfigure their warehouses to best utilize space. Aisle-Master and Combilift, two forklift manufacturers located in County Monaghan, Ireland, both have in-house design teams that provide a complete warehouse and logistics planning service, including layout proposals and storage density calculations.
"A lot of our customers are involved in manufacturing and are looking to squeeze storage—stealing space from their own facility to be more productive. Aisle-Master is very much involved in the economics of cube space," says Joe O'Brien, sales director, Aisle-Master.
Equipment suppliers in general are finding that it is critically important to provide customers with the information they need about value-added services and how best to use them. Aside from offering incentives that make their products more marketable, manufacturers are similarly empowering and encouraging their customers to look beyond short-term ROI to realize long-term efficiency gains.
The value proposition becomes much more apparent to customers, notes Martin McVicar, managing director of Combilift, because "we are essentially selling a logistics solution."
Aisle-Master and Combilift's customers—including Home Depot, Lowes Home Improvement, and DANA Corporation—have been able to drive much greater productivity out of their businesses by taking a more strategic approach to implementing lift truck equipment.
Among the advantages, warehouse operators can:
- Store more product in the same or less space.
- Improve product accessibility.
- Reduce product obsolescence.
- Enhance inventory management.
Companies can also reduce their fleet size and personnel because of greater efficiencies and faster throughput within the warehouse or DC.
For Toyota Motor Manufacturing, most of its forklift activity involves unloading and sequencing incoming and outgoing parts from trucks for subassembly and assembly.
"Our truck operators will unload a full pallet, take it to a sequencing location, then make sure they get the parts to the line side in the proper colors at the right time. We've gone so far now that we're asking some of our suppliers to sequence parts before they even get them—this way we can cut out the middle step," says Noe.
One Truck, Two Processes
Toyota also uses a tracking system to measure the run time of its forklifts to keep tabs on where they are, what time they're moving and when they're sitting still. "If we have a few trucks that aren't fully utilized, for example, we will try and drill down to what time the trucks are being used and see if we can share one truck between two processes," says Noe.
Another important aspect of lift trucks is that many manufacturers offer customers lease options. Mark King, facilities manager for infant safety seat manufacturer COSCO, prefers leasing lift trucks because of the wear and tear they endure at the company's 850,000-square-foot manufacturing facility in Columbus, Ind.
"By leasing, we get brand new trucks every five years," King says. "During this span, we put more than 10,000 hours on our lift trucks even when we rotate them among other areas of the COSCO facility.
"Lift trucks servicing the 24-hour, seven-day-a-week plastics operations really get a workout. The high-speed tube mill produces 150 miles of tubing daily. The load weights and pace make this the toughest lift truck application in the company," he says.
In 2001, the manufacturer replaced its fleet with 25 new trucks from Komatsu. With the help of its local dealer, OKI Systems Limited (OKI), Komatsu developed a logistics plan that helped COSCO match lift truck capacity with specific jobs.
Now, material is staged in racks where Komatsu's internal combustion (IC) trucks move products to waiting trailers. This eliminates valuable time that might be spent hand-loading, reduces loading time, and improves the ability to cube a trailer more efficiently.
The trend toward automation is clearly an important development in the evolution of high-tech distribution and warehouse facilities. With storage capacity at a premium, warehouses are building up to maximize space, thereby creating more demand for automated retrieval systems.
Amid the cacophony of mechanized pickers, sorters, conveyors, and carousels, however, human-operated forklift trucks still remain a vital component of warehouse activities, thanks in part to technology. The proper integration of this technology with forklift trucks is vital to creating the most efficient material handling system.
"One of the things people look to do with forklifts is practice warehouse optimization. They want that forktruck to be as useful as possible," says Len DeWeerdt, vice president of business development, Retrotech Inc., a company that specializes in automated retrieval systems. "Tactics around forklifts tend to be driven by best-practice placement of goods."
DeWeerdt sees forklifts as one component in a successful material handling operation. "Properly applying a warehouse management system is also important," he notes. "Generally the WMS will drive the efficiency of forklift drivers, causing them to have more or less equipment. As they analyze equipment utilization numbers, they depend on the efficiency of the software to do much of the work."
Jim Malvaso expects that the lift truck industry will allow businesses to make even greater strategic inroads in material handling applications. "While the evolution and innovations of forklift trucks have certainly contributed to raising the strategic importance of material handling systems in warehouses and DCs, I would have to say that today they are more an enabler rather than a driver," he says. "Each new innovation pushes these possibilities even further.
"The real driver in my opinion is the continued proliferation of SKUs and the related need for efficient material handling methods," Malvaso says. "This, of course, is a result of the North American propensity for choice."