Materials Handling Equipment: Sorting Through the Options
From conveyors to stackers to shuttles, choosing the right automation can convert your warehouse into a sleek machine.
iHerb Grows a More Efficient DC
New warehousing and distribution facilities bring new opportunities—some of them alluring, others potential pitfalls. Companies hoping to cut labor costs and boost efficiency initiate months of planning, analyzing, and working to build a new facility that will support business growth. The decisions involved are not simple—they’re complex, multi-million-dollar choices with big implications.
Each decision throughout the process—whether choosing the right materials handling solutions provider or selecting the best equipment—must be founded on data and diligence. The best choices emerge from a collaborative team effort, made while searching for balance among divergent factors.
With such uncertainty, companies could easily retreat into comfort zones, recreating previous facilities instead of investigating new options. "That would be a mistake," cautions Lance Anderson, director of sales, sortation, and distribution for Beumer Group, an international solutions provider with U.S. headquarters in Somerset, N.J. Companies that examine—and improve—existing processes when planning new facilities can reap the reward of inching closer to fulfilling that elusive perfect order.
The underlying process must be solid for materials handling equipment to enhance it. "Trying to support an inefficient process with automation rarely works," says Mitchell Weiss, chief operating officer of Seegrid, a Pittsburgh-based technology provider.
Finding the Right Match
Selecting the right solutions provider marks a critical step in the process, says Dan Graves, corporate facilities, production support, and engineering manager for Quad Graphics, a Sussex, Wis.-based commercial printing company. Graves—who has overseen many of the company’s 70 new facility openings since it formed in 1971—typically starts with a long list of possible partners, then narrows the field.
"The solutions partners we consider must have a solid track record," Graves says. "We gather input from companies that have used the provider’s technology."
Reference checks can help ensure a potential partner focuses on building a solid, data-based system, and does not attempt to sell unnecessary or overly sophisticated equipment.
Choosing the right materials handling solution requires looking at a facility holistically, as opposed to considering its individual parts. Data forms the foundation of the process.
The first information a consultant or solutions provider asks for is statistics detailing throughput, order volume, planned inventory levels, and business growth projections. Other considerations include the range of product sizes and stockkeeping unit (SKU) profiles.
While some companies are able to offer all the necessary data already refined, others supply raw numbers that a provider can then crunch to begin the process of evaluating systems.
Companies building their first facilities may not have such robust data, so the project team will make assumptions about the number of orders per day and the size of those orders, making sure to leave a margin of error.
While data is key, companies should avoid "living in the land of averages," says Luther Webb, director of operations and solutions consulting for Intelligrated, a Mason, Ohio-based solutions provider. "A company’s average order may be two lines per order—but that can mean 90 percent of orders are singles, and the other 10 percent represent a larger part of the order line. It is important to dive into the details so the materials handling equipment selected can handle the facility’s real output."
Only What Is Needed
Sometimes, the allure of advanced technology hypnotizes companies into making bad decisions. Consider increasingly popular shuttle technologies, which are most suitable for companies processing a high volume of orders. It would be wasteful for a facility managing low volumes to invest in the latest shuttle technology, however, because the operation would be unable to make full use of the system’s capabilities.
"Don’t fall in love with the technology’s novelty," says Ed Romaine, vice president of marketing for Integrated Systems Design, a Wixom, Mich.-based solutions provider. "Compare it to other technologies to ensure you’re getting the most bang for your buck."
Data also supports the next phase of planning, which involves discussions about a company’s overall goals and those tied to the new facility, such as increasing order-processing times or accuracy. Companies often design facilities in the order that products flow from receiving to processing to shipping.
Instead, Anderson recommends working backward, starting with the company’s description of the perfect order. "The definition of that term varies," he says, although factors may include cost per piece, accuracy, or the time it takes to fill the order.
Working backward reverses the traditional process, forcing companies outside their comfort zones—but ultimately resulting in a better solution. Everyone involved in the project can benefit from looking at the facility with fresh eyes.
Proceed with Caution
A company’s business model and growth projections will drive materials handling equipment decisions, but an increasingly volatile business landscape has shrunk planning horizons. Order sizes have dropped, while expectations regarding speed have skyrocketed.
"The supply chain world is filled with uncertainty," says Kelly Reed, executive vice president, materials handling integration, for Tompkins International, a Raleigh, N.C.-based supply chain consulting firm. "A 10-year plan horizon is almost unheard of."
Because most companies also have capital restraints, Reed recommends building out what’s needed for the next two to three years while reserving funds for future upgrades.
Changing market conditions have also led companies to include multiple systems in their facilities. Companies sometimes install different types of carousels, pick modules, and conveyors inside the same facility to accommodate different flows.
"The specific equipment is driven by the facility’s volumes and product characteristics," Reed says. This is particularly true for businesses combining brick-and-mortar with e-commerce. They may need to accommodate small and large orders, along with value-added services such as embroidery or gift wrapping.
When choosing materials handling equipment for a new distribution center, an additional consideration is balancing the need for peak versus average performance. If a company builds for peak times, it will waste equipment and space during slower periods. "It’s better just to flex the staff," Reed says. "It’s easy to bring in additional labor."
Weiss agrees, citing the example of a candy company. "The week before Easter, the company produces at high levels, and may run an extra shift," he explains. After the holiday passes, production slows.
"If the company invested in extra machinery, it sits idle," Weiss adds. "But if they brought in extra workers to manage the volume, they can adjust labor levels."
Companies with higher labor costs often make a better business case for expensive, automated solutions. "The more costly your labor, the more you can spend on technology that will help reduce those costs," notes Mike Clemens, senior engineering consultant with Indianapolis-based automation provider Bastian Solutions.
Although ever-shrinking planning horizons make long-term projections difficult, Webb says companies could invest in an experiment—say, try out shuttle technologies in a small section of the facility and see how it works. In a few years, conditions might change for the solution to be more financially viable, and the company would already have the data and experience to gauge the merit of expanding. This approach allows companies to balance short-term planning horizons with preparing for long-term evolution.
One way to evaluate materials handling solutions involves comparing total cost of ownership with labor expenses. Webb cites the example of an online apparel retailer that was debating between put walls—a manual solution involving a wall of shelves and containers to hold product—or a more automated tilt-tray and cross-belt sorter system, which features conveyor belts flowing product throughout the facility.
The company ultimately selected the automated solution to reduce labor costs and escape batch size limits associated with put walls.
Two main pitfalls exist in materials handling technology decision-making. The first is under-automating—fearing the capital expenditure and not taking advantage of the range of available solutions. The second involves over-automating—choosing a particular piece of machinery and forcing it to work in a solution. By homing in on the data, and focusing on the perfect order, companies can make wise decisions about materials handling automation.
While it is important to invest sufficient time in planning a new DC’s equipment, beware the endless decision-making that plagues many warehouse automation projects. "The longer a company spends stuck in the planning process, the more it wastes the design team’s time and energy," Clemens says. After all the teams reach consensus about the right equipment, the time is ripe for action.
Planning a new facility is the best-case scenario for many companies. "A greenfield gives you a clean slate, which is exciting, opportunistic, and dangerous all at once," Anderson says.
By focusing on building the best system—and not simply picking a fancy piece of equipment and constructing around it—a company’s decisions set the foundation for success.
iHerb Grows a More Efficient DC
In the grand scheme of determining automation levels, labor costs represent a significant driver. This was the case for iHerb, a Moreno Valley, Calif.-based e-commerce retailer of natural products including supplements, beauty supplies, and groceries.
When the company built its second facility in Hebron, Ky., to more easily reach its East Coast and international customers, it completely reimagined its order processing in an effort to reduce labor costs and increase speed. It also adopted a significantly more sophisticated system to accomplish those goals.
iHerb’s original California facility employs batch processing. As orders come in, they are grouped together by a warehouse management system (WMS), which calculates the number of each product needed for every batch.
A voice-picking system then communicates to employees through headsets, directing them to the right location to pick products. The system worked well, but was labor-intensive, and slower than iHerb wanted.
To equip the new facility, which opened in summer 2013, iHerb worked with Bastian Solutions, an Indianapolis-based solutions provider. iHerb runs a high volume of orders, and needed a system capable of handling the velocity. Most of the company’s orders contain just a few items, but those items could include any one of the company’s 35,000 products. That means workers must be able to access the full range of items.
Ultimately, iHerb opted for a highly automated, goods-to-person, discrete order-picking system featuring shuttle technology. “This equipment allows workers to handle orders sequentially, one at a time,” says Troy VanWormer, iHerb’s director of operations. “One advantage is we can prioritize orders after they’re in the pool.” In the old system, prioritizing orders wasn’t possible—each one would line up behind the other in the order received.
The opportunity to reduce labor costs drove the decision. “The Kentucky facility operates with about half the labor of the California DC,” VanWormer notes.
Order processing times also dropped by 10 percent, allowing for 15-minute fulfillment times. The new system requires more effort to replenish, however, making a true cross-comparison difficult.
Inside iHerb’s new distribution center, floor-to-ceiling aisles contain totes holding products in compartments. A warehouse control system processes orders and directs robotic shuttles as they maneuver inside the aisles, picking totes and delivering them to one of 20 picking stations, where employees select the correct product based on an on-screen image.
The new facility processes up to 40,000 orders daily. While iHerb needed a high-volume solution, companies with lower volumes wouldn’t necessarily benefit from such a sophisticated solution. Processing orders at such a high speed could create bottlenecks downstream if other areas of the facility aren’t equipped to keep pace.