Thursday, 19 December 2013

Poor racking choice harms warehouse economics

It has been said that it is the supply chain that competes, not companies, and while that is a truncated version of the truth it stresses the pivotal role of logistics. Within the supply chain it is also true to say that the warehouse role is paramount, far more so than global transport costs, and therefore the racking/shelving function should receive the respect it deserves.

No longer a static, boring part of warehouses on which goods are stored and retrieved, today's racking comes in many dynamic forms with varying levels of 'intelligence' to deliver accurate throughput rates unheard of 40 years ago. But with so many choices comes complexity and therefore higher risks of making the wrong choice of racking equipment and layouts.

Fortunately, many leading racking and forklift companies have software packages to help prospective clients examine various storage scenarios under all operating conditions. Their 'what if' facility will quickly test specification changes and so hasten the decision process and highlight potential bottlenecks but they are only as good as the information fed into them. But while simulation packages should be seriously considered for large, complex warehouse layouts, a word of caution. Some 'what if' software packages have limited scope. They may not deal with floor factors, for example, which are so important for very narrow aisle (VNA) high bay stores. If a package is offered by a forklift company there is also the temptation to promote their own product range, even though they know that there is a more suitable product on the market outside their own portfolio. Warehouse operators, therefore, need to be aware of all the various truck types on offer or they could be foisted with aisles that are too wide and with too many forklifts. Reach trucks, for example, need aisles at least 2.6 mt wide but there are now articulating forklifts which can work in aisles only 1.6 mt wide and so store 30% more pallets in the same cube. For these reasons it is probably wiser to consult an independent, pure simulation software house with a long service record like Cirrus Logistics.*

Success depends on research

To ensure a successful installation, operators must adequately research the product dynamics of their stored goods. This will look at volume flows by stock keeping unit (SKU), sizes, weights, time sensitivity, seasonal demand variations and packaging (particularly crucial for automated stores). Hazardous goods will also affect racking arrangements. The choice of racking will set the permanent warehouse running costs, which can vary widely depending on the nature of the stored goods' dynamics. Where fast-moving pallet loads need 100% instant accessibility then adjustable pallet racking (APR) will be the usual choice. It is the most commonly used racking form, one of the cheapest and gives good stock rotation. It is, however, space hungry. A variation of APR is double-deep storage accessed by forklifts with pantographs or telescopic forks for loads two pallets deep. This improves storage density by 40% but at the expense of 100% instant selectivity.

Cheaper still than APR is block stacking, based on post or cage pallets. These can be stacked four or five pallet loads high, albeit in a relatively tricky operation, and the storage medium can be hired. Suited to homogeneous loads, this method offers one of the highest storage densities but the poorest, instant stock selectivity.

If 100% instant selectivity is not essential then drive-in and drive-through racking might be the answer. This is where a forklift can drive right down a racking lane because pallets are supported only on rails at the side of the lane. There are no obstructing beams. Cold stores favour them because of the high storage density achievable in what is a high energy cost environment, where energy can account for 20-30% of total warehouse running costs. Instant stock selectivity, however, is only about 30%, which means poor picking rates and stock rotation. This racking type is also notorious for damage from forklift collisions.

Why interface costs matter

A safer racking choice for cold stores is mobile racking, also valued for its high storage density. Unlike drive-in, it allows 100% instant selectivity, albeit at a slower rate than APR because time is spent while selected racking aisles are being powered open. Even so, surprisingly high pallet handling rates of 35 an hour are achievable. On the downside, mobile racking costs about three times as much as APR and is unsuitable for fast-moving goods. As with any equipment buying decision for warehouses, however, it should be the interface costs that matter most of all. Mobile racking, for example, achieves 50% more storage capacity than APR which not only cuts energy costs but also high construction costs when considering a new-build project. Bolted racking rather than welded should be preferred in cold stores because the latter is subject to weld failures.

Racking also becomes dynamic, in part, when live or dynamic storage is chosen. Various live storage forms use gravity or powered systems to index loads forward to the picking faces. Pallets or totes are fed in at the back and roll forwards on wheels or full-width rollers. Storage density is high and stock rotation good because it is a FIFO system. A variation of gravity-based live racking is push-back racking, which has storage lanes four or five pallets deep. Unlike conventional live storage, which is fed from the rear, replenishment and picking are at the same place and so it saves space at the racking's rear end.

The last 10 years have seen many advances in dynamic racking through the application of robotics from companies like Swisslog,* SSI Schaefer,* Knapp* and Redirack.* Their purpose is to maximise storage density while dispensing with slower and more inaccurate methods using labour. A good example is Redirack's recent, automated pallet storage, retrieval and sequencing solution. Unlike any other system, it combines pallet buffer and sequencing system with automated storage and retrieval system (ASRS) technology which can increase the storage density of existing warehouses by 80% when compared with very narrow aisle APR. Pallet throughput is much higher because the system delivers the retrieved pallets to the operator in the order they are required to floor level. One buyer of the system, Fredericks Dairies in north-west England, achieved a 30% cut in the total construction costs for its cold store against creating a building to house a conventional racking system, to say nothing of high energy running costs. Fredericks Dairies confirmed that they achieved 13,500 pallet storage slots with the Redirack solution compared with only 9,500 pallets from its nearest competitor.

There can be no doubt that time compression techniques will come to dominate many warehouse operations as they adjust to multi-channel routes to consumers galvanised by on-line shopping that threatens swathes of high street shops. A key weapon in the adjustment is the right mix of dynamic 'intelligent' racking. To be quick is better than to be dead.

*SSI Schaefer:

Monday, 16 December 2013

How to avoid automated warehouse failures

Lest there be any initial thoughts that automated warehousing is only for the brave, there are now many such centres in the developed world running successfully and fulfilling their payback criteria. However, although now much more reliable than automated warehouses of the 1980s, examples of spectacular failure still occur and the consequences so devastating as to risk bankruptcy.

The reasons for failure are many and can be of an incredibly crass nature, like when a British middle ranking retailer using a third party logistics (3PL) provider as its turnkey partner refused to invest in simulation to expose potential bottlenecks. Both parties agreed on the need for simulation but neither would pay for it. The result was plenty of warehouse bottlenecks leading to empty shop shelves, a fired 3PL and a badly mauled share price. Spoiling the ship for a ha'porth of tar in this way is a potent reason why, despite such very costly investments, price should not be the prime consideration in deciding which scheme to buy and should never be at the expense of flexibility. So what are the main reasons why automated warehouses fail to meet expectations and when should they be considered for investment?

Most "automated" warehouses in Britain are a mixture of automation and manual/mechanical handling and so the payback criteria for such centres will obviously depend on the level of each. These hybrids may even involve only the automation of information technology, as with Amazon, who rely on it for their order picking functions only. Their operation is highly labour intensive, typically involving order pickers walking 7-10 miles per shift, a process some might imagine is highly time-wasting. Yet, Amazon conducts round-the-clock, effective e-fulfilment centres where delivery times to consumer are critical. This shows how careful one must be before going down the warehouse automation route.

Generally speaking, a fully automated warehouse dealing only with full pallet loads is unlikely to achieve a payback in less than five years but payback criteria can be misleading or incomplete. In such exercises, for example, accountants are unlikely to factor in the beneficial impact of warehouse automation on customers, like prompt, damage-free, and correctly picked orders. It's true that figures cannot be placed on that but it has significant value nevertheless. There is also an environmental dividend because 'dark' warehouses need much less heating and lighting.

Points favouring automation

Generally, the case for warehouse automation is strengthened as the scale and demand for speed and efficiency increase. Favouring factors include:

  •  24-hr, seven-day week operations
  • When repetitive tasks are regularly performed
  • When long travel distances are involved
  • When lift height rises above 12 mts
  • When high land values dictate the need for very high bay warehouses to exploit height
  • When a hazardous environment precludes human operations
  • When tight inventory control is essential along with security and almost negligible damage levels. 
  • When the use of very high storage heights and densities could close scattered distribution centres
The factor most likely to drive businesses to invest more in automation is the need for more speed and efficiency to cope with the seismic change in consumer shopping evinced by the remorseless rise of online shopping (e-tailing). This trend, which some estimates suggest will wipe out 40% of Britain's shops in five years, will place far more importance on single item picking, leading to demand for automated goods to pickers, be they mini load cranes, robots, carousels/paternosters, or whatever. But is automation inventiveness keeping up with these momentous changes?

Yes, they are, and good examples are some of SSI Schaefer's unique solutions. They have, for example, developed a picking and sortation system which offers the additional dimension of sequencing of order items so that different elements, or lines, of an order can be picked over a period in different areas of the warehouse, then held and delivered together to one packing station. This has the obvious advantage of being able to consolidate all items into one package as well as being able to prioritise packing of picked order items. It is based on overhead conveyor system technology, called the Fulfilment Factory, and it was devised primarily for e-commerce operations.

Truly fully automated systems are increasingly using a 'teach in' system which captures physical appearance, weights, dimensions and other statistical product data upon goods receipt and before put-away. This enables pallet delayering and put-away on trays, subsequently allowing automatic picking and multiple case selection, sequenced in order to build mixed SKU pallets using a robotic palletiser and wrapper.

Avoiding the tender traps  

The business of avoiding costly project failures starts with the selection process of a suitable project provider. For the more complex projects, taking the turnkey route makes the best sense when starting with a green-field site but even here great care is needed. At one time in Britain a significant number of projects relied on the builder acting as the turnkey main contractor. Fortunately, that has waned following some bad experiences. The fact is, a builder does not have the expertise on the special problems that can arise with warehouse automation. All automated MHE suppliers agree that an automated warehouse must be designed from the inside outwards and so it is the working equipment that is paramount. The building, after all, is only there to keep the rain off.

Another route to take is the appointment of a 3PL provider to build and run the project. This may be reasonably safe provided the 3PL has plenty of experience building, integrating and running automated stores. A third route is to appoint a systems integrator as the project manager but the downside outweighs the upside of this choice. The safest turnkey choice would be to make the main handling equipment supplier as the turnkey operator for they should have a good track record for successful projects, helped by their own software expertise. They will also have the substance and after-sales technical service support as a comfort if things go wrong.

Once satisfied with the choice of turnkey partner, the client must then watch out for the warning signs at the tender stage. These include:

  • Exaggerated claims
  • Lack of well-defined quotation for equipment, with too many qualifications and exceptions
  • Lack of information on commissioning trials and acceptance tests and how the system will achieve the throughputs
  • Sensitivity of the system to single point failure in mechanical, electrical and control areas
  • Design life of equipment at specified duty
  • Lack of established support services for equipment and software
  • Enough potential throughput capability to cope with sudden unexpected peaks

Watch that packaging

Packaging may seem of little consequence but automated warehouse operators cannot afford to ignore it. If there are two lessons that can be learned about the hazards of packaging for automation they are: consult your handling designer as early as possible, and that the automation solution should come before cost. Packaging should heavily influence the design process. Compared with manual handling, warehouse automation requires better quality packaging and pallets, more consistency and more care over palletising and labelling. Poor quality timber pallets are probably the greatest problem for warehouse automation. Pallet damage is a big factor, with broken boards and protruding nails jamming conveyors, especially the roller type. Some operators prefer plastic to timber pallets because of their greater dimensional accuracy and other advantages, though good quality timber pallets like those from pallet pool operators Chep and LPR would be acceptable. Belt conveyors pose fewer problems than roller conveyors when meeting with loose stretchwrap or banding owing to less snagging. Loose wrapping materials can also give incorrect signals to sensors and cause inefficient accumulation or machinery stoppages. 

Finally, the client must examine its role in making the venture a success even more rigorously because it is here that the seeds of failure flourish. Most MHE suppliers would agree that most of the many reasons behind disappointment lie at the clients' doors and topping the list is poor planning with not enough attention paid to functional specification. There is too little effort put in at the front end to the cost of the back end. Clients must realise that their own attitudes can seriously impair efficient working. A system supplier must have accurate information on the business issues underlying the new system. When the project is handed over, the client's operators and system managers must have been adequately trained on how to run the operation before start up, not after. If not, the new system may be unjustly criticised for providing lower than expected performance. In a fast-changing world dominated by multi-channel distribution, future growth prospects should allow for expandability and flexibility through modularity to be designed in for both the mechanical layout and control systems.

If all the preparatory homework has been done diligently the automated warehouse should  deliver all that is expected of it, with one potential exception -- the vicissitudes of future demand that could change so much, for whatever reasons, as to reduce throughput levels to uneconomic rates. Perhaps one day Big Data will reduce that risk.  

Monday, 9 December 2013

How articulated forklifts transform warehouse economics

Whenever buying or hiring new forklifts, buyers will often hear about the need to consider life cycle costs above initial truck price because over, say, a five-year hire period the truck's running costs will far exceed initial purchase/rental costs and, therefore, the truck's reliability and productivity, in terms of pallet loads moved per hour, is paramount. Productivity is important because some truck designs and quality make them 20% more productive than competing models but getting to the bottom of the veracity of competing claims is difficult and perhaps viewed with suspicion by potential buyers.

 While it is undeniably critical to put life cycle costs before initial truck cost and be assured of consistently excellent after-sales service, there is another type of cost that can dwarf life cycle costs -- the truck's interface costs. These costs may be defined as how a truck affects overall storage costs, like building costs, rents and rates, utilities and all other running costs, including safety issues.

When, by dint of its versatility, a truck's design combines higher productivity with a huge impact on interface costs, then the case for buying such a truck, despite its higher initial cost than conventional, counterbalance (cb) trucks and reach trucks, is unassailable. The only forklift design that qualifies for this accolade is the articulating truck, yet there still seems to be some convincing to do, perhaps because of conservative inertia over step changes in handling techniques. Such inertia was faced by the British pioneer of articulated forklifts back in the mid 1980s when Translift Engineering, as it was called then, launched the game-changing, articulating Bendi forklift to initial derision from purblind truck competitors who likened it to a Heath Robinson contraption. Today, however, there are now three manufacturers* in the British Isles: Translift Bendi, Narrow Aisle Flexi and Aisle Master.

Interface costs can be key

Counterbalance forklifts, reach trucks and dedicated very narrow aisle (VNA) trucks will not always be the wrong choice, of course, because, as with any large investment in materials handling hardware, careful analysis of stock handling must precede any investment. If forklifts are worked non-stop throughout their shifts (often not the case) then the conventional cb truck could be the most productive in terms of pallets shifted per hour, especially if gas or diesel-powered. But productivity, while important, is often not, or should not be, the decisive factor in the truck choice exercise. Productivity must also be combined with interface cost-cutting issues.

The origins of the articulated truck go back as far as the 1940s when a US Company, Baker, produced a machine that articulated to 45 deg with the aim of reducing the stacking aisle width. Pallets were stacked in a chevron style to help in speed and to achieve smaller aisles. In the early 1950s, Towmotor developed a truck to rotate the load a full 90 deg, much like a modern articulated truck. However, the truck retained all the other counterbalanced design traits so it required two rotating hydraulic support legs that were activated when stacking on either side of the truck. For various reasons it did not galvanise the marketplace in the way that modern articulated trucks have done. It fell to Freddy Brown, inventor of the Bendi design, to apply a new, articulated concept. He found that by reversing the triangle of stability and changing the weight distribution he would solve the issue that had long eluded his pioneering forbears.

Today's articulated forklifts come in a wide range of models, including side loaders, cab-equipped cold-store models and, in the case of Bendi, a pedestrian version and man-up model. The gas and electric articulated trucks can rotate their masts through a 220 deg arc, lift loads up to 12.5 mt and work in aisles only 1.6 mt wide but just how good are they at productivity claims and cutting interface costs?

Proving the claims

The Bendi was developed initially to cut the number of trucks a warehouse operator needed. This can be achieved owing to the articulating truck's versatility that allows it to perform well outside on rough yards loading and unloading lorries and transferring loads directly to narrow aisle or VNA racking. This function is often performed by a cb truck unloading yard vehicles and then placing loads inside for a reach or VNA truck to take over for racking tasks -- a time-wasting exercise that involves two truck types, of which the VNA is far more costly to buy and run than an articulated truck. Significant though this cost-saving advantage is, there are far greater rewards to be had and most are related to space savings.

The two main truck types that compete with articulated machines are the cb forklift and the reach truck, both of which need much wider aisle space. A cb truck typically needs 3.5-mt wide aisles and can stack no higher than about 6.5 mt. A reach truck needs at least 2.6 mt of aisle width but can stack to 12 mt. This means that typically an articulated truck can store 50% and 30% more pallets within a given cube than cb and reach trucks respectively.

It is no wonder with advantages like these the articulated trucks have replaced over 20% of Britain's reach truck market. However, even dedicated VNA trucks are also losing market share to the artics. This is because VNA trucks not only cost far more initially they also require the added costs of rail or wire guidance within aisles, possibly floor upgrades, are more costly to maintain and need more space at aisle ends if they need to change aisles. When they are no longer required owing, perhaps, to the loss of a long-term storage contract, they have a very low resale value. Articulated trucks, however, retain their second-hand value far more than any other truck type.

Instant truck payback

One example should serve to show just how great an impact on warehouse economics and the environment an articulated truck can have when the interface costs are factored in. When warehouse expansion or contraction beckons there are circumstances which can deliver instant forklift payback when a switch from one type of forklift to rented or leased artics occurs. When growing business demands more storage space there are only three means to achieve that: enlarge existing store, rent offsite warehousing and, if possible, make better use of existing storage space. The last of these is by far the least costly. When Stateside Foods, of Bolton, England, was forced by growing demand to expand its factory warehouse storage capacity it simply made better use of space by switching from a fleet of cb and reach trucks to renting two Bendi artics. The former trucks had been working in 3.6-mt wide aisles but the switch to artics meant the aisle widths could be narrowed to 2 mt, allowing far more pallet storage positions. The result was that Stateside could close a satellite cold store 30 miles away and save £250,000 per year, which did not include the costs of handling and transport between the two sites. The result of the truck change was instant forklift payback. It is overwhelming advantages like these which now convince many warehouse operators buying new or redesigning existing premises to realize their plans based on the use of artics.

Among the many other advantages from artics is their undeniably greater safety advantage compared with reach trucks and cb machines through better pallet load vision and lack of rear-end truck swing. Thetford-based Century Logistics, for example, not only gained 25% more productivity than reach trucks and 20% more storage space after switching to artics, it also sharply reduced rack, load and truck damage. In an age when environmental factors and rising energy costs make the best use of storage space more urgent there is no other type of forklift that even remotely comes close to matching the ability of artics to slash interface costs and improve productivity and safety. It is a message, however, that swathes of industry still have not taken on board.
*Translift Bendi:
 Narrow Aisle Flexi:
 Aisle Master:

By switching to articulated forklifts from reach 
and counterbalance trucks Stateside Foods
saved £250,000 a year through closure of its
Satellite cold store 30 miles away from its main
factory and warehouse