Space Archives - Abco Automation

Spotting Pain in Your Distribution Center

When you cut your hand, you know quickly. The human nervous system is a quick responder. However, outside an open artery it can be more difficult to spot “pain” or inefficiencies.

This is more true in as complex a place as your distribution center. Something that worked four years ago or as a temporary solution becomes ingrained in day-to-day process sapping time and energy.

Here are my recommendations to recognize your order fulfillment pain.

Fresh Look: Have someone outside the company look at your distribution center with you. A set of fresh eyes can give you perspective, and even better if it is someone outside the organization. They can give a more honest opinion, without feeling the pressure of upsetting the apple cart. Note: If there are apple cart’s in your distribution center you should probably move them.

Talk to different levels: Do you think the VP of Supply Chain and a warehouse manager might have a different perspective on problems in your distribution center? Some details that are mere annoyances for one might be a nightmare for the other. Looking at things from another’s viewpoint might help you recognize something that you have been glossing over.

Get on the Ground: Don’t rely on reports from others. They might not see a problem or even could have a vested interest in keeping things the way they are. Talk to the associates there. See what they are doing and ensure that you talk to associates and managers on different shifts and different sites and as mentioned previously talking to different levels helps immeasurably.

Use the Results: If you don’t apply what you have learned you just wasted your time. From all the research you should have a good idea of the problems and how you can start to address them.

Those are my thoughts on how to recognize distribution center pain. If you have any thoughts or comments please let me know. Want some help spotting pain in your distribution center? Schedule a time to talk to abco automation today!

Filed Under: Accuracy, distribution center design, Labor, S.A.L.T. Principle, Space, Throughput

Why Order Lines Don’t Matter in Distribution Center Design

by Travis Baker

Hi I am Cory Flemings from abco automation and welcome back to Whiteboard Insights. Today I want to tell you a story about a discussion I had recently about cubic velocity.

It goes kind of like this. Back in the history of man we created the distribution center design and before there were computers we basically had static locations and somebody walked through a warehouse and getting stuff off the shelves. And that is how we got to this world of distribution center design. Many of us are still thinking in those days when we talk about the Pareto curve. We all know and love the Pareto curve, it’s on our logo, and we love the Pareto curve.

It tells us a lot about the way an operation works. We all know that 20% of SKUs to 80% of the business but we usually measure things in order lines and the reason we have historic play or traditionally talked about order lines is because it has to do with how many times we go and visit a pick location during the day. It was born in the world where all the SKUs have static pick faces. Then it really matters about order lines. If I have one product that does 100 order lines a day and that means we have to go to that pick face 100 times.

But now things are different now we work with computers and automated technologies and so forth the world has changed and the world has changed and this one remarkable way we are no longer concerned with order lines per day we are concerned with cubic velocity. What is cubic velocity?

Well as you can see from my board cubic velocity is the number of pieces you sell a day of a particular SKU times its piece cubed. So if I have a lamp, as an example, a lamp might come in a box this tall and this big but I sell 25 lamps a day you can understand the cubic velocity of this product might be a pallet load a day. I am moving up a pallet load of this product everyday

On the other hand if I talk about pencils, straight pens or chopsticks or things that are small and thin I can put 2000 of those things in a tub and if I’m moving 2000 lines a day I can manage that much the volume with one tub of that product. And so the difference in cubic velocity is immense.

So the person and I were having this conversation they said, “I don’t understand why you’re putting lamps in a pallet flow line that doesn’t make sense”.

I said, “That’s because you’re still thinking in terms of lines, it only does 25 lines a day, but you are moving a pallet load of stuff through your warehouse every day when you sell these lamps. Over here you’re right to have these small items, these trinkets, that you move a lot more lines but you only move one tub of day.”

So for distribution center design in an automated system I am concerned with how much stuff you have to move around a system, even in a manual system that is completely manual think about how much cube you have to move through your building every day. Some products you have to vote the entire pallet, other products you don’t.

In fact think of your carton flow racks today and how much how many of them have backstock on the backside of the flow rack and I will bet you the reason is you haven’t thought of cubic velocity you are thinking of lines that product moves a certain number of lines a day but the cubic velocity drips out the back of the flow rack sits on the floor.

I encourage you to think about cubic velocity in your distribution center design and if you would like us to give you a hand we would be happy to help you out go to www.abcoautomation.US and connect with us we would be happy to give you a hand.

Sound Interesting? Contact us today and let’s see how we can work together to make your distribution center great.

Filed Under: distribution center design, Pareto Principle, Space, Throughput, video

Surprising Cost Difference between Automated Distribution Centers & Conventional

by Travis Baker

Transcript for: Surprising Cost Difference between Automated Distribution Centers & Conventional

Hi, I’m Cory Flemings from abco automation. Hey I want talk to you today about a story about concrete or about conventional buildings versus automated distribution centers. In a recent event in my life we were working with a client that wanted to build a conventional freezer. We said no you should consider automation. And she said OK, the CFO, we will consider automation, but it is really just a throwaway option.

I said, “Throwaway option? That’s not true!”

She said sure it is, “Automation is so expensive.”

That’s something that we in the automation field hear all the time.

I said well you are a CFO, pull out your calculator and let’s run some numbers. So she pulled out a calculator and we went to work.

I said the conventional facility for the operation that you want to do will be 500,000 ft.² and if you take 500,000 ft.² and multiply that by $120 a square foot what does that come out to?

She said that’s “$60 million”. I said that’s correct.

I said I am looking at an automated distribution center or automated storage and retrieval facility that is 117,000 ft.². Yes, a hundred and 117,000 ft.², compared to 500,000 ft.² but I said tell you what let’s add on another hundred thousand square feet for docks, workspace and so forth and we will give you a building that is 220,000 ft.².And if you multiply that by $120 a square foot. What do you get?

And she said, “Oh gosh my calculator must be wrong.” I said no, it’s not, wrong it is only $26.4 million.

She said, “That cannot be!”, I said yes that is true in the difference between these two is substantial.

But that’s not the end of this picture. If you have to go buy the land for this process then you have to spend even more money. A let me show you why.

When you build a building on a piece of property depending upon local codes and ordinances you cannot consume with your operation more than 50% of the land. So if you take 25% of the land and then add to it your concrete turnarounds, your waste-water basins, your easements and your parking lots all of those other pieces of the property shouldn’t add up to more than 40%. Because in the future you might want 10%, between 40 and 50% to build a new maintenance building or whatever. You don’t want to land lock yourself on day one.

So you only use 25% of the land you buy for your distribution center. So if you want to put in a building that is 500,000 ft.² you need to actually buy 46 acres of property to support that operation. And if land is $100,000 an acre that is $4.6 million more.

Over here for 220,000 ft.² I need 20 acres to support that operation. And 20 acres again at $100,000 a square acre is another $2 million.

So look at the substantial difference now between when you build a green field building a conventional building versus an automated distribution center.

You are looking at a difference of $64.6 million here and over here $28.4 million and I have a $36.6 million difference between these two. And that’s $36 million you can spend on automation to get a building that cost as much as a conventional building that is not racked, that doesn’t have rolling stock that doesn’t have a WMS, that doesn’t have an RF network with guns and so forth.

You are talking about a lot of automation and material handling equipment that you can invest in before you even turn the key and turn on it on, let alone the labor savings once it begins to run. So when people tell you automation is too expensive and you are going to build a green field distribution centers remember this tale of two distribution centers and how much difference this can make.

We have a white paper about this subject “Why You Should Go Up” I recommend you download it and it can be found here.

Filed Under: Return on Investment ROI, Space, video

Infographic: S.A.LT. for Material Handling Design

by Travis Baker

The acronym, S.A.L.T., is a great jumping off point for looking at material handling design. It stands for Space, Accuracy, Labor and Throughput. It is also a good way to analyze your distribution center for improvements that might be made by transitioning to an automated material handling design from a manual one.

Let’s break down the infographic and look at the acronym of SALT.

Download the full-size .pdf of Infographic S.A.LT. for Material Handling Design here

Space. The first component is the space, or footprint, that your distribution center uses. With a one million square foot DC you actually need 50-60 acres of land when all is said and done. However, the great thing about land cost is that you only pay for the dirt, not the air above it. Therefore if you can go up and use a high-bay warehouse, which tops out at around 110 feet, you have around 3.6x as much storage space as a traditional 30 foot clear distribution center.

Accuracy: Accuracy is very important in a distribution center. Especially with the cost of returns and shipping, not to mention the cost of lost goods. Nearly 10% of all purchases in retail sales are returned. Much of that has to do with errors from the distribution center.

A 97% accuracy rate though it sounds great means that 3% of your shipments are wrong. On a low end that can mean $650,000 in errors assuming a 30 million orders a year and $.30 for shipping and return. That is also assuming no products were lost or damaged. The high end could be $13 million (or higher), which assumes higher shipping cost, higher cost of return and product that would be lost or damaged.

Labor: Labor is one of the most expensive parts of a distribution center. However, smart material handling design can lower the cost of labor. For instance, an automated material handling design can take a distribution center that needs 100 people and reduce labor by 60% by using technology. Technologies such as product-to-person (also known as goods-to-man) allow for selectors to fulfill orders quicker and more efficiently than an army of workers fanning through an enormous DC.

In many interviews we have had with distribution center executives they say that even with people who want to work in the distribution center, only 25% can pass a drug screen and background check. Therefore with less reliance on labor you can cherry-pick the best associates for your operation.

Throughput: Throughput is the distribution center’s reason for being. The peaks and valleys in distribution can be extreme, which is why you need a deep analysis of the numbers in your distribution center. Over the course of a year a child based retailer (IE a toy store) can have a throughput of X in July and 10 times that amount of throughput in December.

While obviously you can’t use every technology for every product, it is interesting to look at how different technologies can increase throughput dramatically. An A-frame for instance can perform up to 1600 picks per hour and Pick-by-Voice can average around 250.

Hopefully this article demonstrated the effect that the acronym S.A.L.T has on material handling design. If you need help with your material handling design contact abco automation.

Filed Under: Accuracy, Labor, S.A.L.T. Principle, Space, Throughput, Uncategorized

Maximize Your Distribution Center Efficiency with S.A.L.T.

by Cory Flemings

Distribution Center Efficiency

Hi, I am Cory Flemings from abco automation. Have you ever considered automating your warehouse? Have you ever thought about what would be required to justify putting in automated systems inside your distribution center?

I would like to point out the acronym, S.A.L.T., as a way to hang your thoughts together and think about what the issues might be as you consider automating your warehouse.

The first letter up here for S. A. L. T. stands for Space. Now space seems rather obvious doesn’t it? In warehouse operations we are always worried about having enough space. But the problem is once you realize that the walls are closing in and that the rivets on the walls are starting to pop it’s too late.

Because it takes anywhere from 9 to 18 months to build more space. To plan it, to get city permission, to get the approvals, to actually pour the concrete. And even in automated systems if you’re going to consider putting things up in the air with automatic storage and retrieval systems as an example. The data analysis the design, the engineering work is taking somewhere between 9 and 18 months to put those systems in.

So as you start to see your walls close in, give yourself about two years of planning time. Otherwise you’ll find yourself behind the eight ball.

Another place to consider for savings and return on investment for automation is Accuracy. This is one of my favorites.

I went through a warehouse one time and said, “Hey, how is your accuracy?”

And they said, “Oh it is really good.”

I said, “Oh really? How good is really good?”

They said, “It’s at 98%”. While not being the brightest bulb in the box I realized that’s only 2%, or 2% of their orders are going out incorrect.

“How many cases do you ship out a day?”

“Oh we ship about 65,000 cases per day.”

So I pulled out my calculator and realized 1300 cases per day were going out incorrectly. And at $40 a box which is an industry average cost of return logistics to get the product, ship it back to the distribution center, check it out, restock, then you are talking $13 million a year if you work 250 days a year.

$13 million.

And if you have a two-year return on investment your shiny new material handling system can cost $26 million and you will breakeven. In two years.

This is a great place to look, this accuracy, for return on investment in a material handling system as you consider automation.

Labor is the third one. Does your warehouse look like an ant farm? I was going through a warehouse in California. And there are people all over the place. It was like the Indianapolis 500 on the aisle with fork truck drivers going by.

And the vice president of distribution pulled me aside and said, “Before you get too involved in the details, I am trying to figure out how I get something from the receiving dock into that pick face, where that man over there is picking, with as few people as I need to have.”

And that’s where automation can come in. Automatic storage and retrieval systems, automatic re-supply systems, AGV’s, there are a lot of different kinds of automation you can use to get by with less labor.

Additionally, as we move distribution centers further and further away from the population centers people are getting harder and harder to find. And if you find yourself in that position automation might be the way to do that.

For example, 50%, according to one grocery retailer, 50% of the people who apply for a warehouse job can pass a background check.

50%.

And that’s for the people who apply for the job. And in the Southeast he said only 25% can pass a background check and drug test. So people, if you’re having trouble finding them you might want to consider automation.

And finally the last bullet down here the T. stands for Throughput. There are wonderful technologies that are coming out these days that can help improve your throughput.

I’m talking to those who might say, “I just can’t get things out fast enough. No matter how much I try or how many people I throw at my distribution operation I can’t get things through the distribution center fast enough”.

Well, a couple of ideas. Automation, like A-frames. A-frames can do for small stackable products. Let’s spell this correctly, A-frames. They can do anywhere from 1200 to 1800 32 piece orders, an hour. That’s a lot of volume.

Product-to-person systems, P2P, I call them things like shuttle systems, carousels, things like that. These things can do 3x the speed in order lines as pick-to-light or pick-to-voice. That is somewhere between 600 and 1000 order lines per hour. So there are lots of opportunities for you to consider automation in your throughput.

And there is a lot of money available especially in accuracy to help justify the cost of some of these automated systems.

If you have any questions or would like us to take a look at some of your data and do some analysis for you here at abco we would be happy to help you out just give us a call.

Call 803-517-7534 and speak to Amy about scheduling an appointment with abco automation. If you liked our Whiteboard Insights and want to learn more download our supplemental whitepaper here.

Filed Under: Accuracy, Labor, S.A.L.T. Principle, Space, System integration, Throughput, video

Spotting Pain in Your Distribution Center

Like this:

Why Order Lines Don’t Matter in Distribution Center Design

Like this:

Surprising Cost Difference between Automated Distribution Centers & Conventional

Transcript for: Surprising Cost Difference between Automated Distribution Centers & Conventional

Like this:

Infographic: S.A.LT. for Material Handling Design

Download the full-size .pdf of Infographic S.A.LT. for Material Handling Design here

Like this:

Maximize Your Distribution Center Efficiency with S.A.L.T.

Like this:

Subscribe to Our Blog

Spotting Pain in Your Distribution Center

Share this:

Like this:

Why Order Lines Don’t Matter in Distribution Center Design

Share this:

Like this:

Surprising Cost Difference between Automated Distribution Centers & Conventional

Transcript for: Surprising Cost Difference between Automated Distribution Centers & Conventional

Share this:

Like this:

Infographic: S.A.LT. for Material Handling Design

Download the full-size .pdf of Infographic S.A.LT. for Material Handling Design here

Share this:

Like this:

Maximize Your Distribution Center Efficiency with S.A.L.T.

Share this:

Like this:

Subscribe to Our Blog