The State of Automation
February 24, 2011
THE LABOR EQUATION
There is a sense that something is happening in the market: Nearly everyone interviewed agreed that end users are taking a harder look at automation than in the past—even if that has not yet translated into more orders. “We may be too early in the cycle to be conclusive about what this interest will mean to the market,” says Bruce Strahan, president and CEO of The Progress Group. “But I do believe that end users are looking back at the past three years and concluding that all of the layoffs and downsizing they went through was not fun.
They want to be prepared for another downturn in demand without wondering every day whether they need 10 more people or 10 fewer based on fluctuations in volume.” What’s more, as companies like Office Depot look to logistics as a profit center and an enabler of their broader corporate goals, “they are trying to use automation as a competitive advantage over their competitors within their industry,” says Sean O’Farrell, business development manager for Witron.
Solution providers describe an evolving view of automation among the end user community, especially when it comes to automation in the DC. Traditionally, that has involved conveyor and sortation systems. That perception, however, is changing. “More intelligence is required in the distribution center today than in the past, when it was mostly about moving pallets out the door,” contends Larry Strayhorn, president of TGW Systems.
That complexity is driving interest in automatic guided vehicles (AGVs), robotics and automated storage solutions along with semi-automated solutions involving software, lights, and voice. “Every company is trying to drive costs out of its supply chain and the distribution center is the next link in the chain for optimization,” Strayhorn says.
However, with so many organizations already running bare-bone operations, new ways to think about labor and automation are emerging at some companies.
“Our customers are gaining confidence, they are sitting on cash, and they have access to cheap capital,” says Jim Stollberg, vice president of global product management for Dematic. “If you look at the unemployment rate, they clearly are not hiring back people. Many are choosing to put that capital to work in automation.”
Stollberg and others believe that many of those empty jobs may not come back even if the economy comes back. Having already eliminated labor, companies are looking at the costs associated with labor in a different way to justify automation. Those include the increasing cost of training new employees given the high turnover rate in many distribution centers and the inability to find enough labor in sparsely populated areas or in urban areas where there are alternatives to working in a DC. “If a new employee goes out to lunch and doesn’t come back, which is happening, the cost of bringing a new employee up to speed is now part of the calculation,” Stollberg says.
What’s more, there’s a growing acknowledgment that in distribution, lights out automation rarely makes sense, while there is an ROI in making the remaining workforce more productive. “One of the first automation projects I ever worked on years ago was in a manufacturing setting where we were focused on getting rid of as much labor as possible to the point that we probably over-automated,” says The Progress Group’s Strahan. “Today, there’s a recognition you’re still going to have people in the equation, so how do you enhance what your people do with automation.”
That may be as simple as adding semi-automated solutions, like voice-directed or light-directed picking, to a manual process. “Voice and light technologies haven’t changed a lot over the years, but end users have realized they can make the associate on the floor faster and more accurate,” Strahan says. “They’re making decisions that affect the product the end customer receives as much as their internal ROI.” Those types of technologies also address the diversity of today’s workforce. “The fact is, you can put a headset on a Spanish-speaking person while the associate next to him is speaking English, and they can both get the job done,” Strahan says. “That’s pretty attractive.”
That approach might also involve adding a mini-load automated storage and retrieval system (AS/RS) or carousel to deliver product to an ergonomically designed workstation, adds Tom Coyne, CEO of System Logistics. “The goal is not to eliminate the human component,” Coyne explains. “It’s to help the associate reach their potential by eliminating walking, eliminating reading, eliminating waiting, or any other extraneous process. The goal is to help the associate rather than eliminate the position.”
In that same vein, companies are looking at manual processes and asking how they can eliminate the non-value added labor component. “They justify the project not by eliminating a position but by getting better performance out of their people,” says Bruce Buscher, vice president of sales for the smart handling division of Jervis B. Webb.
For example, Webb installed an AGV system to automatically remove bins of cardboard from workstations over a two-shift operation. “The cardboard had to be removed several times during each shift and each cycle took someone away from the workstation for about 15 minutes,” says Busher. “We designed an AGV to handle special trash bins. When a bin is full, a line worker pushes a wireless call button and the AGV takes the trash out for them.”
Last, but not least, companies are looking at automation to create a safer and more ergonomic work environment, especially in the context of an aging workforce. This is already an issue in Europe, where regulations are reducing the amount of weight workers can move at any one time, or during a shift. That is becoming a concern to some U.S. facilities. “One of our customers is adding automatic palletizers to their tote handling processes,” says Jim McKnight, senior vice president for system sales and marketing for Intelligrated. “Because a tote can weight 50 to 60 pounds, there’s a big ergonomic and safety factor to putting in a palletizer beyond reducing labor.”
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!