Big Picture: Materials handling comes out of the shadow

Warehousing and distribution are more closely tied to the business than ever before. Here’s a look at the biggest business issues impacting the design and operation of materials handling systems today.
By Bob Trebilcock, Executive Editor
September 01, 2012 - MMH Editorial

Fortna: From multi-channel to omni-channel
When the Internet burst onto the scene a decade ago, many retailers segmented their customers by sales channels. They had brick-and-mortar customers and they had online customers. They also had two channels of distribution, one for retail store replenishment and another for online order fulfillment, which was often managed by a 3PL.

That thinking is changing, says Mike Dunn, group vice president for Fortna. “Retailers with some degree of sophistication understand that all these channels play together to create a single face to the customer,” says Dunn. “As retailers and e-tailers put together their plans and trajectories, they expect to gain new customers and grow their businesses, but they don’t know which channel that growth will come from.” 

Bringing those channels together is impacting the design of distribution centers in several ways, says Dunn. One is in systems that can handle the pallets and cartons that historically went to retail stores along with individual item picking associated with direct-to-consumer order fulfillment. The second is in the ability to scale. “Our retail customers are asking how can they invest the right level of capital to maximize throughput during average days and still meet peak demand.”

On the one hand, that is leading to technological solutions, like putting in a dual-speed sortation system. “The majority of the year, we run the sorter at a slow speed and get a high utilization of the chutes,” says Dunn. “At peak periods, we run the sorter at a higher speed with lower utilization of the chutes, but the ability to handle the throughput.”

On the other hand, retailers are also recognizing that in an omni-channel world, the experience should be the same regardless of how a customer engages with a retailer.

“Retailers that are running their retail and e-commerce channels through the same distribution center are trying to drive consistency in how a product is packaged,” Dunn says. “We’re designing packaging processes that ensure that the presentation to the e-commerce customer and the wholesaler are consistent.”

Rockwell Automation: Information is the coin of the realm
Businesses thrive on information. Marketing and sales organizations are striving to learn as much about their customers’ habits, likes and dislikes as they can so they can turn that information into sales. That is the promise of social media sites like Facebook and the genius of iTunes and Amazon.

Information has been the coin of the realm in the supply chain as long as there have been supply chains. But, just as sales organizations are turning to the information collected by social media sites, cookies and other Web-based systems to learn more about their customers, operations managers are trying to get more information out of their systems, says Ken Fry, business segment manager for Rockwell Automation.

“The large customers and machine builders we work with want to know what information can they pull off of a sorter to get more out of the system, or how they can use a conveyor that may not have been part of the original design of the system,” says Fry. “That information has always been out there. But it has not always been easy to get.”

Certainly it wasn’t easy to distribute once you got past the maintenance technician who understood the system. “Today, with the proliferation of control systems and Ethernet as a standard, all of the different information networks within a system are converging,” Fry says. “The plant scheduler now has equal access to that information, and we can filter that information so you get what you need in order to make decisions.”

Similarly, the rate of product change today is staggering. Flat screen televisions are getting bigger than ever while other products, like iPods and cell phones, are getting smaller than ever.
“You need flexibility because the products change so often,” Fry says. “That is calling for control systems that are easy to install and can change from one type of product to the next.”



About the Author

Bob Trebilcock
Executive Editor

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. More recently, Trebilcock became editorial director of Supply Chain Management Review. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.


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