Is automated materials handling ready to grow?

By Bob Trebilcock, Executive Editor
November 30, 2010 - MMH Editorial

Are we seeing a resurgence of interest in automated materials handling systems, particularly in distribution?

That’s a question that has been on my mind, based on three points.

The first is rooted in some of the very highly-automated systems we’ve profiled in Modern over the last few months, including Office Depot and Del Monte. Both brought automated technologies more frequently associated with manufacturing, including robotics and automatic guided vehicles (AGVs), into the distribution center. When each of those stories ran, I received e-mails and telephone calls from other large end users who were interested in automating their facilities.

The second is a theory that many of the jobs that have been eliminated in the recent recession are not coming back, even if business comes back. My belief, for what it’s worth, is that companies have learned they can operate with smaller crews; instead of hiring as business picks up, they’d rather invest in automation that will allow them to grow their business without growing their workforce.

I don’t think that the second is necessarily related to the cost per hour of labor, which is usually the ROI associated with automation. Rather, I think a variety of factors from an aging workforce, high turnover rates in the distribution labor pool and complex order fulfillment strategies, has come together to make automation more attractive than in the past. That brings me to the third point: One of the presentations at HK Systems’ logistics conference this year was by Tim Hortons, Canada’s answer to Dunkin’ Donuts. Hortons had recently built a highly-automated distribution center in Guelph that was underperforming expectations. The reason wasn’t related to the automation already in place; the system worked fine. Rather it was an inability to recruit and retain enough workers for the manual picking processes in the facility. While Guelph was a perfect location based on Tim Hortons’ transportation strategy, it is a college town and home to several well-paying auto and auto-related manufacturing plants. College kids aren’t interested in working in a DC and the local blue collar workforce will take a higher-paying job in a manufacturing plant before going to work in a DC. As a result, Hortons explained that they are going to add more automation to the Guelph DC to compensate for the shortage of reliable employees.

It’s always a little dangerous to base conclusions on a few anecdotes like those above, but I’m having more conversations around the inability to recruit and retain employees in the DC than ever. Meanwhile, as I learned in my August story on robotics, the price of automation is increasingly in line with the cost of labor.

I’ll write more about some of the trends in automation industry experts identified during my interviews on Friday. 



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.


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 8.2 percent from September 2013 to September 2014 at $102.2 billion.

NS said that the D&H lines it plans to acquire connect with the NS network at Sunbury, Pa. and Binghamton, N.Y. and give NS single-line routes from Chicago and the southeast U.S. to Albany, N.Y., which is in close proximity to NS’ Mechanicville, N.Y.-based intermodal terminal.

This follows a 1.6 cent decrease last week, which was preceded by a 5.4 gain the week before and stands as the first increase going back to the week of June 23, when the weekly average headed up 3.7 cents to $3.919 per gallon.

BNSF said that its 2015 capital expenditures will be allocated towards various areas of its business, including maintenance and expansion of the railroad to meet the expected demand for freight rail service, with 2015 representing the third straight year BNSF has invested a record annual capital expenditures investment.

While the ongoing labor negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) ostensibly going from bad to worse, following the ILWU’s announcement late last week that it was halting negotiations from November 20 through November 30, a Congressional group last week penned a letter to PMA and ILWU leadership expressing concern over the state of the negotiations.

About the Author

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. Contact Bob Trebilcock.

Comments

Post a comment
Commenting is not available in this channel entry.