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

Working with research partner, The Economist Intelligence Unit, the IBM Institute for Business Value surveyed 1,023 global procurement executives from 41 countries in North America, Europe and Asia.

U.S. Carloads were down 7.8 percent annually at 259,544, and intermodal volume was off 15.7 percent for the week ending February 21 at 213,617 containers and trailers.

The Department of Transportation’s Bureau of Transportation Logistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in December 2014 was up 5.4 percent annually at $95.8 billion. This marks the 11th straight month of annual increases, according to BTS officials.

While the volume decline was steep, there was numerous reasons behind it, including terminal congestion, protracted contract negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union, and other supply chain-related issues, according to POLA officials.

Truckload rates for the month of January, which measures truckload linehaul rates paid during the month, saw a 7.9 percent annual hike, and intermodal rates dropped 0.3 percent compared to January 2014, which the report pointed out marks the first annual intermodal pricing decline since December 2013.

About the Author

Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484 or email [email protected].

Comments

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