November 23, 2023
Fully robotic storage systems are hot and sexy. To reduce dependence on scarce personnel, management teams are investing millions of euros in them. How frustrating is it then when none of the expected performance improvements materialize! Usually, the supplier gets the blame. According to Johan Omvlee and Eric Hoogendam of UC Group, these disappointments arise because the logistics concept is not taken into account. They offer two important pieces of advice for this.
Many companies are considering automating their warehouse processes or have already done so. There are good reasons for this: warehouse staff are scarce, customers demand high On Time in Full (OTIF) performance, there is a lack of storage space, and companies want to reduce their operational costs. To get an idea, management members visit a logistics trade fair, such as Logimat in Stuttgart, and feast their eyes on the most advanced material handling systems available today. Self-driving robots, goods-to-man systems, automatic weight checks, AI-based image recognition cameras… It all looks so modern and flashy, and before you know it, the decision is made: ‘Yes, we want a warehouse system like that too. Supplier, when are you available?’
What directors often forget is that a storage system doesn't stand alone; it forms a link within a larger logistics process. Items arrive at the warehouse, need to be received, checked, and placed into bins. On the outbound side, the system must connect to order picking stations, packaging lines, and value-added service processes. The new storage system must precisely integrate with these and be designed for the type of products, replenishment frequency, and customer order patterns. Companies often think that the material handling supplier will fix all of this, but that's a misconception. A supplier won't help you with your logistics concept; they only implement their own system.
And then comes the disappointment. The system that looked so fantastic at the trade fair, and which potentially can process thousands of order lines per hour, doesn't even achieve half of the intended productivity in your company. This can be due to various causes. For example, the inbound capacity might have been underestimated, creating a bottleneck in the supply. Or a scanner might be placed in an awkward spot on the conveyor, causing many scans to fail and leading to blockages. Or that hypermodern put-away robot can only process perfectly stacked pallets, while your pallets have all sorts of protrusions. Whatever the causes, they lead to severely disappointing performance. "The project has failed," you hear, and the system supplier is blamed.
Another observation is that a storage system might initially perform well, but problems emerge over time. This happens because the initial assumptions, volumes, and/or product mix for which the system was configured have changed. For example, a company might start carrying larger or heavier products. Or customers might begin placing larger orders, meaning you should actually be working with bigger bins. You then see companies devising workarounds and adding manual order picking processes to still meet new customer demands. These stopgap measures incur additional costs, causing the efficiency gains of the new system to evaporate, and management grumblingly wonders what they've actually achieved with the entire project.
At UC Group, we are often asked to get a 'failed project' back on track. While we're happy to do so, we much prefer that companies don't let it get to that point. How can disappointments with a new warehouse system be avoided? We have two important pieces of advice for this. The first is: always get your logistics concept in order before you automate. Analyze the expected order and inbound patterns and align your system accordingly. What are the product characteristics? What volumes must the system be able to handle during peak times? Consider how processes interact and prevent, for example, robots and people from getting in each other's way.
The second piece of advice is to verify once a year whether the chosen logistics concept is still aligned with the initial assumptions. Are the market characteristics for which the material handling system was designed still current, or do the parameters need adjustment? In such an 'MOT check,' you verify if all parameters are still correctly set and if the system is still optimally configured to achieve business goals. Is the use of forklifts for a specific sub-process still the best choice, or should AMRs or conveyors be introduced? The advantage of such a periodic check-up is that you can develop a standard procedure for it. Collecting and analyzing the necessary data doesn't have to take much time, and you can be sure that any discrepancies will immediately come to light.
Within UC Group, we have extensive experience in implementing and optimizing material handling systems. Our Logistics & Fulfilment department has a group of logistics engineers who specialize entirely in this. A major advantage is that they possess knowledge of both logistics concepts and the setup of automated or robotic systems. For the latter, they are also regularly hired by material handling suppliers, such as Dematic. Suppliers, after all, benefit greatly when customers have their supply chain processes in order before automating, as they are held accountable if things go wrong.
Technological developments in warehousing are moving incredibly fast, and companies would do well to take full advantage of them. With the two pieces of advice above, and potentially the help of UC Group, this should certainly succeed, and costly, failed material handling projects will become a thing of the past.
The above article was written by Johan Omvlee and Eric Hoogendam of UC Group. Johan Omvlee is a member of the Planning & Customer Service Tribe, and Eric Hoogendam is a member of the Logistics & Fulfilment Tribe at UC Group. They have extensive experience with automated storage systems; Johan primarily from a management role and Eric from the role of senior logistics engineer. UC Group's logistics experts specialize in designing logistics concepts, optimizing warehouse processes, and implementing material handling systems (including WMS).
UC Group works everywhere — our professionals are based across the Benelux. We welcome visitors at our offices in Rotterdam and Nieuwkuijk. Drop by for a coffee and get to know us!
