We are the robots

Automation is leading the way in e-logistics today says Mike Alibone, business development manager, SSI Schaefer

Many businesses have suffered over the past two years as a direct result of the credit crunch and an uncertain economic future; however one area that has managed to go by relatively unaffected is online retail.

Continuing to ride the storm with impressive results, recent reports reveal that online retail sales rose 17 per cent year-on-year in December 2009 to £5.46 billion with growth expected to be at 13 per cent in 2010, e-logistic operations are in full swing. High demand for bargain buys, product range, availability and swift delivery options are all contributing to the continued rise in online shopping and with the advent of m-retailing the demand is set to rise even more dramatically.

It is this continual growth that will see more and more companies moving into e-tail, recognising the profit gains that can be achieved by developing overall business capabilities and service offerings to its customers.

However, there are a number of factors that logistics managers must consider before expanding into unknown virtual territory.

Many customers shopping online want same day or next day delivery, an easy to use returns system and simple cancellation procedures - online shopping is all about the end customer experience and this should always be remembered. Such speedy product delivery and return lead times will place enormous stress on any manually operated warehouse system and will eventually reach saturation, failing to meet order fulfilment demand due to high volume throughput. This is where the role of automation can come into play within DC operations in terms of achieving faster and more reliable customer deliveries.

Time and time again SSI Schaefer is faced with the same responses to automation... 'it's not economical', 'we've no resources or time', or quite simply 'we don't need it'. Companies need to think outside of their comfort zone if they want to succeed in today's competitive online market and search for available proven concepts and opportunities to handle today's supply chain challenges.

Of course defining operational requirements is paramount when considering switching from manual to automated with many pointers to consider, including; economic justification, reviewing overall business processes and validating cost implications, including manpower and cost per unit.

But ultimately when benchmarked, automation solutions are more cost beneficial than traditional solutions. Perhaps the most visual change to follow the implementation of an automated picking system is the reduction in manpower. It is worth noting than an ergonomic environment can save a distributor as much as £8,000 per lost employee at the distribution centre level.

The development of automation in distribution has come on in leaps and bounds during the past few years with new concepts, better technology and system integration compatibility, enabling warehouse operators to streamline logistics operations, increase efficiency and cut costs more effectively. Automated systems provide significant added value services and order/despatch sequences that reduce cost throughout a company's distribution operation.

If you want faster reaction / cycle times, on-time delivery, same-day delivery, high picking and replenishment accuracy, order fulfilment, manpower savings, store friendly picking, RFID, tracking, tracing, information transparency and visibility with a significant reduction in damaged stock, then automation is the only way forward. Automated systems are a long term investment with immediate short term gains and now is the right time to invest.

However, it must also be clear that there are limitations of automation within the supply chain for online retailers, for example, gift wrapping items and ironing clothes before despatch can never be automated. Although these may represent extreme examples it is now widely acknowledged that the end of line packing process is the 'new' operational bottleneck which presents the greatest challenge to automation today.

Nevertheless, logistics managers moving into e-tail should consider warehouse automation as an alternative option to investing in brand new facilities, removing the necessity for high capital investment in new properties.Warehouse operators should research automated systems that can easily integrate into current facilities and operations, in many instances utilising wasted vertical space, thereby reducing unit distribution costs. This is when the modular approach, recommended by SSI Schaefer, to system building and integration is so important, enabling small and medium sized operations to grow, change, adapt and invest in stages with ease over time.

The modular approach can start with adding in a paperless RFbased picking system, placing conveyors at either ends of storage aisles to take picked goods away from the storage area. This could then be converted to a pick-to-light system, introducing 'automatic picking', before adding in conveyors and an automatic storage and retrieval system to build up to a goods-to-man system.

If a small or medium sized business operates a manual picking system and just wants to move to a basic paperless system, the initial capital cost is low with minimal disruption as a result of no structural changes to the distribution centre. The long term benefit of this is increased speed and accuracy both in the distribution centre and further down the supply chain.