Proving a point

Gordon Smith, founder and CEO of SDI Group urges UK warehousing professionals to priortise automation projects with proven benefits to maximise return on investment

Asharp focus on projects with proven return on investment, and not dithering on the procurement process, is the best path to automation success, according to Gordon Smith, founder and CEO of SDI Group. The manufacturer and systems integrator of automated systems, including garment hanging, for the fashion retail industry, has a 15 year record of British engineering, with more than 500 projects completed worldwide.

After recession eliminated 50% of the company's pipeline three years ago, SDI restructured and is now firmly back on the trail of growth, with a broader European focus and with German acquisition PEP Fördertechnik fully integrated.

That said, Smith urges caution among customers to ensure that best return on investment is delivered. "In the UK, there has been a trend towards spending more capital and going for high speed sorters and in our market we don't think it is the right product. The ROI tends to be compelling if you can keep your capital costs down." Three years after the recession, Smith still sees the need to change cost base as the key driver, especially in the High Street.

He thinks most logistics operations can cut out a lot of cost simply by looking at picking, for example, as he estimates 50- 60% of labour cost can revolve around this process.

"You can do a lot with low level mechanisation, but you must understand your flows and processes. Take the individual sections - receiving, putaway, picking, packing, shipping - look at the people and processes involved and test them. Ask what you want in an ideal world and if you can take small steps towards that without upsetting the CFO by requiring large amounts of capital," says Smith.

It requires leadership to break the norms at distribution centres, adds Smith, which can be in short supply in a risk-averse environment, but there are examples when bold decision making, nevertheless grounded in reality, have paid dividends for retailers.

He says the discount retailers, among others, have often led the way because of their strong ownership of the supply chain, and their relentless drive to lower costs in logistics by spotting trends and backing them once the ROI argument stacks up.

"TK Maxx came over here and in 15 years they have really grown. They used hanging sortation very effectively, and understood what could be achieved with AS/RS. The best examples are companies that moved smart and early. They have applied proven technology to specific processes and really worked it.

They didn't do endless analysis, they acted and rolled out quickly. At the same time, they haven't tried to build enormous sites with everything automated," explains Smith.

Smith argues that retailers that moved early to automation, choosing the processes where ROI stacked up best, have "gained 10 years in productivity" over those running mainly manual sheds. He points out this means these retailers can increase volume very quickly with the same staff, and avoid escalating labour costs over Christmas.

Smith is enthused about the solutions SDI is offering and believes they can improve processes and increase productivity for UK customers.

SDI has unveiled the Flexible Sorting Unit (FSU), a mid range sorter, at a "good price point", which is able to serpentine around (and up and down) customers' facilities.

"Lots of customers need to fit sortation into older premises, and they just don't have straight lines. This has become a very strong product for us. It is also low maintenance, and runs on an energy efficient modular drive system." Smith is equally excited about a sortation system that allows garments to be sorted in single units.With this product, the time it takes to receive, pack and ship a product can be reduced, with obvious applications for store replenishment and ecommerce.

"Where retailers would have to close down a sales window at say 4pm to ensure products got into the trucks, they can now extend that by two or three hours. They can also reduce investment in the larger systems by 30% and build more afterwards if needed.

The amount of steel going into a dc is reduced," explains Smith.

Smith sees 'e-tail' volumes just starting to get to the point where automation is justified and sees e-tailers gaining confidence in automated solutions. SDI has worked with Vente-privee in France, which is regarded as a leading edge online retailer.

In an era of ever increasing procurement departments, and ever dwindling engineering teams, SDI is a proud UK-based firm with engineering at its heart. Smith says SDI can bring its wealth of retail logistics experience to bear on any warehouse or dc.

"We don't shift metal for the sake of it.We will work with you to understand your processes and develop site specific solutions that are proven and will deliver return on investment."