A Practical Approach to Automation
By Marc Menard
March 9th | 2 min read
Marc’s Mechanics: Velocity x Process Matrix to Evaluate Automation
How do you justify the price tag for automation?
More often than not we see people gunning for a fully automated facility, only to be blindsided by a hefty price tag with little visibility on where the dollars are actually going. That’s why it’s essential to design your automation solutions with a laser focus on item combinations and processes.
Take a page out of Marc’s playbook as he shares his practical approach to evaluating where and when automation make sense based on item velocity.
A Practical Approach to Automation
Today, we’re rethinking how companies should look at automation in warehousing.
When you first think of automated facilities, you imagine these massive systems that can achieve enormous throughput and solve all your labor shortage issues. Then, you dive into the numbers and realize very quickly that the return doesn’t justify the spend. This is because you rarely see a single system capable of handling your entire SKU portfolio without busting the bank.
Start with Pareto’s law, 20% of SKUs generate 80% of volumes shipped and 80% of SKUs only generate 20% of volumes shipped. It’s easy to see how these SKU velocity categories should be analyzed separately. The same is true about warehouse processes. Not all processes warrant automation. When receiving products over the road, pallets may move in trailers making it difficult for AGVs to know their exact locations. On the other hand, AGVs can easily load trailer following a planogram. This is why when I evaluate warehouse automation; I like to look at an item velocity and process flows matrix.
The Matrix
Velocity, in the context of supply chains, refers to the speed at which goods move through the various stages of production, distribution and consumption and the ability to change direction on short notice.
It is the heartbeat of an efficient and responsive supply chain, with different processes falling into categories like fast movers, medium movers, and slow movers.
When considering automation, companies use technology to accelerate velocity in supply chains, but the effectiveness depends on the process. Companies need to examine each process alongside the streams or population of items associated with it.
The Processes
Let’s take the example of picking/storage processes in your operations.
Fast-moving products in your warehouse demand an efficient high-bay storage solution, like goods-to-person picking or even robotic arms. Say a distribution center was catering to pharmaceuticals, here, a high-bay storage solution would address the rapid turnover of perishable goods, ensuring timely replenishment and order fulfillment.
On the other hand, for products that don’t fly off the shelves (slow-moving items), a high-density storage system is a valuable investment. In order to reduce space and walking distance, these goods can be stored densly using a VLM or autostore system.
Medium movers may increase the cost and effectiveness of either system, and may benefit from remaining in a conventional setup. For example, niche or specialized products that have moderate demand but require tailored handling or picking processes may not significantly benefit from automation. The adaptability and dexterity of manual operations can effectively manage such medium-moving SKUs without the need for extensive technological intervention.
Automation at LIDD
LIDD has extensive experience in assessing where technology does (or doesn’t) drive value across specific stages in the warehousing process. We help clients in designing automation solutions with a laser focus on item combinations and processes.
Don’t fool yourself into committing to a fully automated facility only to be blindsided by a hefty price tag with little visibility on where the dollars are actually going.
Get in touch with us today to learn more.
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