How All Aspects of Growth Drive Change in the Distribution Center
What are the keys to drive a company towards automation? What are some telltale signs that mean you can’t try to squeeze a little bit more or hold on a little while longer to how you have been running your distribution center? The predominant sign is growth.
However, there are a variety of variables that can “grow”. Let’s take a look at some of them and see how they might influence the need to evaluate the workings of your distribution center.
SKU: If you have growth in your SKU count, you need more pick faces. Over a year if you have growth of 5-10% in your SKU count, automation could be a great avenue to pursue. Even if the growth is only seasonal, during those times you need the additional places to pick from.
In this instance, taking into account throughput and SKU dimensions, a Goods-to-Person system could be a good fit. With good planning, automation can be flexible and a great way to increase your storage capacity while remaining within the same footprint.
Business: Let’s look at growth in another way. Let’s say business is booming. In this instance, the growth is external and you have growth in customers, or your customers order profile changes, and they need more of your products. You will obviously, need more throughput. This kind of growth could also be a signal for automation. Person-to-Goods can only get you so high a rate before the inefficiency need for space and labor cost become untenable.
Errors: Another way to look at growth is in a negative light. Let’s say your errors are growing. For example if you are in the pharma industry, the goal is Six Sigma. This is 3 errors in a million. The typical standard in a manual DC is 97% accuracy, which is not going to ensure the Six Sigma Goal. Let’s say you have a grocery DC with 97% accuracy. If you are shipping out 130,000 cases a day that means you have an entire truckload of errors every day.
How much does it cost you to deal with all of those errors? The labor and the loss of customers alone add up to another reason to look at automation.
So while in most cases, growth can be a good thing, it is closely tied to the need to reevaluate how your company operates your supply chain. Have any other thoughts on aspects of growth we missed? Let us know by comment below.
And if you are attending the Modex Show in Atlanta please be sure to visit us at booth #4709. And don’t forget to download your Guide to Modex 2012.
Schaefer Systems International, Inc., the North American subsidiary of the SSI SCHAEFER group of companies, established headquarters in Charlotte, North Carolina, in 1989.
SCHAEFER’s automation integrates to any existing system earning us an international reputation as the global leader in the material-handling industry for returnable packaging, static racking, and highly complex, automated distribution systems. With over 70 years of experience and a 100% commitment to quality behind every SSI Schafer system, we focus on providing our clients with unconventional picking and storage solutions delivering best value