Currently, retail is one of the biggest AS/RS users. "For retailers, there's a lot of pressure to deliver more often and in smaller quantities," says Bill Ostermeyer, vice president of automated solutions at Swisslog in Newport News, VA. "One of the drivers needed to justify AS/RS is a high number of orders and lines."
HK Systems' Kotecki says that while the environments are different for retailers, distributors and manufacturers all can find a fit with AS/RS. "There's a different flavor in each category," he says. "But AS/RS can fit for cases or full pallets, depending on the application."
With the substantial benefits of AS/RS, even with its high cost, choosing that equipment for a warehouse is tempting. But before making that decision, you have to consider several factors.
Chief among the issues you must address in making a decision about bringing on AS/RS is whether or not your facility includes a freezer environment. "AS/RS is a fit in both cold and dry applications, but it's easier to justify in a cold environment," says Swisslog's Ostermeyer. "You can decrease your footprint with AS/RS, which will bring energy costs down. You can also get your people out of the freezer."
Siemen's Ruehrdanz agrees. "AS/RS is well suited for both cold and dry storage," he says. "However, cold storage has a stronger ROI as energy cost savings are more significant for freezer/cooler applications. AS/RS allows high-density storage and therefore, a smaller cube to refrigerate."
Another issue to consider is your facility's size and throughput. "AS/RS applications are driven more by throughput rates and storage capacity required, which in turn translates into a facility size," says Ruehrdanz. "Throughput rates around 20 loads per hour and storage capacity of 5,000 pallets is considered a minimum requirement for ROI."
Ostermeyer says that when it comes to facility size, there's no real rule of thumb for AS/RS. However, the technology can be a great fit for companies running out of space. "Good candidates are those DCs where space is tight and making a move to another DC would be very costly," he says "You can usually expect to reduce your square footage by about a third to half with the addition of AS/RS."
Steve Plothow, senior logistics engineer at Daifuku America, based in Salt Lake City, says that a typical AS/RS candidate might have between 5,000 and 25,000 pallet locations. In addition, he says, DCs with high ceiling height can make the most of the technology, which can go as high as 120 feet.
FKI's Matson says that ceiling height is an important factor to consider. "If you're in an old DC where the ceiling height is too low, you can't really get the most out of AS/RS," he says.
Know Your SKUs
SKU count is another part of the equation. "AS/RS can handle as few as 500 SKUs," says Plothow. "But we have many more applications where you have between 5,000 and 6,000 SKUs."
Brian Sherman, manager of business development at Witron, based in Arlington Heights, IL, says that "we like to see a lot of movement to show an ROI, especially if the SKU count is on the lower end of the spectrum."
The bottom line when it comes to size, says HK System's Kotecki, is "does the ROI make sense?" He adds, "If the technology and unit of storage makes sense, the rationale is scalable. Historically we've tended to put larger systems into larger buildings. But we've also done very small projects and have one customer that has deployed AS/RS in just one aisle."
The cost of AS/RS-always a factor-is all over the board, but as mentioned earlier, is expensive. On a per-aisle basis, you can expect to spend from $250,000 to $1.2 million, says Siemen's Ruehrdanz.
Plothow says that an average 25,000 pallet system right now might cost around $13 million. "One thing that can affect the price," he adds, "is what equipment you already have in place and what infrastructure you might need to add to support AS/RS."
Typically, says Plothow, U.S. companies are looking for an ROI in about three years, while in Europe it tends to run about five to seven years due to a different profile. Cost justification will come through several factors, he says, including improved accuracy, reduced labor costs, improved security, and better space utilization. "Even with all that," he says, "you still have to have the velocity and the right type of items to justify it."