Meanwhile, labor at the retail outlet is also a concern, which is one reason that DCs are being asked to design and deliver more shelf-ready packaging and store displays that require minimal work on the clerk’s part to get product onto the shelves. And, while the clerk’s job at the retail outlet has become easier, the DC is now responsible for putting together the various products on the back end so that they’re ready to go on arrival at the store.
WITRON’s Sherman also notes this trend. “Companies are becoming more focused on how they’re shipping product to the store,” he acknowledges. “A lot more are becoming increasingly ‘store focused.’ They’re looking at their whole supply chain and the end game, and their trying to get the product to the store in the best format, with the easiest handling to get it onto the shelves, and at the same time reduce the amount of inventory across the supply chain. So, what you’re shipping on your trailers is changing the philosophy about the DC. In other words, what your store needs is affecting how your DC is adapting.”
In the view of Dematic’s Kotecki, “The labor element is bigger than ever. It’s the least explored, least understood, and most powerful and volatile in the whole supply chain equation. Companies are seeking to reduce labor or at least make the labor they have optimally efficient. For some, that means putting in some point solution technologies that can make the labor they have more efficient, and at the very least, avoid having to hire more people that would end up becoming redundant should we encounter another down cycle.”
As part of the early analysis for retrofit projects, companies need to ask, “Where do I have non-value-added activity?” suggests Kotecki. “And, a lot of that is found in point-to-point movement.”
For Dematic, that has resulted in an uptick in demand for the company’s automated guided vehicles, and not just for traditional applications such as moving pallets or containers from Point A to Point B.
“We’re seeing several new applications emerging,” says Kotecki. “One is the transportation piece, using AGVs to replace people for long-hauls or deadheads. The other is retrofitting existing rack structures with AGV-based technology for pallet movement in terms of replenishment as well as storage and retrieval. I call it the ‘poor man’s ASRS.’ Voice picking to an automated pallet jack is another area that’s getting a lot of interest. In this scenario, a fleet of automated pallet jacks are coupled with a team of pickers, each of whom are assigned to a fairly tight zone. Rather than driving wildly around the warehouse, people are contained with a zone that is served by a fleet of automated pallet jacks. It’s all very synchronized and walking is also cut down drastically. It comes down to reducing human travel and reducing senseless, non-value-added activities.”
There’s also a lot of potential for AGVs to enhance labor in the freezer environment, says Kotecki.
“We did a study a while back that showed that humans who work in a freezer environment are anywhere from 15 to 25 percent less productive than they are in ambient environments, because they have to take breaks to warm up, they’re making more mistakes because they’re hurrying, and they’re just slower in general. So, the improvements that DCs can get with automation in the ambient environment are even greater in the freezer environment, which is prompting ice cream manufacturers and others to look at automation for what it can offer on the manufacturing side as well as the pre-customer stage in their supply chain.”
e-Commerce makes its move
Pete Hartman, president of Retrotech, sees e-commerce as an increasingly significant driver in the retrofit decision making process.
“It used to be that you and I were the order pickers. Now, we sit at our computers and click on what we want and expect it to be delivered to our doorstep within three days. So, e-commerce has ushered in a new level of complexity. Companies like Amazon have been doing it all along, but for many others it’s a new business model and they’re having to adapt and accommodate it within their existing distribution centers.”
Hartman admits that the impact of e-commerce on the food and beverage sector has not been as great as other sectors, such as apparel, for instance, but he believes it’s poised for rapid growth (see sidebar).