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MIXING IT UP: An ergonomic manually assisted palletizer system builds mixed cases for a grocery retailer.

PHOTO: COURTESY OF DEMATIC

Insourcing Vs. Outsourcing

For companies that outsource their warehousing and transportation operations, automation provides an opportunity to bring those functions in house—and gain better control of their supply chain. “We’re asking manufacturers to reconsider the trade-offs, long term, to insourcing vs. third-party logistics providers,” says Bill Leber, business development manager for Swisslog, Newport News, VA. “Manufacturers that are outsourcing are losing a bit of control and connection down the supply chain.”

Leber points to manufacturers that are consolidating their networks, such as PepsiCo, which recently acquired its bottlers. “It wasn’t that they were having issues with getting stuff in the bottle—it’s about getting control of the distribution network. And automation will allow them to get more out of their facilities. The start up costs are high, but with automation you can maximize the use and productivity of the facility—put on a second shift or run it 24/7,” he says.

On the other hand, HK Systems has launched a company called HK Logistics that not only develops automated material handling systems, but owns and operates them as a 3PL. “If a food manufacturer wanted to have a 40-aisle AS/RS system with lights out operation and robotic palletizing—but didn’t want to own it—we would build it, staff it and provide them with service custom-made for their business,” says Kotecki. “It’s a pretty revolutionary concept.”

Designing an automated or semi-automated system is contingent on a company’s product mix and throughput rates, so companies need to do a through analysis of their operation to determine if they’re a good candidate for automation.

“Automation can be scaled or tailored to meet the needs of the business,” says Coyne of System Logistics. “If you’re shipping 1,000 cases per hour out the door, you’re probably not a candidate for robots, but you may be a candidate for lower cost technology that can improve your picking performance. If you’re hitting rates of 4,000 to 5,000 cases per hour and you’re carrying more than 500 SKUs, you might be a candidate for a higher level of automation.”

The food industry is destined to see more automation in its distribution process, adds Coyne. “It has the highest velocity rate of the overall American supply chain, so it’s destined to be automated to a higher degree. It’s just a question of how fast it’s going to happen and what’s the final evolution of the solution going to be.”