Doylestown, PA: It’s becoming more apparent that the U.S economy is in a slow but accelerating recovery. According to the Institute for Supply Management (ISM) semi-annual forecast, the U.S. manufacturing sector will grow in 2011, with manufacturing revenue increasing by 5.6 percent. ISM also predicts that business investment, a major driver in the U.S. economy, will increase substantially in the manufacturing sector.
In the ISM survey, manufacturers also indicated that they expect employment in the sector will increase by 1.8 percent. Along with that employment increase, respondents said they expected labor and benefits costs to increase an average of 1.9 percent in 2011.
In positioning business to take advantage of the growing economic recovery, companies and organizations have to take a close look at their methods of operation and find ways to improve productivity in all areas, particularly in view of the potential for rising employee compensation costs.
In a strict economic sense, productivity is the ratio of the quantity and quality of units produced to the labor per unit of time. This means that improved productivity can and does have a significant impact on bottom line profitability by producing more for less. Therefore, to take full advantage of the economic recovery, it is imperative that businesses look to improving employee productivity as a means to ultimately improve profitability efficiency.
One area in many organizations and companies that is ripe for improvement is storage and retrieval operations.
According to Operations and Fulfillment Magazine, in most warehouse operations, 45 percent of costs are for direct labor while an additional 16 percent are for indirect labor. Picking and packing activities account for the majority of those costs.
Automating For Productivity
How can organizations reduce labor costs and improve efficiency and customer service at the same time? One way many companies and organizations have met this challenge is by looking at automated storage and retrieval systems as a means of improving employee productivity.
Automated storage and retrieval systems, such as vertical and horizontal carousels and vertical lift modules (VLMs), can increase productivity by 2/3 or more through the simple concept of bringing goods to man, rather than having man search for goods.
Automated storage and retrieval systems work by delivering stored items to an operator an ergonomically positioned removal area. By delivering items to the operator, these systems eliminate one of the most costly factors in retrieval operations—walk and search time. Conventional static storage systems like shelving require employees to spend up to 70 percent of their time traveling aisles searching for items and only 30 percent actually retrieving items.
Typically, using automated storage and retrieval systems, an operator’s walk and search time is reversed from that of conventional systems to 70 percent picking and only 30 percent searching time.
When operators spend more time picking and less time searching, they become more efficient and the productivity of the picking operation increases substantially. Because operators are more efficient, businesses and get by with fewer of them, even when the business begins to grow. Indeed, some businesses might not be able to keep pace with increased demands, no matter how many pickers are added to the staff simply because more labor doesn’t necessarily translate into more efficiency and productivity.
The access area of automated systems is ergonomically designed to present stored items at an ideal height for picking, usually about waist high. This location of the access area contributes to employee safety since this positioning design eliminates the bending, climbing and stretching associated with conventional shelving and rack systems. Throughput generally improves as well.
Redundant or non-essential handling can be reduced with automated systems by using retrieval techniques such as batch picking and slotting. Batch picking is the process of picking multiple orders simultaneously. Since an operator will visit a storage location once for the batch total picking time is reduced. The time saved also results in less operating cost and usually improved customer service. Labor costs are reduced due to quick retrieval times and the capability to meet varying throughput requirements while not being bound by thresholds imposed by limited-access systems.
Slotting is the assignment of items to a particular location, and in appropriate quantities for specific distribution needs, in a storage and retrieval system to maximize system capacity and improve efficiency. Storing parts in their appropriate distribution quantities significantly reduces part handling time and, consequently, the costs associated with unnecessary handling.
Saving Space, Improving Accuracy
Another reason for choosing to automate storage and retrieval operations is improved space utilization. Automated storage and retrieval systems can recover up to 85% of the floor space typically required for rack and shelving systems. Recovered floor space can be re-allocated from cost-associated functions of inventory to value added production operations. Improved space utilization can also extend the useful life of existing facilities, eliminating the need for expensive brick and mortar expansion to meet growth requirements.
Automated storage and retrieval systems, when combined with microprocessor controls, position indicators, information displays, and PC-based inventory management and control software, offer increased speed and picking accuracy levels of 99.9 percent. Higher accuracy levels reduce waste and can result in significant savings, while improving customer service.
What is the return on investment for an automated storage and retrieval system? At Sapient Automation, we’ve found that most customers who chose to install an automated storage and retrieval system reported an ROI in the range of nine to 18 months.
This is based on a number of factors including labor savings, recovered floor space, increased manufacturing capacity or additional lines, reduced inventory levels and increased inventory turns, fewer mis-picks and returns, reduced training costs, fewer injuries and possible litigation costs.
Reducing costs and adding value translates into economic prosperity for the company, and its employees. Automated storage and retrieval systems are a cost effective way to reduce the cost of doing business and position a company for growth.