How to Master Seasonal Peaks and Get a Fast ROI with Warehouse Automation
By: SupplyChainBrain April 17, 2014
Seasonal events that cause spikes in demand no longer are limited to holidays. Handling these peaks without adding labor requires automation, but companies worry about the cost. Lance Anderson of automation systems manufacturer Beumer Corp. shows how better use of equipment can generate the ROI that companies need.
Many companies have seasonal peaks that require them to handle up to 20 times their usual volume. Operations that run smoothly during off-peak times can be completely overwhelmed by these volume spikes, says Anderson.
Simply hiring more workers is not the answer, Anderson says. Most DCs are located in clusters with many other companies that have the same peak seasons, so competition for qualified temporary help is fierce. “It’s very hard to hire good people for just a month-and-a-half or two months,” he says. Most of these companies want to install an automated solution, “but they have difficulty justifying the capital expense such solutions require,” notes Anderson. This often is because they are looking only at labor savings during the peak season, he adds.
To address this issue Beumer developed a process that models an automated solution to solve peak volume issues, then looks at additional savings that can be achieved using the automation during off-peak times. A company might increase off-peak store sales, for example, by using point-of-sale data to customize replenishment orders rather than just shipping full cases of one size or model. These gains can be used to improve the return on investment calculation.
“We help them make sure that the numbers they use to justify projects and capital expenses take into account things like improved accuracy and whether getting something out the door faster enables them to use a less expensive method of shipping,” says Anderson. “We capture all of this in the ROI calculation.”