Executive Briefings

Why Automate Order Fulfillment in the Warehouse

Order picking is indisputably the most labor intensive job in the warehouse, says Brian Keiger, global IT sales leader-logistics, KUKA Systems. But with SKU proliferation and the retirement of baby boomers, there will be more and more automation.

What a change the pallet-handling world has seen. Traditionally, 80 percent might have left the warehouse relatively unchanged from how they came in. But with SKU proliferation today, Keiger says, pallets that might have had eight SKUs in the past now might have that many per layer. "It's just so much more labor intensive because of all the breaking down and building of mixed pallets."

That customization, of course, is a driver of automation in the warehouse, but there are other factors as well. For instance, on average an employee might pick up to 25 tons of product in a day. "That could cause wrist and back injuries, and then workers comp and lawsuits, and you have to fill in for injured workers while they're not able to work," says Keiger.

Pick quality is another important driver. With manual picking, "failures" are greater. In other words, picking the wrong items causes an increase in returns and other complex problems in the distribution network. "So, that's loss of revenue."

That problem will partially solve itself as more and more of the work force, aging baby boomers, retire and take their skill sets with them.

With the shortage of employees willing to take on picking, it becomes easier to justify the cost of automation. Keiger says an estimated 40 percent of pickers are likely to leave the work force in the next few years, leaving only about 20 percent trained sufficiently to replace them.

Automation may be inevitable, but it isn't without its constraints. The biggest challenge is in the variety of package types, Keiger says. "There are just so many variants." As examples, he cites shrink-wrapped cases, bags and sacks, with each coming in sizes ranging from 2-inch by 2-inch to full pallet size.

Other constraints include handling empty pallets, returns and damaged goods. "So while automation seems like a simple step when you look at justification for investment, there are challenges that aren't easy for automation to handle."

Nevertheless, manufacturers are increasingly turning out equipment that meets those unique needs.

The biggest opportunity is in ecommerce, Keiger says. He thinks online business will grow 400 percent in the next five to 10 years. "That's huge. It changes the way manufacturers operate their warehouses. They have more each picking, they have to handle more parcel shipments, they need a more sophisticated distribution center.

"Traditionally, you would just throw more pickers at it, throw more labor on it." Not anymore. "Manufacturers have to adapt to ecommerce, but through automation."

To view video in its entirety, click here


Keywords: Warehouse Logistics, Inventory Planning & Optimization, Logistics, Pick Quality, Distribution Center Labor Management

What a change the pallet-handling world has seen. Traditionally, 80 percent might have left the warehouse relatively unchanged from how they came in. But with SKU proliferation today, Keiger says, pallets that might have had eight SKUs in the past now might have that many per layer. "It's just so much more labor intensive because of all the breaking down and building of mixed pallets."

That customization, of course, is a driver of automation in the warehouse, but there are other factors as well. For instance, on average an employee might pick up to 25 tons of product in a day. "That could cause wrist and back injuries, and then workers comp and lawsuits, and you have to fill in for injured workers while they're not able to work," says Keiger.

Pick quality is another important driver. With manual picking, "failures" are greater. In other words, picking the wrong items causes an increase in returns and other complex problems in the distribution network. "So, that's loss of revenue."

That problem will partially solve itself as more and more of the work force, aging baby boomers, retire and take their skill sets with them.

With the shortage of employees willing to take on picking, it becomes easier to justify the cost of automation. Keiger says an estimated 40 percent of pickers are likely to leave the work force in the next few years, leaving only about 20 percent trained sufficiently to replace them.

Automation may be inevitable, but it isn't without its constraints. The biggest challenge is in the variety of package types, Keiger says. "There are just so many variants." As examples, he cites shrink-wrapped cases, bags and sacks, with each coming in sizes ranging from 2-inch by 2-inch to full pallet size.

Other constraints include handling empty pallets, returns and damaged goods. "So while automation seems like a simple step when you look at justification for investment, there are challenges that aren't easy for automation to handle."

Nevertheless, manufacturers are increasingly turning out equipment that meets those unique needs.

The biggest opportunity is in ecommerce, Keiger says. He thinks online business will grow 400 percent in the next five to 10 years. "That's huge. It changes the way manufacturers operate their warehouses. They have more each picking, they have to handle more parcel shipments, they need a more sophisticated distribution center.

"Traditionally, you would just throw more pickers at it, throw more labor on it." Not anymore. "Manufacturers have to adapt to ecommerce, but through automation."

To view video in its entirety, click here


Keywords: Warehouse Logistics, Inventory Planning & Optimization, Logistics, Pick Quality, Distribution Center Labor Management