Historically, third party logistics service providers have been reluctant to invest in warehouse automation. The comparatively high degree of investment required and the apparent inflexibility of certain systems to adapt to the changing needs of a 3PL’s shifting client base have made such systems unattractive to most logistics firms.
But, with recent advances in automation technology, this is set to change, as Steve Richmond, director of Jungheinrich UK Ltd’s Systems and Projects Division, explains: “In the past a fully automated system could involve significant capital expenditure and require extended periods to secure Return on Investment. With many 3PL providers having to commit to relatively short term contracts, the outlay on the type of fixed assets found in many fully automated systems – such as conveyors and stacker cranes – was often hard to justify.
“However, recent developments have made automation scalable and flexible and, as a result, pay-back times are cut significantly – which should encourage 3PLs to look again at the possibility of automating some of their intralogistics processes.
“For example, a standard operator controlled Jungheinrich VNA truck can, with the introduction of transponder technology linked to a warehouse management system, operate 25 per cent more productively because the truck is automatically directed to the next picking location in the most direct route possible. The operator doesn’t have to think about where in the storage cube he or she has to go to next – it is all done automatically.
“And,” he continues, “should the user’s needs change and, for example, 24/7 operation be introduced, the same base machine can be converted to allow it to operate fully automatically. The man-power savings made by employing a fully automated VNA machine over a three shift operation typically bring payback down to between 18 months and two and half years. Taking the costs of the truck operator out of any operation running three shifts makes a huge difference to a site’s running costs
Steve Richmond believes that it will become increasingly common for 3PLs to employ partial automation – hybrid systems that are part-automated and part-manual.
“In the past some companies shied away from automation because they felt that a move to an automated system would mean that every aspect of the operation would have to be automated,” he continues. “This is simply not the case. Automation no longer means that every aspect of the warehouse or distribution centre has to be automated – just the parts of it that will benefit most from automation.
He continues: “For instance, in many applications a strong case can often be made for automating the ‘bulk pallet’ operation and then designing the ‘picking operation’ to be as flexible as possible. This is a model that we at Jungheinrich have developed over a number of years and it lends itself to the phased development of a facility, that can also take into account changes in customer demand and product profile.”
This ability to phase the introduction of automation within a distribution centre or warehouse should be highly attractive to 3PL companies, Steve Richmond says. He explains: “Consider a 3PL contract where the initial volumes dictate a low level manual forward picking area, (using conventional equipment) supported by an automated bulk store. As and when the client’s volumes grow, the picking area can be developed by increasing the number of pick faces and levels and then utilising high level order picking equipment. Up to this point there has been no need for the 3PL to invest heavily in the order picking areas due to the employment of conventional equipment and techniques. However, should there be stepped changes in volumes or product profile, automated picking or sortation technology can be introduced.”
“It should be noted that in applications where automated handling systems are phased in, payback can be calculated for the individual phases of the project to provide the most effective utilisation of capital for the organization.
“Furthermore, the equipment is transferable. So, should the 3PL’s client’s needs change, the equipment can be adapted or easily moved to another site.”
“And, what’s more, by automating all or part of its logistics operation, a 3PL will enjoy improved flexibility, better traceability and all round safer working environment,” he adds.