For a growing number of merchant companies, automated systems have become a way to address the issue of increased throughput, order accuracy and returns. In addition to accuracy, often the biggest driver of automation decisions, the ability to achieve higher throughput per headcount, increasing efficiency while keeping down labor costs, is also paramount.
Since picking and packing usually account for more than 50% of labor costs, identify all non-automated ways to streamline the labor involved in those operations.
- Conduct an objective analysis of operational pain points and costs. Take a methodical approach to defining all opportunities and potential solutions, and involve warehouse staff. Frontline personnel know the issues and can often contribute valuable ideas.
- Get a thorough understanding of existing productivity and costs by department, unit and line, as well as per order and per package shipped. Be selective and methodical about identifying and assessing areas and applications most likely to yield cost-justifiable benefits.
- Assess every conceivable area where automation might help will simply result in confusion, paralysis and a lot of wasted time and effort. Focus on assessing just those areas that are most likely to deliver business benefits
- For each area, estimate the savings in labor reduction, the ability to track inventory through the center, reduction in errors and throughput of customer orders, using an 18-month payback as the guideline. This will provide a solid read on the level of automation that can be cost-justified based on your operation and cost structure.
- Make sure the solution you’re considering is sufficiently flexible and scalable to accommodate changes like product assortment or increased volume that would affect layout needs or the fulfillment model.
If you’re running out of floor space or know you’ll be there soon, automating your storage and picking process can greatly improve storage capacity and allow room for growth. Systems like a vertical lift module or another goods-to-person system can improve storage capacity by 40%–60% or more. You also need to weigh the cost of investment in your overall facility vs. automation equipment. Typically, the time, effort and cost of retrofitting your building far outweigh the cost of an order fulfillment automation system.