Page 19 - Logistics News Oct Nov 2020

per SKU. Generally, high inven-
By defining these conditions, it is
Knowing the above information
tory item SKUs, or items with
possible to gauge if the operation
and verifying its accuracy are
more than 30 pallets per SKU, are
crucial to form an initial idea of
is best suited for single-deep or
multiple-deep storage. With mul-
whether or not warehouse automa-
assigned to a storage block that is
tiple-deep storage, considerable
tion is a good fit. By analyzing the
anywhere from seven to 12 pallets
inventory data in more detail, you
deep. The rest of the items are
space savings are achieved but
assigned to another storage block
selectivity is reduced. Therefore,
can determine the average inven-
tory levels per SKU and divide
that ranges from two to six pallets
you generally want to store the
these into logical groups.
same SKU in a multiple-deep
deep. Of course, with automated
storage lane. Automated systems
systems each lane at every lev-
have an advantage in that they
The following breakdown groups
el is accessible. Compared to a
can be used as a guideline:
drive-in or drive-through rack, it is
can rewarehouse pallets automat-
ically as long as this work is not
obvious that an 8-deep automated
Inventory levels per SKU of
high-density warehouse will result
performed during peak shipping
less than 7 pallets – use single
hours.
in a higher storage utilization than
deep storage
a 4-deep, 3-high drive-in rack
system serviced by conventional
For most manufacturing opera-
Inventory levels per SKU of 8
tions, a small number of items
fork-trucks. In the automated case,
to 14 pallets – use double deep
to get to the eighth pallet, seven
typically account for 80% or more
storage
pallets must be removed. In the
of the volume and inventory. So,
how deep (storage lane depth)
conventional case, to get to the
Inventory levels per SKU of
last three pallets, nine pallets must
should these manufacturers store
15 and greater – use multiple
their inventory? Again, this
be removed.
deep storage
depends on the inventory levels
AS/RS
are multiple deep (3-12 pallets deep). Thus, AS/ have an advantage in that they can re-warehouse
RS design can match a client’s item/SKU mix and pallets automatically as long as this work is not
its varying product throughput rates and inventory performed during peak shipping hours.
levels. Should the AS/RS require expansion to meet For most manufacturing operations, a small
future growth, aisles can generally be lengthened number of items typically account for 80 percent
or added, providing both lateral and longitudinal or more of the volume and inventory. So, how deep
expansion alternatives. (storage lane depth) should these manufacturers
An AS/RS is made up of five essential store their inventory? Again, this depends on the
components: inventory levels per SKU. Generally, high inventory
• A rack system to store product. item SKUs, or items with more than 30 pallets per
• A crane or S/RM (storage and retrieval machine) SKU, are assigned to a storage block that is anywhere
that runs on a floor rail. from 7-12 pallets deep. The rest of the items are
So You Want to Automate? 11 • A load-handling device/shuttle to move product assigned to another storage block that ranges from
2-6 six pallets deep. Of course, with automated
from the crane to the rack location.
• A conveyor system to move goods to and from the systems each lane at every level is accessible.
AS/RS and dock areas. Compared to a drive-in or drive-through rack, it is
• WES software to control, track and optimise all obvious that an eight-deep automated high-density
product movements. warehouse will result in a higher storage utilisation
than a four-deep, three-high drive-in rack system
Data analysis and metrics serviced by conventional fork trucks. In the automated
Despite any preconceptions about automation case, to get to the eighth pallet, seven pallets must be
technology, it is simple to decide whether or not to removed. In the conventional case, to get to the last
invest in an AS/RS by taking the following three-fold three pallets, nine pallets must be removed.
approach: Perhaps the most important statistical
1. First, perform an analysis of the warehousing information concerns throughput. In conventional
system’s existing design and framework. systems, throughput determines the staffing levels
2. Then, examine some basic, yet key, criteria to and the number of fork trucks required, whereas
determine if the operation is suited for automation with automated systems, throughput determines
technology. the quantity of S/RMs required. One S/RM is
3. Finally, justify the basic cost for such a system by usually capable of handling between 60-70 unit
demonstrating its overall benefits. loads per hour when handling one unit load at a
Data analysis is the first step in determining the time. Systems handling two unit loads at a time
requirements of any warehousing and distribution are also available and can almost double that
operation. Customer-provided data regarding the throughput per S/RM.
number of items/SKUs, product throughput rates
and more are critical to AS/RS design. However, Cost justification
merely receiving the data is not enough. System Assuming an automated warehouse is deemed to
designers must understand each customer’s data in be a good fit, it is time to justify its cost by looking
order to develop a design that will take advantage at the following elements: site conditions, labour
of the latest technology and generate the maximum requirements, inventory accuracy and control, and
savings possible. equipment usage.
Knowing the above information and verifying Perform the justification of an automated system
its accuracy are crucial to form an initial idea of using discounted cash flow capital budgeting
whether or not warehouse automation is a good fit. techniques. When using straight payback methods,
By analysing the inventory data in more detail, you the time value of money is rarely taken into account.
can determine the average inventory levels per SKU To compound the problem, the benefit of having
and divide these into logical groups. The following the automated system operate for its anticipated
breakdown groups can be used as a guideline: life of more than 25 years is ignored. Fortunately,
• Inventory levels per SKU of less than seven pallets determining the net present value (NPV) and the
– use single-deep storage. internal rate of return (IRR) is easy with today’s
• Inventory levels per SKU of 8-14 pallets – use spreadsheet programmes. These figures should
double-deep storage. justify the initial cost difference associated with
• Inventory levels per SKU of 15 and greater – use installing an AS/RS versus building a conventional
multiple-deep storage. system. Compare both of these by establishing cash
With multiple-deep storage, considerable space flow differentials between a ‘base case’ conventional
savings are achieved, but selectivity is reduced. approach and an automated approach, and then
Therefore, you generally want to store the same SKU apply the cost differential to the cash stream that is
in a multiple-deep storage lane. Automated systems generated to offset the investment. •
October/November 2020 | Logistics News 17