Business has always been competitive, even more so today. Companies are facing the rising cost of labor, higher prices for physical facilities, and increased customer demand for quicker and better service. Managers are constantly under pressure to find ways to lower expenses, improve productivity, and create more pleasant customer experiences. (See videos )
For a large number of businesses, managing a warehouse is a major expense in terms of labor and the cost of physical buildings. It costs money to store inventory and ship products to customers; therefore, improving storage productivity is a primary objective for all managers. Anything a manager can do to reduce operating expenses will be welcomed.
Consequently, many companies are moving to Automated Storage and Retrieval Systems (ASRS) as a way to reduce their costs and remain competitive. Today’s storage automation equipment helps companies improve their warehouse operational productivity while providing an attractive return on investment at the same time.
But how does ASRS improve productivity? First, let’s define the factors that affect warehouse productivity.
What is Warehouse Productivity?
Productivity measures how efficiently a resource is utilized. The most well-known measure of productivity is labor, but productivity, in the case of warehouse management, also measures the effective use of space, capital, and material flow.
Suppose you have a warehouse with several thousand SKUs that employees have to pick, pack, and ship to customers. You’re going to be concerned about how long it takes your employees to locate the items and prepare the order for shipment. The less time spent walking and searching, the better. So, on-time delivery of orders is important.
Are your SKUs stored in bins spread over several thousand square feet of warehouse floor space? Do your employees have to walk around your warehouse looking for the SKUs needed for an order?
What if all these items could be stored vertically, taking up less floor space, and be delivered to the operator instead of the operator hunting for them? This would result in lower labor costs and better space productivity.
Warehouse productivity also involves the most efficient flow of materials from the moment of receiving at the docks, storage in the warehouse to picking, packing, and shipping to customers. How should the items be stored? In static locations where operators have to walk to those locations or in vertical and horizontal carousels that bring the items to the workers?
These are all areas that either add to or take away from warehouse productivity.
Why is Productivity Important to Business?
Improving warehouse productivity is important because it leads to the following results:
- Reduces operating costs: If your employees can fill more orders in less time, your labor cost per order will go down, improving your profits. Reducing the square feet of warehouse space required to store your inventory means the cost of your physical buildings can be less, adding more to profits.
- Creates better customer relations: Speedy and accurate delivery of orders make customers happy, and they are more likely to remain loyal and place new orders.
- Improves employee morale: Employees who don’t have to walk, stretch, or bend as much are less fatigued and feel better about doing their jobs. They will be more likely to embrace new systems that improve productivity and make their lives easier rather than just another way to get them to work harder.
- Builds brand credibility and reliability: Customers view companies that can operate efficiently and deliver orders correctly and on time as reliable and dependable. You are seen as a leader and innovator in your market. Your customer acquisition cost is reduced, and existing customer retention rates are higher.
What Hampers Productivity?
Effective and productive warehouse management calls for a balance between two conflicting objectives: speed and accuracy. These are the obstacles that managers must overcome to balance that conflict and improve warehouse productivity:
- Inefficient pick/pack/ship systems: Employees that have to walk long distances and search through boxes to find the correct SKUs are not being productive. It takes more time and the labor cost to fill an order is higher. Training employees takes longer. They have to learn where to find everything.
- Low employee morale: Employee fatigue leads to low morale and a tendency to make more picking errors and have more workplace accidents. Workers get frustrated, and you have more employee turnover. These are not productive employees.
- Order mispicks: Inefficient picking systems and tired employees lead to packing errors, unsatisfied customers, and returns. Even if errors are detected before shipping, you still have to unpack and repack, wasting time and resources.
How Does Automated Storage Improve Productivity?
To remain competitive, companies are converting to ASRS productivity systems that improve their order fulfillment processes. Improved productivity gives you the following results:
Reduced labor costs. Automated storage retrieval systems use the goods-to-people principle. This brings the items to the operators and eliminates or reduces walking time. Zone picking reduces walking to just a few feet. Workers can fill more order lines per hour, which increases worker productivity and lowers labor costs.
An often-overlooked cost of labor is customer service representatives. Packing errors make customers mad, and, as a result, you get more service calls. More complaints mean you will need more CSRs to handle the calls, increasing your labor costs.
Improved ergonomics and safety for employees. Less walking, climbing, bending, and lifting means better safety and fewer worker’s compensation claims. Employees are more satisfied with their jobs and turnover is reduced. Less need to train new employees.
Increased picking productivity. Pick to light systems reduce pick times, improve picking accuracy and increase lines picked per order. Batch picking software groups orders into batches and directs operators to the items needed for picking, reducing time to fulfill orders.
Saves warehouse space. Vertical carousels, horizontal carousels, and vertical lift modules take up less warehouse space compared to static storage, upwards to 80% less space.
More efficient inventory management. Inventory software for automated systems keeps more accurate item counts. You will have fewer unexpected stockouts and lower inventory carrying costs. The software can be programmed to automatically reorder parts when inventory levels cross the reorder quantity trigger or point, reducing backorders as a percent of total orders. Backorders cause customers to lose confidence in a company’s ability to deliver and decrease the desire to order other products.
Better customer relations. When customers don’t receive the items they ordered, they get irritated, call your customer service representatives, and defect. Automated storage systems reduce these problems with accurate, on-time shipments, which builds customer trust and improves customer satisfaction. It’s much easier to retain customers than it is to incur the marketing expense required to acquire new customers.
What Automated Storage Equipment Will Make Your Business More Productive?
Manufacturers of automated storage equipment offer a variety of product configurations that can be modified to meet almost any company’s unique needs and space requirements.
Vertical lift modules
Vertical lift modules have vertically-arranged modules that can store large and bulky items in trays or small parts in bins. The systems can be integrated with cranes, conveyors, robotic arms, or forklifts for loading and unloading bulky or heavy items. Trays and bins move vertically up and down on a belt drive between the modules. The software selects the best modules based on the item’s size and weight.
Vertical lifts are best suited when your warehouse has unused overhead space, or you need to move goods between floors, eliminating the need to walk up and down stairways.
Vertical carousels are used in areas with lower ceilings to store small- and medium-sized items. The system works like a Ferris wheel. Pushing a button signals the carousel to locate the desired part and rotate into the access port. Pick to light software improves picking accuracy and reduces operator errors by using bar codes to verify picks.
Horizontal carousels are typically grouped in pods with three to four units, letting an operator process several orders at the same time. The system software separates the orders into batches and tells the operator which items to pick from the carousel and which bins to put them into. The operator can be picking from one carousel while another is rotating into place, reducing pick time.
Pick to light technology improves picking accuracy by giving the operator directions and confirmations of proper execution. Horizontal carousels are ideal for applications with low ceilings and batch processing.
Vertical buffer modules are perfect for storage and retrieval processes that involve large numbers of SKUs and smaller batch sizes. The comfortable, ergonomically-designed operator station comes with a conveyor that enables the operator to fill up to 500 lines/hour.
Inventory management software
Batch-picking software saves the operator from walking to multiple bins to pick items. The inventory management software analyzes the orders and consolidates them to find the shortest and most efficient sequence to fill a request. The system will keep real-time counts of each item in inventory to avoid being out of stock and will automatically place a new purchase order at the selected low inventory level.
Improving warehouse productivity is essential in today’s environment for any company to remain competitive. The upfront investment may seem formidable, but the payoff in terms of lowering operating costs, improved customer satisfaction, and return on investment justify the cost.
Contact Us for Automated Storage & Retrieval Systems
Southwest Solutions Group® provides design and installation services for all of these automated storage and retrieval systems and more. For more information or to speak with a specialist, call us at 1-800-803-1083 or send us a message today.