This document explains how companies can utilize advanced and emerging technologies to help deliver superior results. Prepare for the unexpected, understand your process, look at all the options, go back to the fundamentals, reengineer, gain stakeholder acceptance through a pilot program, and finally deliver. The savings are there for the taking.

Robotics going Mainstream: Improve Warehouse Productivity and Safety

Contributed by | Aberdeen Group

Traditionally, automated pallet handling equipment solutions, like Automated Guided Vehicle (AGV) solutions, have been limited in adoption to those companies where a substantial amount of the pallet movements are full pallet units. The higher investment costs of AGV solutions do not typically make them practical when the pallet must be broken to the case or each level for put-away or picking. However, unlike AGVs one technology segment, pallet robotics at both a full pallet and case level, is growing in relevance and beginning to challenge this traditional process-technology limitation. 

In February and March of 2010, Aberdeen surveyed 114 logistics professionals for a benchmark report (Labor Management: Instill Accuracy, Efficiency, and Productivity in the Warehouse and Retail Store), which explored the pressures they are facing, and what plans they have for the coming months. From that group of respondents, this Analyst Insight examines one specific segment: users of Automated Pallet Handling Equipment (APHE). How are these 21 companies prioritizing and addressing their labor management and process concerns, and how do they compare to others in key operating metrics for productivity and safety? 
This document will specifically highlight the key differentiators that this APHE group of users displays with respect to labor, productivity, and safety. It will then examine how the traditional barriers to investment in automated pallet handling equipment are being challenged by some of these companies. Through a recent case study and user testimonials, we will explore what benefits are emerging for companies that reengineer their workflow and processes to garner the specific advantages of industrial robots for both full pallet and less-than-pallet operations. 

Background: Synergy in Process and Technology 

Regardless of the specific enterprise involved, 67% of companies overall cite the internal top management pressure to reduce operating costs as their key operating pressure with external seasonality/peak capacity concerns coming in second (30% overall).  
When asked about their capabilities to respond to both the external seasonality/peak pressures and/or the internal or top management pressures around labor management, most companies are planning to take similar actions (Figure 2).  
With labor costs averaging 37% of warehousing and operations costs across all enterprises, all companies give priority to process and technology in improving labor management. It should be noted, however, that our focus group in this insight, automated pallet handling users, are 1.11-times as likely as their peers to invest in warehouse technologies to support labor productivity (41% vs. 37%). The fact that these companies are more likely to invest in technology is in apparent conflict with conventional wisdom. Conventional wisdom is that APHE technology is relatively heavy on the investment side. But when it comes to automated pallet robots, the cost per unit volume handled is orders of magnitude less than AGV and ASRS technologies. Companies that understand this distinction (like those in this study), are, hence , more likely to understand that they can meet or exceed the one to two year payback requirement that most enterprises demand. 
Here, as in other studies, having an acceptable ROI is a first barrier to investment. The second barrier is one of finding adequate unit volume. As we shall see in later sections, automated solutions for pallet put-away and picking to pallet have been limited to largely full pallet unit processes; but by reengineering warehouse processes to complement the unique features of robotic technology solutions, companies are breaking down this traditional barrier. Here we see that it is the synergy between process and emerging technology that is often a differentiator in finding applicable unit volume at the less-than-pallet level. 

Performance Gaps – Automated Pallet Users vs. Others 

Here we highlight performance gaps between users of Automated Pallet Handling Equipment (APHE) and all others from the recent March study. As illustrated in Table 1, the automated pallet handling users from Aberdeen's recent survey out pace their peers across multiple key measures.  
While all these metrics are important, it is not easy to see the direct correlation they may have to APHE technology. However, it is clear that most APHE solutions do have a direct impact on the put-away of pallets or the dock-to-stock time. Here we can see that APHE users are 20.12% more productive and, hence, are able to reduce the average time to put-away a pallet by over one hour. While this same advantage applies equally to AGVs and pallet robots, the investment dollars per unit is significantly higher on AGVs. It is also true that the safety features that are built into guided vehicle technology over both speed and flexibility have grown as control logic and alogorithims have improved over time. "The fixed relationship these technologies impose to a pallet path with known time and space parameters have allowed us to reduce travel/safety accidents by over 65%,"says the VP of Logistics at a major grocery chain. While the remaining measures are more "all encompassing" it is interesting to see that, in general, across a series of both productivity and safety measures, the APHE companies appear to have superior performance overall. While it cannot be concluded that all these metrics are improved by simply deploying APHE technology, we can conclude that the companies that have incorporated such technologies into their operations share common interest toward reshaping all their capabilities synergistically to insure that their people, process, and technology are working together to form a holistic solution that yields superior results. The key point here is that companies that take the time to discover how people and processes can be redefined to leverage the unique features of emerging technologies, like robotics, are finding greater value and return on investment. To further examine the ways companies are leveraging these solutions we will look to an industry example next. 

Case in Point: Midsized Auto Parts Manufacturer Deploys Robotics Solution and Improves Performance and Value 

A midsized auto parts manufacturer, located in Ohio, manufactures rubber components including engine mountings, bushings, tubes and hoses for the automotive industry. They employ nearly 800 professionals in one main, US-based, production facility and several Asian production sites. The company has a customer base that includes Honda of America Mfg., Honda of Canada Mfg., Mitsubishi Motors North America, General Motors Corporation, and Ford Motor Company. 
In an effort to reduce cost and streamline manufacturing operations, the VP of Manufacturing decided to increase their automation with Seegrid robots. “Material flow is one of our most important and most expensive activities. It was one of the first places we looked to in our cost containment efforts,” said, the VP of Manufacturing. The firm chose pallet robots because of a combination of performance and value. “We had looked extensively at conventional AGV equipment but we found the start-up costs and maintenance were a little too large. However, the Seegrid Inc. robotics solution was different, they presented us with very workable cost structure with the performance that we needed,” he continued. 
While the Seegrid system has many uses, the plant mainly uses the system to efficiently and quickly transfer finished goods to the manufacturing lines to the warehouse for storage. “The transfer is completely automated. We are using several drop zones to hold the finished goods. The Seegrid system uses advanced robotics and vision systems to move the product. The units can tell when the drop zone is full and it will move on to a different drop zone,” said the VP of Manufacturing. 
The benefits from the installation of the Seegrid system were immediate and well documented: 
  • Reduced labor costs. “Once the system is completely rolled out we will be able to reduce our material handling related labor force by about 10 full-time equivalents. Plus, the robots never get sick orneed days off,” said the VP of Manufacturing.
  • Improved product visibility. “Each time the system transfers a load a log is created. We can analyze this data to optimize our material flow. Now we can better determine drop positions and floor layouts. This just isn’t practical without robots,” said the VP of Manufacturing. 
The company is now expanding the concept from delivery of full pallet units from the end of the manufacturing line (to the warehouse) and is now deploying the concept within the manufacturing line itself. Through the introduction of Seegrid's robotic tuggers they plan to justify the integration into the work-in process case and pallet flows between each stage of the manufacturing process. "Because of the numbers of workers involved in managing the case flow in our Kanban system we anticipate the new solution to generate significant time and efficiency savings,” the VP says, “butthis is just the beginning.” 

Case in Point: Robots Decrease Dock-to-Stock Cycle Time

With annual sales totaling $8.6 billion, Giant Eagle is one of the nation’s largest privately held multi-format food and fuel retailers. The chain operates 228 corporate and independent supermarkets and 158 GetGo fuel and convenience store locations across a region that spans Pennsylvania, Ohio, West Virginia and Maryland. 
The company’s five retail support centers ship to the stores delivering up to 750 truckloads each day. Most stores carry seven product lines; dry grocery, dairy, produce, meat, health and beauty, perishables, and frozen goods.
Cultural Background – Team Members are the Most Valuable Asset
To support its continued growth in an environment of ever-expanding competition, the company identifies its team members as its most valuable asset. 
Unlike many distribution operations, which are run independent of the store, Giant Eagle’s retail support centers and transportation functions are set up to optimize and reduce end to end logistics costs. This understanding is reflected in the mission of the supply chain organization and in the corporate culture - priority is given to the store over distribution labor efficiency. 
Typical of most operations are grocery products, totaling 7,500 items, that are distributed from the retail support center on a selection path over two miles long. Even though operations follow the typical Pareto principle, with 80% of the volume falling to only 20% of the stock keeping units, company retail support centers are not always laid out in a fashion to take advantage of a given stock keeping unit's velocity. Looking at total operating costs, and due to the higher store labor cost, it is more important to optimize the whole rather than the part. In support of the whole, storage within the retail support centers is constrained - not every situation follows a velocity layout (and benefit from travel reductions). Instead, it follows a high-low store aisle configuration layout. 
"Wherever possible we want to improve labor cost and efficiency at our stores. This means we will lay out our retail support centers according to store aisle configurations, not by product velocity,” says Joe Hurley, Vice President of Distribution and Logistics. “It also means that we need to minimize product damage in what we call our heavy to light pallet. Each pallet is comprised of a base of more heavily weighted product up to 40 ft.³ topped with 10 pounds of lighter weight or more fragile items.” 
All of these restrictions increase the travel time and distance required for both product put away into warehouse storage, and store order selecting from the case selecting aisles. 
Decreasing Travel Through Robotic Technology 
About a year ago the Supply Chain Organization embarked on an initiative to introduce new technology into the retail support centers to keep the appropriate product layouts constraints in place while simultaneously improving labor efficiency. With its corporate headquarters in the Pittsburgh, Pennsylvania area, initial focus was placed on the grocery put away operations of a nearby grocery retail support center. 
Of the 7,500 items handled in the dry grocery warehouse, more than 30% to 50% of them are single item pallets destined for warehouse storage. The remaining inbound pallets are of mixed stock keeping units and need to be separated by individual stock keeping units to form pallets for put away to storage. 
The new automated process works as follows: The retail support center receives tens of thousands of inbound pallets a week. These pallets are identified through the warehouse management system and placed into put-away queues according to the aisle designated by the system. With this many pallets to put away, the overall put away function exceeds 60% travel.
"On any given week inbound product will travel up to 5,000 miles, and we needed to effectively handle the daily flow,” says Hurley. “By using robotic technology our Seegrid pallet jacks enable us to minimize travel within our operations. The robot is able to take pallets directly from the pickup point on the receiving dock to an end of aisle drop point without requiring an operator or a hi-lift," Hurley continues. 
After a brief pilot, the company first rolled out the solution in August of last year and within three months replaced about 30 motorized long tom pallet units – motorized and manned pallet jacks - with the pallet robot while boosting hi-lift utilization by greater than 20%. 
Hurley summarizes the benefits as follows, "Incorporating the Seegrid pallet robots in the warehouse grocery operation has allowed us to improve dock-to-stock speed and productivity. By providing a predefined route between pickup and drop locations it creates a fixed time and space between product/aisle, selector and robot. The predefined route and volumes bring considerable consistency to our operations. From an efficiency standpoint we have reduced manned-travel for putaway by 20% - 30% and increased hi-lift pallets/hr by 20%. The cost effectiveness that the new system incorporates has allowed us to remain successful in an extremely competitive environment and bring value to our end customers. We look to expand the program into other areas in the future." 
Future Plans and Next Steps 
Giant Eagle is considering plans to expand the use of Seegrid pallet robots to other functions within and across its retail support centers. The company is examining the case picking/selecting operations in the same grocery retail support center where it has over 150 team members, each manning a longtom pallet jack. As indicated before, there is considerable dead travel in the two mile selection path and the frequency of off-and-on team member transfers for each stop is both a safety and time concern (a total of about 28,000 stops at about 1.1 cases per stop is a weekly average). 
Across the aisles of the warehouse there are numerous opportunities for incidents as multiple motorized longtoms traverse through the retail support center for case selection. 
"We are examining a variety of process changes to take advantage of the safety and time benefits in this the largest volume labor and travel component of our operation," says Hurley. 
Using the Seegrid pallet robots, the discrete selection path can be preprogrammed for each store pallet and the selector can simply work alongside the robot as it advances through each aisle. Giant Eagle is also looking to reengineer the aisles into logical work zones so that fully palletized orders are maximized within each logical zone or group of aisles. At the end of each pick zone the Seegrid robot would be able to skip unmanned to the next required pick zone, and next team member, to continue to top off the pallet until complete. 
"The full solution would likely require integration to a voice-directed casepicking technology for completion of each pick. However, besides the reduced travel and the elimination of off-and-ons, the workers’ case selection would be voice-directed and hands- free. The application of this Seegrid technology to our other product warehouses and functions is enlarged with each new challenge presented," Hurley concludes.  

Debunking Traditional Barriers

As this insight suggests, the traditional barriers of entry to justify investmentin APHE is beginning to diminish. A brief recap follows:
  • Cost of ownership is lower. Compared to traditional AGVs the pallet robot is substantially less. In addition any maintenance worker that is trained on a walkie-rider is capable of performing setup and preventative maintenance. An AGV system is much more complicated (locked to physical constraints like lasers and wire guides) which are not easy to modify or alter with business and volume changes. Seegrid Robots on the other hand are easy to program, are easy to reprogram/repair, and are capable of multiple modes and routes depending on business needs and volume. The investment, training, and ongoing upkeep are substantially less with the Seegrid robots.
  • Applicable unit volumes are much larger. With proper redesign of one's process users have demonstrated that robots can be complementary and synergistic with less-than-full pallet picking solutions. As companies match process with process/people in less-than-pallet operating areas, they are beginning to adapt to the more robust capabilities that robotics solutions provide. 
  • ROI thresholds are easier to obtain. The combination of lower investment and greater applicable volume (above) can generate acceptable cost/benefit analysis and ROI. Companies that understand this advantage are more likely to understand that they can meet or exceed the one to two year payback requirement that most enterprises demand. 

Recommendations and Summary

The following are some steps to consider when evaluating any automated pallet handling system:
  • Understand and document current process and challenges. Document and understand the current method and streamline breakdown the process into its elements. Many companies are hampered by the challenges found in the sidebar to the right. For instance, over 56% of companies have not analyzed or measured current individual performance. Without having knowledge of what your costs and methods are, you cannot baseline for improvement. The companies that are getting maximum efficiencies from their new solution understand the limitations and barriers of the current system, understand their metrics, and work to understand company culture well before they attempt redesign. Making sure you know your current metrics and can understand the full flexibility and value of the new solution puts the control back in your hands to properly balance your people, processes and technology to find optimal performance. Unlike older AGV and even newer AGV technology, the case studies illustrate the ways companies are debunking the traditional barriers of AGV technology that simply isn't that flexible, compared to robots.
  • Reengineer and redesign the process. Where you find barriers due to people, technology or process, be willing to break down and realign your work methods to take advantage of newer technology advancements. Get creative and look for synergy across people, process and technology. For example, from our March study (Labor Management: Instill Accuracy, Efficiency, and Productivity in the Warehouse and Retail Store,) we know that leading companies are 40% more likely than others to utilize the full capabilities of their warehouse management system. For example, one company, through simple table changes was able to use walkie-rider robots in their high volume case picking operations by simply instituting picking zones in their WMS system rather than using a full warehouse pick (this is similar to the Giant Eagle project on case picking that is now under study). The new solution allowed order selectors to build a store pallet without getting on and off their rider. 
  • Pilot extensively and obtain buy-in. Overall there is an increased focus and appetite for becoming more efficient as well as safety conscious throughout industry. About 30% to 40% of companies from the March study are looking to find technologies to complement or automate pallet handling. By testing and piloting the program first you can avoid resistance to change and insure the buy-in is in place from both the workforce and management. 
In closing, expect 2010 to be another year of change with increased pressure to reduce costs and improve operational safety. This document explains how companies can utilize advanced and emerging technologies to help deliver superior results. Prepare for the unexpected, understand your process, look at all the options, go back to the fundamentals, reengineer, gain stakeholder acceptance through a pilot program, and finally deliver. The savings are there for the taking. 
For more information on this or other research topics, please visit
The content & opinions in this article are the author’s and do not necessarily represent the views of RoboticsTomorrow

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