One common mistake that is made is to let density drive your design process.  Density is the ultimate goal, but focusing on operational efficiency is more critical.  Putting a system in that does match your operation may yield more pallet positions on paper, but in reality, can actually produce significantly less than anticipated.

“Pigeon Holing” as it is called can occur when the design does not match the operation.  This is where product cannot be stored in the manner in which it was designed.  This creates holes in the storage density and does not allow you to take advantage of all the positions you have created.

A common comparison is one that centers around two high density approaches, Pushback rack and Drive-In rack.

Pushback rack is where each pallet resides on a series of trays within each pallet location.  Every subsequent pallet that is placed in a particular location has the ability to “push” the previous pallet back one location.  This allows multiple pallets of the same SKU to be housed in a very dense fashion.  Pushback is an ideal LIFO (Last In First Out) storage layout.  It also allows for more pick facings giving you the ability to store a larger number of SKU’s in a given aisle.  The ideal application is one where you have multiple pallets of the same SKU that need to be stored and retrieved in a medium paced operation that does not require a FIFO (First In First Out) methodology, e.g. non-perishable items that do not have a short life-span.

Comparatively, Drive-In rack creates lanes down an aisle that allow a lift truck to travel into the lane to store product.  This is the densest storage media available.  However it has its limitations.  Only one SKU can be placed in a lane.  Once the lane is loaded, pallets must be pulled from the front backwards.  Once a pallet is removed, deeper pallet will not be available if you load the empty position back up.  So, to gain access to the back pallets, you have to leave the front positions open.  This reduces your ability to take advantage of the density you have created.  The ideal application for Drive-In rack is where you load a lane and flush that lane in its entirety.  Fast moving operations can benefit from this design.

The bottom line is: Don’t be driven by maximizing pallet positions at the cost of the efficiency of your operation.

To view this article, please follow the link below:

http://www.themhedajournal.org/content/4q09/stillhere.php#sas

All too often companies struggle to keep up with their warehousing and distribution needs.  They react to problems as they arise and defer to capital as the driving force for not investing in a forward plan.  The result is a disjointed operational process flow and a material handling system that doesn’t fully meet current needs let alone allow for future growth.

Take time to look ahead.  Anticipate adjustments you will have to make to ensure that your system will meet your needs.  As you evaluate options, always design so that as you grow, your system can grow with it.  The worst thing you could do is design yourself into a box, needing to constantly re-do work that has already been done.  This will increase the project cost as you lose your initial investment.

This is the value that a systems integrator brings.  The ability to bring a multitude of experience and expertise across a wide variety of industries to assist you in managing your short and long term challenges.

Without argument, if you have a facility that is currently using Metal Halide, Mercury Vapor or High Pressure Sodium, you need new lighting.  The great thing about it is that very often, these are self funding projects.  Yes, you heard me correctly.  You can put new lighting in at no cost to your company. 

Each month you get a bill from your energy company.  You have to pay this bill otherwise your power will be cut off.  Using new lighting technology will lower your lighting costs up to 75% under the right circumstances.  If you pay $10,000 a month in lighting costs and that is cut in half, the $5,000 savings will pay the lease payment.  There is no impact to your cash flow.  Once you pay off the lights, you’ll be putting that $5,000 right to the bottom line.  That is essentially increasing your net revenue by $60,000 a year.  In this economy, more revenue certainly isn’t a bad thing.

There’s more.  The federal tax credit has been extended.  That means that you can take up to $.60/sq. ft. up to the cost of the project as a credit to your taxes.  This can mean big money, lower the cost of the project and improve the payback period.

It just doesn’t make sense not to change your lighting.  Period.

1. Change out your lighting – Switch from old Metal Halide or High-Pressure Sodium lamps to new T5 florescent lighting can save your company up to 50-75% in electricity costs.
2. Install air curtains – If your facility is either heated or cooled, install air curtains on all dock doors.  This will help minimize the amount of energy you are using to heat or cool your facility.
3. Maintain your equipment – Properly maintain your equipment will ensure that it is operating at optimal levels, minimizing the need for parts and service over the long run.
4. Recycle –If your facility produces a lot of corrugated cardboard waste, buy or lease a compactor.  Selling bundles of waste can generate extra revenue and protect the environment.
5. Install impact devices – Install impact devices on your lift trucks.  This will help minimize damage to the facility.  It will improve overall safety, lower replacement/damage costs and identify the culprit.
6. Keep your floors clean – Debris is one of the leading causes of pedestrian accidents as well as damage to wheel assemblies of lift trucks.  Keep your floor clean and your trucks and people healthy.
7. Reduce your box size variety – Lowering the number of box sizes you use.  This will give you greater purchasing power as you will buy more of a smaller range of sizes.  Use low cost dunnage to fill any voids between product and package.
8. Evaluate every step in your process – Do not overlook even the smallest step in your distribution process.  There is a tremendous amount of technology available the can handle each part of your operation.  Take a long term view, initial capital expenditure can have a quick payback if applied correctly.
9. Continuous Training – Turnover in our industry is generally high.  Have a structured training program to get new employees up to speed quickly and reinforce operating principles to existing employees.  There can be substantial productivity gains and reduction in damage if your employees are well trained.
10. Make smarter purchases – Purchasing improperly specified equipment will cost you money in the long run.  Do not overlook what you are buying.  Price alone is by far the worst metric for evaluating equipment.  Whatever you are buying, you can find that product at whatever price point you have in mind.  However, be aware that spending more upfront for a more robust solution will save you money in the long run. 

To be honest, I can’t stand salespeople.  They drive me nuts.  I know what I want, I don’t need their help and I do not want someone forcing a product on me that may or may not be the best suited for my needs.  This sentiment doesn’t surprise me, our culture and experiences have trained us to be weary of salespeople.  They bother you by mail, on the phone and when you walk into a store.  Frankly, it is just plain annoying.   However, salespeople can be more than just annoying, they can be unethical.  Many of us have been burned by an unethical sales approach.  We have bought into a ‘pitch’ only to find out that we had been taken advantage of or that we bought something that really doesn’t do what it is supposed to do.  It is unfortunate, but there are a lot of very able salespeople that make this approach a common practice and apply their skills in an inappropriate manner.  This is why I don’t blame the client.  They have been given every reason not to trust salespeople.

The real irony of this article is that ‘technically’ I am a salesperson. 

 However, the real shame is that not all salespeople are what they are perceived to be.  There are a lot of us out there that always have the client’s best interest at heart.  No matter what the client’s issue is, it’s more about solving it, than trying to make a product fit a solution it is not best suited for.

One advantage that I have is that by being a material handling systems integrator, I am not a distributor of one particular brand of product.  My company has established relationships with multiple manufacturers.  This allows us to select the most appropriate mix of products to create the best solution to a client’s issue.  We don’t have to explain why our brand is better than ‘their’ brand.  We can explain how, through analysis and industry expertise, we recommend a particular solution.  We analyze the strength’s of the manufacturer’s product against the needs of the client.  I love this approach.  It is more consultative approach then a sales approach and I can add value to the customer’s operation.

So what’s my problem?

I have to fight even harder to overcome the initial wall that is built in front of me that protects the customer from the dreaded ‘salesperson’.  It is amazing the level of distrust a customer can have during the initial stages of your relationship.  They shake with their right hand and have their left on their wallet.

Do we make money?  Sure we do, every company needs to make money to pay employees and keep the lights on.  However, just because someone is making money on a transaction doesn’t mean you aren’t getting value from it as well.  Not only is there a lot of time in the proposal phase just to be awarded the project, but the company has to successfully execute in order to re-coop the costs of the time, risk and intellectual property offered during the pre-sale process.  Many salespeople looking to ‘close the deal’ may compromise their company’s ability to successfully execute the project by slashing budgets to be the low cost provider.  True value on a project is only recognized after a project is commissioned.  At that point it becomes clear whether the promises or claims made during the sales process were merely a ‘pitch’ or an actual reflection of a company’s ability and strengths.    

What’s the bottom line?

Not all salespeople are ‘out to get you.’  Judge the individual, not the title. Let someone help.  You might be surprised at the benefit you receive.

Green lighting is one of the simplest ways to make your operation greener.  Not only does green lighting produce better quality light, you’ll be surprised to know that it IS cost effective and can have a tremendously short payback period.  Historically, facilities are outfitted with Metal Halide or Sodium bulbs.  Represented by obnoxious and large fixtures, these bulbs take up to 10 minutes to warm up and produce a terrible, yellow light. 

In comes the green revolution.  High output lighting, commonly referred to as T5, T8 or T12 lighting is providing companies with an alternative that has immediate impact to the bottom line.  They have so many advantages it’s hard for companies to find excuses NOT to justify them.

Comparison

Data Source: Westinghouse Lighting Solutions

BEWARE!!  Not all High Output systems are the same.  There is more to the science of lighting than the just the bulb.  Reflectors play as large a role as the bulb, directing the light in the right area maximizing every lumen you are producing. 

The approach of a quality lighting provider will be to match the right light to your application and facility layout.  Matching the right bulb and the right reflector will maximize your efficiency and increase your savings. 

**Keep in mind that many states are also offering tax savings for converting your current lighting to high efficiency lighting.  Check your state laws to see if your business qualifies.

Let South Atlantic Systems Group be your partner and show you how Going Green can save you money.

Material handling technology is positively impacting the way we store and distribute product.  Implementing technology solutions reaches beyond lowering costs and increasing work flow, companies also benefit from improved customer service, more accurate shipping, faster response time and lower liability of workplace incidents. 

Warehousing and distribution functions have always been considered as nothing but a corporate cost center, a necessity for doing business.  But in today’s global economy, competition is driving margins continually downward and you can only raise prices so much before you out pace the market.  It is for this reason that companies must look at any area where costs can be reduced without sacrificing their quality or service levels.  By reducing your distribution costs you add net dollars to the bottom line, effectively creating a profit center from what once was a cost center. 

The most significant cost factor in any warehousing or distribution operation is labor.  And it is labor that should drive the return on investment (ROI) analysis prior to any decision as to whether or not to purchase technology.  Salary, benefits, training, insurance and the transient nature of the typical warehouse employee are all costs that exist in perpetuity…They never go away! 

So, why do companies hesitate to spend money on technology, opting to increase labor instead?  Many times it is because labor costs come out of an operating budget where technology comes from a capital expenditure budget.  Distribution center managers, who request funds for technology, have difficulty persuading upper management that the expense is justifiable.  If they hire more workers, the added expense is less scrutinized.  The mentality is, “We’re doing more business, so we need more people to get the product out the door…that’s understandable.  Frankly, I’m glad we’re doing so well!”  It’s not an irrational perspective.  However, companies must eventually realize that spending money for operational improvements and depreciating them over time can be much less expensive and improve effectiveness in the long run. 

Let’s look at a theoretical example: 

·         Picking orders in a paperless environment can  generate picking rates of between approximately 50 and 200 picks per hour, per operator based on the density of the pick locations and concentration of picks (i.e. 6 items of product A vs. 2 items each of A, B and C). 

So…

·         30 employees picking at 200 picks per hour (high end of the range) could pick 48,000 lines per day.

·         Each employee makes $14.00 / hr + benefits; 25% of salary (basic health, workman’s compensation and liability) = $17.50 / hr.

·         30 employees, 2080 hrs/year at $17.50/hr = $1,092,000 per year in salary costs.

·         A Pick-to-Light process which visually directs the picker to a location and directs the pick requirements can generate conservative rates from 300 picks per hour and up depending on pick density.

·         At 300 picks per hour it would take only 20 workers to pick 48,000 lines in an 8 hour shift.  (48,000/300/8)

·         A small system of 2500 lights where one light is assigned to each location would average around $250.00 per light including all fixed costs would be $625,000

·         Saving 10 employees = $364,000 in savings per year

·         Payback would be less than 2 years.  This cost is reduced by the use of one light bar to cover 2 sku positions (above and below); your payback would be less than one year.

Keep in mind that this only covers the direct costs.  Operationally, moving to a pick-to-light system increases the ease in training new employees, allows for a greater pick zone to be created, reduces employee turnover by simplifying the picking operation and improves picking accuracy to rates above 99.5%

Bottom line:  Sometimes you have to spend money to make money.

Protecting Your Rack

Rack is an expensive asset.  Even with steel prices at a low point, a rack system still represents a large percentage of your warehouse investment.  When you make that investment, you want to protect it.  Unfortunately it is common practice to overlook protection for your investment on the basis of cost.  This is a slippery slope.  Protection is inexpensive as a percentage of your total rack project.  Don’t forget that the cost to repair or replace damaged uprights and beams will quickly justify the upfront cost of protection.

What kind of protection is available?

1. Rack guards – There are many types of guards available on the market, from individual upright protection to end of row protection.  They come in all shapes and sizes and should be tailored to the type of lift truck your operation employs.
   1. Post protector – Comes in many varieties, mostly rounded or angled to deflect impacts.  Comes in a variety of material including steel and plastic
   2. End of row – Protects the entire width of the upright, usually curved around the front of the upright at the entry point of the aisle
   3. Bollard – Multi-functional free standing post to create a protection barrier
   4. Guard rail – Is used in a number of manners.  It can be used to create a safe walk way for pedestrian traffic or to protect sensitive equipment that is exposed to potential truck damage
2. Driver training/responsibility – Making sure that your drivers are well trained and understand that there are consequences to poor performance can be a great deterrent.
3. Shock Switches – These are modules that are installed on your lift trucks that will disable the truck if it impacts anything.  The only way to enable a truck is to have a supervisor do so.  This will make sure that your drivers are more conscientious as the work in the warehouse.