Posts Tagged ‘AS/RS’

Always, Always, Always, Plan for the FUTURE!

Tuesday, October 13th, 2009

 

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.

The Good Salesperson

Tuesday, April 21st, 2009

 

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.

Payback: Labor vs. Technology Costs

Tuesday, February 17th, 2009

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.