How Do Semi-Automated Storage Solutions Stack up Within Europe?

How do semi-automated storage solutions stack up within Europe?

A background on how semi-automated storage solutions have evolved, and why technology, worker’s legislation, changing timescales and buying landscape has created the need for semi-automated storage solutions. This paper looks at the challenges faced by the logistics industry, from manual labour through to full automation, and asks whether automation is the answer in every location. And, more importantly, whether it will help to address the biggest problems faced by the industry today.

vuodesta 1886 LLEADINGEADING TTHEHE SSEMI-AUTOMATEDEMI-AUTOMATED RREVOLUTIONEVOLUTION

Constructor Group is one of the world’s leading developers and manufacturers of storage solutions. We are proud to work for some of the most famous brands in the world, as well as many dynamic and pioneering SMEs. With a rich heritage, stretching back 150 years, our products have been used in everything from Olympic stadiums to earthquake relief.

Constructor Group has a global reach, but offers regional expertise and delivery through its subsidiary companies, which include other leading brands such as Dexion, Kasten, Bruynzeel, and PSS. As an international business, we don’t just manufacture and sell shelves, we empower our colleagues to be creative and take the time to understand the demands of different global industries in order to ﬁ nd the best solution for you.

Whatever the challenge, we make it work. How do semi-automated storage solutions stack up within Europe? WHITE PAPER

TTHEHE SSITUATIONITUATION

Pallets, forklifts and people have been the essential components desires and expectations of both employees and customers for every warehouse for over 100 years. Although both of the have grown beyond recognition, and it becomes clear that our ﬁ rst two aspects have evolved since then, the logistics industry approach needs to evolve. today is still heavily reliant on the one component that hasn’t This paper looks at some of the challenges we currently face, evolved – people. and examines solutions that could ensure our survival for the Of course as many company’s state, people are their biggest next 100 years - and beyond. asset. However, in these lean, competitive times, they can also be their biggest cost. Add in the fact that the needs, wants,

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YYOUOU WWANTANT IITT WWHEN?HEN?

AALLLL PARTPART OOFF TTHEHE SSERVICE!ERVICE!

Want one item, in multiple sizes and colours, to try on and return, all at no extra cost?

YYESES OOFF PPLEASE!LEASE! CCOURSE!OURSE!

Same day Delivered to delivery? your door?

Even ﬁ ve years ago these demands Someone sitting on a bus, train or on their the scenes to get their purchase to their would have been seen as outrageous, sofa with a smart phone in hand gives no front door. They just know they want it, but today they are expected. thought to what needs to happen behind and they want it now.

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A TIMETIME FORFOR CHANGECHANGE

The old adage, you snooze and you lose deliver before they click to buy. Now that has never been more relevant, particularly would be challenging. in the logistics business. Companies If Bob Dylan thought “The Times They have to adapt their operations to keep up Are a Changin’” when he penned his with consumer demands. But adaptation multimillion-selling song back in 1964, requires investment. And with smaller the title of another award-winning song, proﬁ t margins and increasing stafﬁ ng “You Ain’t Seen Nothing Yet”, also springs costs, a balance needs to be found. to mind. Automation within the logistics industry has enabled many companies to keep pace with demand, but full automation requires serious investment. Not every company needs it and as we have discovered, not every country is ready for it.

It is diffi cult to say what customer expectations will be when it comes to delivery in fi ve years’ time. With the way technology is going, maybe someone in Silicon Valley is working on fi nding a way to get inside the customers’ head to

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AAUTOMATION:UTOMATION: THETHE SSTATETATE WWE’REE’RE IINN

A quick browse online indicates automated their storage process is of the workforce. On the face of it, that automation is the only way dead in the water, or at the very least this is a win-win situation as this alone forward when it comes to warehouse left struggling to survive. would alleviate two problems in one: operations. Countless articles, shortage of people willing or able to The proponents of automation claim thought-pieces, advertisements and work in the industry, and having to pay that one of its main beneﬁ ts is that it press releases breathlessly imply that higher wages to those who do choose will drastically reduce the headcount any company that has not yet fully it.

AAUTOMATIONUTOMATION DDEFINEDEFINED

The Chambers Dictionary deﬁ nition of Some examples include: automation is as follows: 1) Bar-Code Scanning has been used for decades, and remains the most commonly used form of warehouse automation. 2) Voice-Directed Picking has been around since the 1990s. automation noun The use of automatic machinery in manufacturing and data 3) Pick-to-Light Systems have been used for order fulﬁ lment since the early -processing, so that entire procedures can be automatically controlled with minimal 1980s. or no human intervention. 4) Horizontal and Vertical Carousels and Vertical Lift Modules. 5) Automated Storage and Retrieval Systems (ASRS).

As the deﬁ nition implies, automation isn’t ASRS is the most comprehensive of these, with the ability to be used across just about robots and drones. Automation, many functions including assembly, order picking, distribution, storage, waste or at least automatic machinery, is not handling and replenishment. The market for it is therefore huge. According to new. It comes in many forms and is Marketsandmarkets.com, the automated storage and retrieval system (ASRS) already the mainstay of most warehouse market is expected to grow from USD 5.19 Billion in 2015 to reach USD 8.43 operations. Billion by 2022, at a CAGR of 7.1% between 2016 and 2022.

RREASONSEASONS TTOO AAUTOMATEUTOMATE

Automation has moved up the agenda for a number of reasons: Changing demographics in the labour market has increased labour costs, the changing ways in which customers are shopping and the ever present need for more efﬁ ciency, productivity and overall cost reduction.

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RRISINGISING LLABOURABOUR CCOSTSOSTS

As Figure 1 shows, in January 2016, 22 out of the 28 EU former Yugoslav Republic of Macedonia, Serbia and Turkey also Member States had a national minimum wage. The exceptions had them. were Denmark, Italy, Cyprus, Austria, Finland and Sweden. In As you would expect, these monthly minimum wages varied addition, candidate countries such as Albania, Montenegro, the widely, from EUR 215 in Bulgaria to EUR 1923 in Luxembourg.

Figure 1: National Minimum Wage Across the EU Member and Candidate States in January 2016

With staff costs being the biggest 5% 80% overhead for the majority of warehouse operations, a recent report by DHL Just 5% of current 80% were being included two surprising statistics: warehouses are automated manually operated with no supporting automation

The report, Robotics in Logistics, did go constantly improving IT.” was in large sorting hubs, where there on to say that the latter were dealing may still be more than 1,000 employees It also added the comment that even with demands for increased productivity who spend their time loading and among the 5% claiming to be automated, and throughput “by supporting existing unloading trucks, handling parcel ULD “even the most highly mechanised workers with good layout design, mobile containers, and manually sorting odd- environments still had to employ people material handling equipment, and sized items. in key functions.” An example they gave

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TTHEHE PPEOPLEEOPLE PPROBLEMROBLEM

In addition to labour costs, the industry also has a problem with and cold storage operations conduct warehousing activities in its image. Despite the best efforts of recruitment agencies and sub-zero temperatures, it is easy to see why there is a dearth of careers advisors, the perception of many is that they would be quality applicants of any age. working unsociable hours in a cold and dirty environment in Most of the problems faced by the industry in relation to the a poorly paid, dead-end job. Add to that the belief that it is an workforce can be broken down into three major areas: unwelcome place for women, and the majority of frozen food

AAGEINGGEING POPULATIONPOPULATION UUNWILLINGNWILLING PPOPULATIONOPULATION DDIFFERENTIFFERENT SSKILLSKILLS RREQUIREDEQUIRED Order picking is a very manual job. As anyone who works in the sector The DHL report suggests that as knows, many warehouses and Any automation of processes brings a traditional warehouse employee distribution centres have been with it the need for a new set of skills. typically spends most of his or her transformed over the past decade or In the warehouse environment it time walking around the warehouse so. Unfortunately, those who don’t work means understanding of and getting to gather all of the items for an order, in it still think of warehouses as being to grips with new technologies, the a picker might walk between seven an unattractive workplace. A report by ability to adapt to new ways of working, and ﬁ fteen miles per shift. With the PwC Transportation & Logistics 2030 and in many cases accepting that state retirement age rising in many found that many young people, as omni-channel operations are here to countries, there can’t be many people well as more senior managers, did not stay. in their 60s willing and/or able to do even consider applying for a position this day-in day-out. in it.

So what is the reality? Is automation the answer in every location?

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CCOULDOULD SSEMI-AUTOMATIONEMI-AUTOMATION BBEE TTHEHE SSOLUTION?OLUTION?

Many companies are taking a wait and Examples of these include: Pallet see approach before diving headlong Shuttle Systems, which increase storage into investing in a fully automated capacity, save time and reduce operating environment. costs, and Mobile Pallet Racking systems, which have a guaranteed operational In the meantime, they are also making safety at temperatures as low as -30°C use of semi-automated solutions, which and can carry bay loads of up to 24 tons are designed to reduce some of the most at racking heights of up to 12 metres. labour intensive tasks, such as order- picking.

WWHATHAT IISS SSEMI-AUTOMATION?EMI-AUTOMATION?

In summary, semi-automation is driven by humans, but brings in elements of technology to improve efﬁ ciency.

FFULLULL OROR SEMI-AUTOMATION:SEMI-AUTOMATION: TTHEHE PPROSROS AANDND CCONSONS

FFULLULL AAUTOMATIONUTOMATION SSEMI-AUTOMATIONEMI-AUTOMATION Semi-automation can be retrofi tted to an existing facility and it Full automation usually requires a very specifi c fl oor plan. has a bigger balance between people and software. You can also have pick zones in it.

High cost - £8m is not an unrealistic budget to expect for a Reduced costs, easier to implement, more ﬂ exible, less risk, completely new build. stronger power of return.

Semi-automation is the best way to make better use of the space It’s completely software driven (not relying on people as much as available, maintaining the people you have and if things don’t in software) and if it goes down, the whole system goes down. fully work it’s much more amendable.

It can take up to 2 years to put a fully automated system like this Semi-automation is still a manual solution, in a way, but brings in place. elements that automate the solution - conveyors, etc.

Semi-automation can be conﬁ gured so that at some point in the future, and if necessary, clients can move seamlessly to a fully automated state.

The return on investment is quicker. The window for semi- automation is more or less two years.

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Cristian Androne, National Sales Manager for Dexion in Romania says that the market in Romania is at a very SSPEAKINGPEAKING FFROMROM EEXPERIENCEXPERIENCE different stage to many other European countries. Is automation a universal desire, or does it vary from country Many of our customers have little to country? We asked some of our managers in Europe for or no experience with semi-automated their experiences. solutions and as a result they are not sure they can trust electronically operated systems.

However, that is changing as they In Germany, Klaus Vay, Head of Sales Department South for Dexion, says that: hear about or see automation in use elsewhere. Those who are looking for It often comes down to space. If a or too complex. All customers want a future-proof solution and have the customer has lots of space and no need fl exibility, so if there’s a semi-automated fi nancial power are beginning to realise for special climate conditions, then solution can provide that, as well as what a difference it can make to their they don’t tend to see as much need for the other benefi ts of effi ciency and time operations and some of them have fully automated solutions. saving, then we can make it work for already started to invest in automation. them without the huge investment that full There’s also the question of costs. Many This has been particularly noticeable in automation involves. believe that it is simply too expensive the last two years.

Mark Cummings, UK General Sales Manager Marek Skibinski, Managing Director for for Dexion, says that there are regional Dexion Poland, says that his customers’ differences too: needs are quite different. In my experience the European market is In Poland, our customers are often just more receptive to automation. Countries like starting their business. They are small Germany, Holland, Scandinavia and Spain and want to be as ﬂ exible as possible, have been buying semi or fully automated so prefer a system such as MOVO as it solutions for many years. In the UK some is ﬂ exible and can be easily adapted to remain nervous about automation, although potential changes in their business over the mind-set is changing as new people enter the years. the Logistics industry.

He goes on to say that after joining the EU, Poland received a lot of EU subsidies dedicated to different sectors.

A lot of subsidies were targeted at the food industry, such as farmers (direct subsidies), other agriculture and food processing companies. This has led to further investment into the food industry and today export of Polish food is growing by 25% annually.

This growth has driven the food industry to invest in new infrastructure, including new warehouses that have adopted semi-automated storage solutions.

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SSEMI-AUTOMATIONEMI-AUTOMATION IINN AACTIONCTION CCASEASE SSTUDYTUDY

How does a company know when it’s dilemma: soaring production costs and an hampering their ability to keep pace, time to invest in semi-automation? inability to grow with market conditions. let alone grow the company. A decision The following case study from Dexion Both of which made it vulnerable to more was made to introduce new production provides a good illustration. effi cient, lower cost manufacturers. lines in their four sites over a fi ve-year period. This would increase effi ciency A major soft drinks producer with over a The Board recognised that their lack and capability, and double their potential billion Euro turnover had reached a point of investment in production lines over output. where they were faced with a double the previous 15 years was seriously

TTHEHE SSOLUTIONOLUTION The company was mainly using Drive-in racking. To help them decide whether to fully automate or semi-automate, Dexion simulated a fully automated solution, incorporating pallet conveyor feeds, lifts, AutoSAT MOVERS and despatch lanes as well as the semi- automated solution which was chosen for the test site the company had chosen for a trial.

TTHEHE MMETHODETHOD The decision to choose Dexion’s semi-automated Shuttle system solution was made as it offered the following beneﬁ ts: ▪ Shuttle system has advantages over Drive-in as it could manage increased levels of pallet movements with limited increases in staff overhead. ▪ The footprint of the solution is similar to Drive-in, so existing infrastructure could be utilised in most cases. ▪ The solution is adaptable to increases in production with the introduction of additional shuttles or added features. ▪ Rack damage and therefore loss of locations is reduced substantially. ▪ Longer lane depths of up to 35 pallets deep could limit queuing times and accommodate batch runs of products. ▪ A ‘demo’ lane was installed into the site to allow operatives to familiarise themselves with the solution and gain acceptance.

TTHEHE RRESULTESULT ▪ The target of over 240 pallet movements was achieved. ▪ Total number of pallets stored in 2 blocks totalled 15,393.

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CCONCLUSIONONCLUSION

Can the logistics industry continue its intelligently predict its own maintenance upward trend? Will it keep pace with needs. A connected street light can customer expectations on delivery? sense the presence of cars and send Is there anything that can be done to environmental intelligence to drivers. increase the availability of good quality However, there are always going to be staff? some tasks that can never be automated: Automation is now part of our everyday a word of encouragement to a colleague, lives. From self-scanning tills at the a pat on the back from a manager, or supermarket to contactless payments going the extra mile for a customer. But for on public transport, we have come to most other things where speed, precision accept these developments as the norm. and analytics are needed, automation, to But these are small fry compared with some degree, is here to stay. what is in store. A fascinating report by DHL/Cisco outlines the possibilities that For those companies who are the Internet of Things [IoT] brings to the unwilling or unable to make the logistics sector. transition to full automation, A connected pallet that can tell its owner the whereabouts and condition of their semi or partial automation shipment. A connected truck that can can, and is, ﬁ lling the gap.

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AANYNY QQUESTIONS?UESTIONS?

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RREFERENCESEFERENCES

1) Dexion Website 2) https://www.pwc.com/gx/en/transportation-logistics/pdf/pwc-tl-2030-volume-5.pdf 3) Latest edition in the DHL Trend Research series 4) http://www.eurocommerce.eu/media/86151/omnichannel_policy_guidance_ﬁ nal_mar_2014.pdf

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