Everyone likes to see how they’re doing vs. their industry peers.  This isn’t just a natural urge to compare yourself, it’s a vital part of doing business.

Benchmarking, at the heart of it, is comparing your performance to others like you. You look at your business processes and outcomes, and how they stack up to the performance metrics of industry leaders, your peers, and the best from similar operations. In warehousing, it is particularly important to understand where you are, and where you could be with reconfigurations, tweaks, and innovations that others are using to improve their numbers.  What do you specifically measure? Typically this can include quality, cost, and time. Specifically, it can get much more complex.

At the end it helps you understand the success of your peers and how you can reproduce that success.

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President Obama’s State of the Union address focused on manufacturing in the United States – which everyone, no matter their political persuasion, can agree is a vital part of our economy. Countries that don’t make things aren’t world powers, period.

And the numbers, on the surface, can look dire. According to Forbes Magazine,  22 million manufacturing jobs were lost globally between 1995 and 2002. The U.S. lost hundreds of thousands of manufacturing jobs in that timeframe.

The common belief is that these jobs were palletized and shipped east to China or south to Mexico. While that has happened – we’ve seen it in our client base more than once – it’s only part of the story. The reality is more complicated, and may help us to understand why manufacturing output has increased in the U.S. while jobs have been reduced. Manufacturing output didn’t just grow; it rocketed 30% since 1995. China – the supposed vampire of manufacturing employment – has lost a whopping 16 million manufacturing jobs.

In a word, the “culprit” (if you want to call it that) is automation. Robotics is less expensive and significantly more capable – and continues to improve. The same goes for other automation of other kinds.

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The end of a manufacturing or distribution line is where the rubber meets the road for many operations. It’s potentially the last place where you have direct control of your product before it ships to retailers or direct customers. It’s where you can add a lot of value…or spoil a lot of value. The end of the line in many ways is more important to your company’s image as all its public relations, its websites, its brochures. It is often where your reputation can be made.

At the end of line, we package, we palletize, we stretch-wrap, we inspect, we ship. And we have the chance to add value.

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In the last two decades, smart companies have identified the warehouse operation as a profit center, not a cost center. This is far from universal, but it inches toward that every day. No longer are warehouse managers considered box-hustlers – at least not in smart companies. Many are utilizing varying levels of automation. WMS is standard for larger operations and is making its way even to single-building, midsize and smaller ones.

Very few operations of any size rely completely on muscle, clipboards, carts, and spreadsheets these days; automation, at least in areas, has come into its own. But do you need to radically change your operation (and spend the capital that comes with that change) to boost warehouse productivity?

Some no-nonsense steps:

• Evaluate warehouse processes. Is each part of the process logical? Process mapping can be done without expensive consultants, either by hand or with relatively inexpensive software. The discussions you’ll have with various department heads and people on the floor are often worthwhile by themselves. Look for gaps in the process you can plug. If packers point to picking issues that cause them problems, you have a place to start.
• Create a plan – and stick to it. Identifying issues isn’t enough by a long shot, of course. Companies who identify issues and then fail to plan and execute based on them are only talking improvement. Execution is the key.
• Be determined; bullheaded. Once you’ve identified, planned, and executed a process improvement, you should be able to understand its effect on the operation. If the result of our hypothetical issue between packers and pickers is that packers are better off, but order picking bogs down (or becomes less accurate), we haven’t achieved anything.

Spending money

But you can’t always attain significant increases without capital expense. You may need to implement robotic palletizing, enhanced WMS, etc. “Productivity gains” mean little to CFO’s or other upper level managers, though. They’re interested in dollars – how many were spent, how many were saved, and how fast the investment returns its value to the operation.

ROI isn’t simple math

Do you know your company’s definition for ROI? If you don’t know what it is, find out. It varies throughout companies and industries. A simple line item of my cost of $X saved $Y may not be good enough. In many firms (including Cisco-Eagle) the standard is to also compare that expenditure to what else could have been done with the money, including letting it drop to the bottom line. Prove your idea will pay off better than alternatives.

Can you show that a new conveyor system or picking system costing $600,000 will reduce labor costs enough to pay for itself within a reasonable time? Sometimes this is easier than others. If the system helps you reduce headcount by 10, and each person earned $30,000 per year, you get a rough idea of what you are faced with. But if the system simply allows you to keep up with growth, your justification scenario is easier. Can you also prove that your new idea is going to pay off better than, say, letting that money drop or better than an IT overhaul or other alternatives?

Cisco-Eagle has partnered with Seegrid to offer automated, unmanned industrial pallet and tow trucks as part of our continuing focus on automated storage systems.

• Seegrid Automated, Unmanned Pallet Trucks & Tow Carts

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In the not-too-distant past, most companies that weren’t running immense distribution operations, who didn’t have multiple facilities, who didn’t run 24-hour shifts, didn’t even consider automation. Too expensive, they’d say. Too much risk. Too little upside if things go wrong.  All valid in context, if we were in 1998. But the reality is this: While most costs—personnel, land, energy— have increased, automation costs have remained steady or declined across the board. The reality today is that the four guys stacking pallets at the end of a line, even for a single shift, even at low wages, are more expensive than a well configured palletizing system.

Those costs aren’t going to do anything but escalate, either. Listed are ten ways automation has become more relevant, even to mid-size operations:

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In this video, a Fanuc robot is executing mixed-load palletizing of beer cases at a distribution center.

In this operation, differently-sized beer cases are conveyed to the robot to fulfill a specific order. Since the cases vary by width, length, and height, their dimensional information is sent to the robot by the WMS (warehouse management system). The robot utilizes mixed-load palletizing software to determine the best pattern to build a pallet with the available products, achieving high density and stack stability with rapid speed.

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