Over at the Operations & Fulfillment site, Curt Barry has written a brief, informative piece on reducing warehouse costs. In particular during a difficult economic climate, cost reduction is at the top of mind for distribution operations.

Here are some of the quick tips from that piece…

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Conveyors, like any capital investment have multiple costs. The amount on your invoice is hardly the last time you’ll pay for that conveyor. If a conveyor is correctly specified and designed for future use, significant cost savings can be realized.

The three costs:

• Initial costs – the easiest to understand and quantify. This is the cost of equipment, installation, and controls.
• Operational costs – electrical usage  & pneumatics usage
• Maintenance costs – Spare parts, replacement parts, & labor costs

All of these costs are spread over the conveyor’s useful life, so a formula that might best express what your conveyor will cost is: TCO (total cost of ownership) = IC (initial cost) + OC (operational costs) + MC (maintenance costs)/ useful life of the system.

Higher initial costs may be recouped in lower maintenance and operational costs over time if the right decisions are made when the equipment is specified and ordered. The initial cost savings can be eaten up by higher operating and maintenance costs, but neither of those is as expensive as a system that cannot do the job it was deployed to do. Long term costs can easily outstrip the initial costs. What are the real, long term costs and what can you do to control them?

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Do your line employees help extend the life of your conveyors? If you don’t know the answer to that question, it’s probably “no.”

Employees are the first line of defense when it comes to minimizing maintenance problems, according to Cliff Holste at Supply Chain Digest. Are you adequately preparing them to fulfill that role? Are they trained, equipped, and encouraged to help you prevent issues with conveyors and other equipment? Past the jump, a couple of ways to help your line workers become more aware of ways to keep your systems running…

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This is great news for small business. How great?

All businesses that purchase or finance less than $800,000 in business equipment should qualify for the Section 179 Deduction. To qualify for the Section 179 Deduction, the equipment purchased must be placed into service between January 1, 2010 and December 31, 2010. The list of qualifying equipment includes machines purchased for business use, vehicles, computers, and property attached to your building that isn’t part of the structure (essentially, most material handling equipment). For more information, check out the Section 179 website – it has lists of qualifying companies and an online calculator that helps you figure out your position. As always, see a tax professional to ensure your company and purchase qualify.

Please Note - The HIRE Act does not extend the 50% bonus depreciation that was available in the 2009 tax year.  We’ll let you know if there is movement toward extending that credit.

• www.section179.org has calculators and detailed equipment lists to help you understand how this may affect you.
• Crest Capital Section 179 Calculator

(Videos after the jump)

Vertical Carousels have always been one of the most efficient ways to improve order picking productivity while saving floor space, but they have always been an expensive proposition. Automated carousel systems have their place, and can provide a high return on investment in the right application, but there are lower-volume applications, or specialized operations where a manually controlled vertical carousel may offer the productivity enhancing & space-saving advantages without the higher cost of automation. These carousels are good for operations where it is desirable to minimize forklifts &  ladders usage for a more ergonomic functionality.

So, when is the right time to use a manually controlled system?

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When you are moving items such as cartons, bins, or components through a facility, several methods are available. Most of the time the choice is between non-powered carts & trucks or conveyors, whether power or gravity. (If you’re moving pallets, there are other methods and issues). Generally, conveyors deliver a less manual, safer operation with added efficiency across the board. Products are moved faster and fewer employees are required to accomplish the same tasks. Conveyors minimize fatigue and reduce potential manual lifting injuries. This improved handling has the potential to reduce worker compensation claims and expenses

But when do you make the leap from a manual, cart-driven system to a conveyor transport system?

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Implementing an energy-efficient lighting system can make your facility much brighter overall, and in particular, it can brighten those dark ‘canyons’ between rack rows.

It also saves you money on utility costs. In a large distribution center, the daily cost savings is significant, even before you factor in enhanced productivity due to an overall better working environment. But it gets better: Under the 2005 EPACT law, you can deduct the entire cost of a new lighting system, up to 60 cents a square foot if the system reduces lighting power density below he maximum allowable lighting power densities listed in ASHRAE/IES Standard 90.1-2001, and if a few other requirements are met. This typically results in a much lower cost of ownership and a very quick return on investment.

Oh, and combined with other energy saving upgrades to your facility, that 60 cents could climb to $1.80 a square foot.

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E24 Powered Roller Conveyor from Hytrol has become very popular with conveyor users due to its advantages over conventional conveyor and motorized rollers.  This quiet, energy-efficient conveyor fits the green mode that many operations are following, and can deliver exceptional flexibility, superb heat dissipation, and a robustness that cannot be achieved with motors embedded in conveyor rollers.

Below are two examples of  creative application of E24 technology…

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WERC (Warehousing Education and Research Council) has announced its 2010 Annual conference, geared for the needs of warehouse and distribution management. The conference is set for May 16-19, 2010. The WERC conference offers on a strong educational program for warehousing/distribution professionals from long-time to just-starting-out. Practitioners, subject matter experts, industry suppliers and academics freely share their experience and ideas. You’ll walk away with new insights on the best ways to optimize resources, maximize productivity and optimize performance. For more information or registration details, visit the official WERC site.

The age-old argument of top-versus bottom-driven horizontal carousels comes up all too frequently (at least among carousel people). You may think it doesn’t really matter that much but in fact, it makes all the difference in the world. Supporting something from underneath makes sense. After all, trains, cars and most rolling objects are bottom-supported. Yet, the best designed horizontal carousels in the world are top-supported units that outperform bottom-supported units in both speed and efficiency. How can that be?

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