What is required to justify automation? How the acronym, S.A.L.T., is a way to think about the issues to consider before automating your warehouse or provide the justification to go forward with an automated materials handling project.
Hi, I am Cory Flemings from abco automation. Have you ever considered automating your warehouse? Have you ever thought about what would be required to justify putting in automated systems inside your distribution center?
I would like to point out the acronym, S.A.L.T., as a way to hang your thoughts together and think about what the issues might be as you consider automating your warehouse.
The first letter up here for S. A. L. T. stands for Space. Now space seems rather obvious doesn’t it? In warehouse operations we are always worried about having enough space. But the problem is once you realize that the walls are closing in and that the rivets on the walls are starting to pop it’s too late.
Because it takes anywhere from 9 to 18 months to build more space. To plan it, to get city permission, to get the approvals, to actually pour the concrete. And even in automated systems if you’re going to consider putting things up in the air with automatic storage and retrieval systems as an example. The data analysis the design, the engineering work is taking somewhere between 9 and 18 months to put those systems in.
So as you start to see your walls close in, give yourself about two years of planning time. Otherwise you’ll find yourself behind the eight ball.
Another place to consider for savings and return on investment for automation is Accuracy. This is one of my favorites.
I went through a warehouse one time and said, “Hey, how is your accuracy?”
And they said, “Oh it is really good.”
I said, “Oh really? How good is really good?”
They said, “It’s at 98%”. While not being the brightest bulb in the box I realized that’s only 2%, or 2% of their orders are going out incorrect.
“How many cases do you ship out a day?”
“Oh we ship about 65,000 cases per day.”
So I pulled out my calculator and realized 1300 cases per day were going out incorrectly. And at $40 a box which is an industry average cost of return logistics to get the product, ship it back to the distribution center, check it out, restock, then you are talking $13 million a year if you work 250 days a year.
And if you have a two-year return on investment your shiny new material handling system can cost $26 million and you will break even. In two years.
For the complete transcript please visit Maximize Your Distribution Center Efficiency with SALT.