Planning and Improving Warehouse Operations The Synergy of Automating the Picking Process Lachlan Wymer, Senior Consul

1. Planning and Improving Warehouse Operations The Synergy of Automating the Picking Process Lachlan Wymer, Senior Consultant Dawson Consulting 30th October 2001

2. Review of Contents • Defining the picking process - traditional v's automated • Automated picking processes and some examples • Do we need to automate the picking process? • Reviewing current operations • Where does WMS fit into this?? • Automated picking improving space utilisation • Some estimated savings of automated picking • The Woolworths experience - a total integrated solution • Conclusion • About Dawson Consulting

3. The Synergy of Automating the Picking Process

4. Back to Basics - let us define what is considered traditional and what is automated……. • The traditional pick process normally refers to a storeperson selecting items from a bin location, and is directed to this location from a paper list. • It is up to the picker to read each line of data, locate the items and pick the correct quantities. • After the process is completed, the data must be entered into IT systems. • The traditional process is open to errors, and this generates another costly step in the process of having to rectify these errors and inevitably disappoint your customers • Traditional picking is also unable to perform real time data updates Traditional Picking

5. Back to Basics - let us define what is considered traditional and what is automated……. Automated Picking • Automated picking refers to methods which provide the picker with data and/or mechanical aids to conduct the picking process. • Examples of such methods include • Pick to Light • Automated Storage & Retrieval Systems (ASRS) • Carousels • Robotics or Automatic Order Selector (AOS) • Voice directed picking via RF technology • Provides advantages in enhanced productivity and reduced errors and associated indirect costs • Automated picking is system directed and takes the decision making process away from operator

6. Automated picking methods and examples of its application • Pick to Light (PTL) is a method of automated picking technology which is growing in application each year in Australia. • This method may be considered one of the more cost effective automated picking processes and allows for further growth and upgrades within an operation • Offers a range of benefits including • productivity improvements up to 50% • picking error levels as low as .02% • enhanced customer service levels • ease of implementation and use • flexibility of integration with other systems and modules • EDC in Sydney boasts a PTL system comprising of 15,000 pick locations and claims a pick accuracy of 99.98% • Woolworths in Melbourne and Sydney have dedicated multi tier picking modules providing 4200 PTL locations at each site Pick to Light

7. Automated picking methods and examples of its application • Automated Storage and Retrieval Systems (ASRS) are used to automatically replenish picking modules and bins and to store “reserve” stocks. • The system relies on messages from the WMS system to direct it where to dispense of stored product and to retrieve product for picking location replenishment • A common application of ASRS is pallet cranes, which negates the use of manned forklift equipment to conduct these tasks • Application of this technology is common overseas, especially in Europe & Asia, where warehousing space is of a premium. • Australian application has increased in recent years • Woolworths sites in Sydney and Melbourne operate 17 pallet cranes at each site completing 220 pallet cycles per hour • Woolworths site in Melbourne features a mini ASRS system housing 28,800 tote bins completing 1,200 tote cycles per hour Automated Storage & Retrieval Systems

8. Automated picking methods and examples of its application • Carousels generally in two types - vertical and horizontal • Creation of vertical carousels originated in Europe, due to the large expanses of space required for the storage of slow moving items and the travel time required to pick these products • Depending on storage requirements, vertical carousels are normally used for small item, spare part type products • Most common example of its application is in electrical spare parts and kit assemblies • Advantage of carousels is the ‘product to picker’ principle of a picker not needing to leave their workstation and hence, reducing travel time by more than 50% • A common limitation of carousels has been the ability to replenish and pick product at the same time • Email (Electrolux) in Adelaide recently installed two vertical carousels for their spare parts inventory and claim huge savings in productivity and accuracy Carousels

9. Automated picking methods and examples of its application • This is relatively new technology with high capital cost, also referred to as ‘robopick’ • Robotic palletisers are relatively common in manufacturing environments • Woolworths introduced an AOS system in their Sydney and Melbourne facilities incorporating four machines per site at a cost of approximately $1 million per unit • These machines have the ability to pick different carton types from pallet locations by calculating of carton size and palletisation • Due to replenishment being conducted via pallet cranes and cartons being distributed by conveyor belt, no human intervention is required • AOS productivity boasts maximum throughput of 370 cartons picked per hour per machine Automatic Order Selectors (AOS)

10. Automated picking methods and examples of its application Voice Directed Picking • A recent technology introduction in Australia • the system prompts the operator via voice direction to locate a pick bin and pick the desired quantity. These instructions are transmitted real time via RF that integrates with the users WMS system • Benefits claimed of; • 99.95% pick accuracy • improved productivity and throughput of up to an average of 230 full carton picks per hour • payback period of 12 to 18 months • cost savings in labels and printing • Recently implemented in P&O Cold Storage in Queensland and Masterpet in New Zealand • Has also been used at Woolworths in Sydney

11. Do we need to automate the picking process? • Not every warehousing and distribution operation can obtain immediate benefits from automating their picking process, is the capital outlay justified? • Cost benefit analysis and payback period are important considerations • Immediate benefits and cost savings are normally gained by operations with high pick frequency and volumes or limited space requirements • This should not be treated as a “bolt on, quick fix” solution • Integrated systems and solutions - look outside the square • what storage systems do I need? • do I have barcode capabilities? Should barcoding be integrated into the solution? • will conveyor and sortation systems enhance my operations? • what Materials Handling Equipment do I need?

12. Review your current operations first…. • Which method of picking best suits your operation? • A review of your warehouse and distribution operations and product profiles is the first step in determining the right solution • Consider this methodology; • capture the data • apply the data to current methods of operation • understand your product putaway, replenishment, picking and inventory profiles • attribute costs to tasks • determine where cost savings can be attributed • apply the data to materials handling and system solutions and determine which solutions best suits your needs

13. Where does a WMS fit into this? • A Warehouse Management System is crucial in supporting automated picking methods • Real time picking data capture and return must be supported to integrate with other WMS functions such as replenishment, inventory control, order release, batch picking and location control • As an example, the Microlistics ISIS WMS has the capability to support such technologies, via radio frequency or data integration • PTL technology is being supported by the ISIS product through the Cigweld Distribution Centre in Melbourne and ASRS technology is supported by the ISIS product in Nestle Malaysia

14. How can automated picking improve our space utilisation?? • Selective pallet racking or single level shelving has limitations in its utilisation of floor space • By incorporating automated picking processes into dedicated multi level picking modules, this can allow improvements in space utilisation and picking travel times • A national retail chain improved space utilisation from 200 floor pick pallet locations to 700 pick pallet location in the same area by introducing multi level picking and automated pick processes • A good example of maximising space utilisation is by the application of carousels. By locating pick bins into a single pick module will allow the picker to remain at the same workstation. • CLS racking, narrow aisle and other storage media enhancements will also improve space utilisation in a facility

15. What are some of the estimated savings from introducing such methods?? • This will vary according to application and technology utilised • Published benefits for picking technology enhancements such as PTL and voice picking include; • up to 99.98% picking accuracy • increased productivity up to 50% • decreased costs of paper, printers, paper based order preparation • decreased indirect cost of correction of picking errors, product returns and dissatisfied customers • Cost benefit and payback period considerations are important • Don’t forget the cost of maintenance in automation - a maintenance contract in a fully integrated system can effectively represent 5% of total operating costs

16. The Woolworths experience - a total integrated solution • Sites located in Minchinbury, Sydney and Broadmeadows, Melbourne. Completed in 1999 • Both sites designed and commissioned by Swisslog Digitron • Melbourne distribution network reduced from six sites to two • Fully integrated materials handling systems which combine automated and manual processes of picking • Storage capacity for 32,000 pallets, picking channels in six aisles over four levels • Automated carton barcode sortation system providing a throughput of approximately 11,000 cartons per hour • Current throughput to retail stores is approximately one million cartons per week, per site. 350 people employed per site over 2 shifts • Capital cost of each site was approximately $150 million. Payback period for the company was approximately 3 years

17. In conclusion • Consider these issues • does your operation require this technology now? • Is there supporting tools in place - WMS, design and layout • automated picking should not be considered as a “bolt on quick fix” • a review of current operations should be considered • integrated solutions - consider solutions beyond automated picking processes

18. About the Authors- Dawson Consulting • Founded in 1990, Dawson Consulting is now Australasia's largest full service Supply Chain Management Consultancy. Whether the focus is on strategy, operations or organisational change our people are committed to helping clients improve their products and services, their business relationships, and their overall value. Dawson Consulting assist companies of all sizes to improve the performance of their supply chain and generate a greater return on their capital items and financial resources employed. With employees in offices throughout Australia and New Zealand, Dawson Consulting has the skills and capability to undertake projects of any size. The clients we have worked for include leading national and international companies that span all industry sectors, as well as government enterprises. Specialising in supply chain management has earned us a reputation as being an authority in the area of logistics, and as providing significant bottom-line value to our clients. Dawson Consulting and Microlistics are part of the Dawson Group of companies.

19. We Handle all Facets of the Supply Chain Core Practices