AUTOMATION IN WAREHOUSE: DEVELOPING AND IMPLEMENTING SUCCESSFUL PROJECTS

In Brazil, the number of automation projects in storage is increasing, from the simplest, involving only order picking systems, passing through stacker cranes, to the most sophisticated where every operation has a minimum of human intervention. In addition, dozens of warehouse management software (WMS) suppliers are already in the country, having installed their products in more than 400 companies. We are therefore following a natural trend of sophistication in storage operations, a trend already observed in countries where recognition of the importance of logistics for the competitiveness of companies is a reality.

The implementation of automatic systems, whether for material handling or operation management, is, in fact, a reaction to the demands of a new business environment, with more demanding customers and fierce competition, leading companies, many times, to implement changes radical changes in storage and distribution structures.

NEW DEMANDS ON STORAGE STRUCTURES

Less willing to carry inventory, customers are looking to order ever smaller and more frequently, forcing inventory back up the supply chain. Reducing the size of the order increases the demand for picking operations, in addition to making them more difficult when working with orders for broken boxes.

Industries have increased the number of sku's to target specific market niches. In addition, variations in the sizes of packages with which products are sold at retail, increase the number of items to be controlled, processed and handled in warehouses, implying a decrease in productivity, greater need for space and higher administrative costs.

As they are working with lower inventory levels, customers demand shorter response times from their suppliers, increasing the pressure for agility in distribution centers, which now have less time between order receipt and shipment at the docks.

Also, because they work with low inventories, incomplete or incorrect orders received are highly likely to lead to product shortages and sales losses, making customers' tolerance for distributor errors practically zero. And as an aggravating factor, considering that orders become smaller and more frequent, the cost of correcting errors is much higher!

It is clear, therefore, that traditional storage facilities, which have paper-based processes, which operate with computational systems that run in "batch" or which were designed to maximize the use of space, not the efficiency of the physical flow, will have an enormous difficulty in meeting these new requirements (figure 2). In some cases it will be practically impossible.

These conclusions lead us to expect an acceleration in the process of adoption of new technologies for storage, even more so in Brazil, which is practically starting this movement.

COMPLEXITY AND RISK IN THE DEVELOPMENT OF AUTOMATION PROJECTS

Automation projects are complex because they involve the integration of various technologies related to management systems (WMS), mechanisms for capturing and displaying information such as bar codes, remote terminals, radio-frequency systems and scanners, and handling equipment. , transportation and storage of materials. Depending on the extent of integration with customers and suppliers, electronic data interchange (EDI) systems may also be involved. This entire set must operate with a unit that will perform better or worse depending on its correct dimensioning, the operating procedures adopted and the existence of qualified and trained personnel to take full advantage of the system's potential.

The high investments involved and the enormous effort required for its implementation require an extremely disciplined approach to project development and execution. Although this is clear, it is common for there to be a disproportion between the expenses incurred in equipment and software and the expenses in time and personnel dedicated to the previous planning stages in several projects that have been carried out.

It is not uncommon to find projects with investments in the order of millions of dollars that failed due to lack of adequate planning, preventing the achievement of established goals. To give a recent example, a retail company that invested in an automated picking line in its distribution center, had to continue with its manual line operating in parallel due to problems with under-dimensioning the automatic workstations. The initial objective, which was to increase capacity to meet greater demand, was undermined, in addition to having to bear high labor costs, which should be reduced.

The process of adopting new technologies can revolutionize the company or it can bring big headaches: everything will depend on the approach used and its adequacy to the system in question. To minimize the risks involved and maximize the return on investment to be made, it is recommended to follow a structured planning and implementation process. That's what we'll cover next.

The development of a typical automation project can be divided into three major phases (figure 3):

• The preparation phase, which has as its main activities the formalization of the project's objectives and the formation of the team responsible for its planning and implementation.
• The definition phase, where new processes are created and from then on the software that will support the operation as well as the handling and storage equipment are defined.
• And finally, the implementation phase, when the necessary items are purchased, personnel are trained, equipment is tested and put into operation.

PREPARATION PHASE

The preparation phase begins with the formation of the project team, which must be composed of representatives from all functional areas of the company affected by the project. Initially, it will only be able to count on personnel from those directly related areas, but as the project progresses, other members will have to participate. The minimum core is composed of distribution and storage personnel, who must have knowledge of all current processes and personnel from the information systems area, who must ensure compatibility between the automation project and the company's systems. If the project is large, it may be necessary to appoint a manager, working exclusively to coordinate, monitor and manage the activities. Otherwise, one of the team members can perform this task.

In the following phases, the functionality of the warehouse management system (WMS) and the material handling system, which are the main components of automation projects, will be detailed. The specification and evaluation of these systems for later selection requires specific knowledge, as they involve new technologies and the definition of new processes that make use of all their potential. These processes can differ considerably from the practices currently used in the current distribution system and, probably, the company does not have profiles like this in its staff, leading to the need to bring in external elements to participate in the team.

One of the advantages of incorporating external members is that of bringing a new vision, free from the used paradigms and with a new perspective for the definition of the new storage and distribution system. In fact, it is interesting to have a balance in the project team between internal members, with a deep vision of the problems and characteristics of the current process and external elements.

One of the sources of external professionals are consultants who are specialists in management systems and material handling equipment who have worked with the implementation of projects in other companies. The second source is the suppliers of these systems and equipment. In this case, it involves choosing suppliers at a very early stage of the project. Although this is common, care must be taken so that there is no bias towards adopting the supplier's solution and not the most appropriate solution for the company's needs.

The next step after defining the project team is defining and formalizing the project objectives. These should be established in concrete terms, based on quantitative targets (see Figure 4). This step is necessary for three basic reasons:

• First, it establishes project evaluation criteria. Its success will be measured by the degree of fulfillment of established goals.
• Second, it makes it clear to the team and the company what needs to be achieved and what effort will be required.
• Third, it defines very objective criteria on which system to choose, placing the focus of the project on the expected performance and not on the technology itself. It must be remembered that automation by itself is not a goal.

The project must be in tune with the company's logistics strategy and, therefore, the strategic role of storage in the logistics process. The goals to be achieved must be aligned with this strategy.

The preparation stage ends with the definition of the scope of the project, that is, with the delimitation of what is and what is not part of the project. A common problem that occurs is the growth of the project due to the inclusion of new business areas or previously unforeseen functions. Therefore, establishing the scope exactly minimizes the chances of delays as it allows a better dimensioning of efforts and planning of activities. While typically restricted to the warehousing operation, this is not to say that the project should not include other related areas such as order processing, procurement, accounts receivable and payable, etc.

DEFINITION PHASE

The definition phase begins with the reassessment of the current processes so that a new process can be defined, which can start from a complete restructuring or from an adaptation of the current one to the new possibilities brought about by the introduction of new technologies. It should be clear that an automation project does not only involve the implementation of new, faster equipment or greater storage capacity. It also involves, and mainly, the design of a new form of operation that should take full advantage of the available equipment and software. Some companies simply mechanize manual processes or adapt management software to their current processes, which can significantly reduce the benefits of automation.

The definition of the new process in the automated environment must be documented in detail, through the description of its operating rules, how the information will be used to perform each task and how the physical flows will be in each area of ​​the operation. The next step is to define the management systems (WMS) and materials handling that will support the new process. Although they involve specific knowledge and must rely on different teams, the definition of these two components must be done simultaneously, as the way in which one operates influences the other.

When defining and evaluating automatic handling equipment, manual processes must not be forgotten or abandoned. They may be useful, not to scale the handling equipment for peak demand, but allowing manual systems to be operated in these events as well. Furthermore, automatic systems have an inverse relationship with flexibility. The more automated it is, the more difficult it will be to deal with orders with special characteristics or deal with contingency situations.

As we saw earlier, cases of incorrect sizing are not rare. When under-dimensioning implies low performance and over-dimensioning implies high costs. Automated distribution and storage systems are highly integrated, composed of interdependent and interactive functions, making the task of dimensioning them complex. One of the most useful and currently widely used tools to assist in this task is computer simulation, as it allows examining the processes to be implemented, anticipating problems that may occur and evaluating alternative solutions for equipment for moving and storing products capable of supporting the processes. previously specified

Through simulation, computer models are built representing the operation as it could be structured (see figure 5). These models may include details such as the number of workstations, equipment parameters such as displacement speed, available space for storage and load assembly, and product positioning rules. Indeed, they may include as many details as are relevant to evaluating the system. Another source of error in sizing systems is dealing with demand, operating times, order sizes, etc. through their average values. In fact, these parameters can have a great variability, bringing a huge impact on the performance of the system. Through simulation, they can be treated through their probability distributions, bringing greater realism and precision in the evaluation of alternatives.

http://www.autosim.com/Simulation/index.html

Currently, the supply of storage management systems (WMS) meets a relatively large range of needs. Except for very peculiar processes of some companies, a natural solution should be the acquisition of the system and not the development itself. Therefore, one way of accelerating this phase is to start from existing systems on the market, requesting information from suppliers about the characteristics of their products and assessing their suitability for new processes. As rarely all needs will be met, the possibility of adapting the supplier's system should be considered, which in turn may imply high development costs. It then becomes necessary to review the previously defined processes and evaluate the possibility of modifications. The cost-benefit ratio of the two alternatives will dictate the decision to be taken.

The definition phase will be completed when the handling equipment, auxiliary hardware, management systems and the respective suppliers have been specified and determined.

IMPLEMENTATION PHASE

The final implementation phase is characterized by the need to integrate and coordinate the efforts of a wide range of elements: internal staff, WMS suppliers, handling equipment and auxiliary hardware suppliers, and possibly infrastructure companies. These elements will be involved, each in their respective area, in the detailing, acquisition and adaptation of the various items that make up the automation project. The success of this coordinated effort largely depends on a rigorous schedule, where everyone knows exactly the expected result of their activities and when they should be completed. In this schedule of activities, testing activities, the preparation of manuals, training and possibly hiring new employees should not be forgotten.

One of the most critical stages of the implementation is the conversion, that is, the transition from the current system to the automated system. There are basically two ways to perform the conversion:

• Total conversion, where all storage operations such as receiving, positioning, storage, picking and shipping are installed simultaneously. As it involves a high risk, this option is adopted when there are other warehouses that can serve customers in case of failures, or when it is carried out in a period of low demand, making the order fulfillment operation less critical.
• Partial conversion in phases, where operations are installed at different times. For example, you can install only the product receipt and picking operations at first. Another alternative is to install the entire operation, but starting with a division of products or customers. Although the risks of this alternative are lower, the conversion time can be very long.

It must be anticipated that after the conversion, a large number of problems may arise and that the processing capacity will be below the specification. But as the system becomes operational, errors tend to decrease and capacity tends to reach its normal standards. It is necessary, however, to take contingency measures in these phases, such as increasing quality control procedures and alerting customers about system changes.

The degree of tranquility and the level of errors in the implementation, as well as the achievement of established goals are an unequivocal measure of the efficiency of the planning stages. In fact, the basis for the success of a warehouse automation project is a clear understanding of what needs to be done, how and when to do it. The redoubled effort in the planning stage will be more than compensated for in future stages by avoiding delays and minimizing problems.