If you were the lucky recipient of a mail-order (or e-tail) gift last year, you may have marveled at the beautiful wrapping job … the knife's edge creases, impeccably formed corners, perfectly symmetrical gift bow centered to the nearest micron. But if you're gleefully picturing Martha Stewart toiling away in a dusty backroom of the vendor's DC, you'll have to revise that image. It's entirely possible that your package was wrapped by a machine.
Are we trading Martha for HAL? No need to worry just yet. At this point, automated wrapping technology can only be found in a few ultra-high-volume facilities. Nevertheless, machines are slowly taking over other warehouse tasks in distribution centers across the country, with generally good results.
The appeal lies in the staggering potential for labor savings. Phil Dodden, vice president of process improvement at material handling design firm Fortna, reports that one of his clients employs close to 100 workers to handle gift wrapping services. "And that's not even a big facility," he says. "Some companies have a lot more people than that. Imagine the labor savings that could be achieved when you automate that process."
As DC managers push to save on labor and materials, they're letting their computers do some of the heavy lifting, so to speak. Manhattan Associates has actually built technology into its warehouse management system (WMS) that automates the carton building process. That way, it can direct packers in a DC that ships, say, home goods, to use "soft goods" as dunnage for more fragile items. For example, if a customer's order includes a dozen dish towels and four wine glasses, the dish towels are used as packing materials in the order.
The savings run deeper than you might expect. First, the DC will save on shipping costs if the entire order now fits into one box, not two. And of course the cost of dunnage is eliminated. But perhaps the biggest payoff comes in customer goodwill—the recipient receives his or her entire order in a single box and doesn't have to dispose of a lot of annoying packing peanuts.
Though it sounds pretty straightforward, the practice actually represents something of a breakthrough in this industry. "Using certain items as dunnage systematically wasn't being done in very many applications," says Eric Lamphier, a product manager for Manhattan Associates.
Computers are also overseeing what are known as auto pack applications. Instead of loading packages manually, one major apparel manufacturer is using software from FKI Logistex that automatically cubes the shipping carton, which is auto-loaded until the WMS software signals that it's full. At that point, a packer is directed to the chute, where he or she applies a shipping label. If the packer sees there is more room in the carton, he has the discretion to signal for more product.
The technology is getting better all the time, says Steve McElweenie, executive vice president of sales and marketing at Crisplant, a division of FKI Logistex. "We've seen some tremendous increases in fill rates for cartons—from the low 90 percent area to the high 90s. Everyone is looking at ways to reduce operating costs, and auto pack applications can reduce packing and shipping costs across the entire logistics network."
HAL and his cohorts are making inroads into DC picking operations as well. Whether it's voice, pick-to-light or RF, technology vendors are cutting prices and adapting their systems to broaden their market appeal.
Voice technology, for example, continues to grow. "The thing everyone keeps talking about is voice-activated picking," says Dodden. "I think it's finally coming. Some of the big boys—like Wal-Mart—have been using it for a long time, but others are showing some interest now. People seem to be beyond the science fiction part of it and are evaluating it where it makes sense."
Indeed, one of the leading suppliers of voice-recognition equipment, Vocollect, says it's expanding its traditional grocery-industry customer base to include pharmaceutical and medical distribution, specialty retail and food service. In February, the company announced that its sales for 2002 had reached well over $25 million.
"Voice has yet to gain wide adoption in picking, but it offers a lot of potential," says Bob Silverman of material handling consultancy Gross & Associates. "To a large degree, voice is still a technology waiting for the right application, although it's received a lot of early adoption in the grocery industry."
Pick-to-light technology has come down in price, but its applicability is generally limited to DCs that can segment volume and apply pick-to-light to the areas with the highest volume. It's hard to justify the cost of pick-to-light for an entire 10,000 SKU product line because the return on investment often disappears on items that are not fast movers.
That limitati on doesn't apply to radio frequency. "One of the easiest things to justify is some kind of RF system," says Silverman. "Hard-wired options like pick-to-light aren't justifiable across as many applications as an RF system might be.
"As for the more mechanized systems like carousels, you need to look at your ratio of picks to replenishment," Silverman adds. "If you have a high ratio of picks to replenishment, then carousels could be the technology you want to investigate." They'll do the job for less … and they certainly won't be as high maintenance as Martha or HAL.