Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In the process-driven world of material handling, where new ideas are often refinements of innovations that came before, few events qualify as "game-changers." But at a facility in Joliet, Ill., 40 miles southwest of Chicago, something is happening that just might measure up to the billing.
There, Central Grocers Inc., a food supplier co-operative serving Chicago and parts of Indiana, will be operating what is believed to be the nation's first distribution center whose entire lift-truck fleet—220 vehicles—is powered by hydrogen fuel cell technology. As of April 5, 140 order-picking trucks were running on fuel cells. The remaining 80 trucks will transition later this year or in early 2010. The company expects to save about $750,000 over five years, largely through productivity enhancements, says John Coari, vice president of operations for Central Grocers (see "green grocer," DC VELOCITY, May 2009, for more on Central Grocers' fuel cell program).
Yet as Central Grocers moves aggressively into the world of alternative energy, it is also hedging its bets. It does not own the fuel cells; instead, it leases the cells, the equipment, and maintenance services from Plug Power Inc., one of a handful of fuel cell manufacturers. It pays Plug Power a usage fee for the hydrogen. Plug Power, not Central Grocers, arranges for the shipping of hydrogen to the Central Grocers site. Central Grocers has an exit clause in its contract should the technology fail to meet its expectations. And since it already owns batteries and chargers, it can fall back on the old-fangled power source if need be.
The project, whose progress is being closely watched by the material handling/supply chain world, epitomizes the industry's current perception of fuel cell technology: The potential is there, but so is the reality of significant upfront and ongoing expenses. For warehouse operators with relatively small lift-truck fleets and which run mostly single shifts, fuel cells may not even be worth considering.
Then there is the natural reluctance to be perceived as a guinea pig. "No one wants to be the first penguin in the water," says Bill Ryan, vice president and general manager of the material handling division of LiftOne, a multiline lift-truck distributor.
Power plays
For one thing, fuel cells cost more to purchase than batteries. It costs about $10,000 to buy one fuel cell to power a lift truck. The cost of the fuel cell power pack, which includes the cell "stack," storage capabilities, and other necessary but expensive equipment and systems, is between $32,000 and $41,000 per truck, though the cost should come down if production ramps up.
A standard lift-truck battery, by contrast, costs between $3,000 and $4,000. Because the average battery life is about eight hours, a lift truck that works more than a single shift will likely require multiple batteries. For example, a vehicle that works three shifts round the clock will need three batteries to ensure one is at the ready while the others are recharging.
It is also more costly to power a truck with fuel cells than with electricity used in batteries. Blake Dickinson, technology manager for AeroVironment Inc., a Monrovia, Calif.-based company that makes equipment to quickly recharge lift-truck batteries, estimates a fuel cell-powered lift truck uses three times more energy than a truck using electricity.
From there, however, the road divides. Proponents of fuel cell technology maintain that high-volume users, broadly defined as those operating 50 or more trucks in two or three shifts in a 24/7 environment, will significantly reduce labor costs and increase productivity by eliminating the need to swap out batteries for washing and recharging. It takes, on average, 10 minutes to change a battery, while it takes about two to four minutes to fill a cell with hydrogen, according to data from The Raymond Corp., a leading lift-truck manufacturer. Some say the battery swap-out time can be as long as 30 minutes.
Users will also free up warehouse space previously reserved for battery storage and changing. They can also expect to achieve superior run times with their trucks because unlike batteries, whose voltage drops toward the end of a shift, fuel cells don't lose power until the cell is empty, fuel cell advocates contend.
Ryan says the hourly unit cost of maintaining a typical forklift battery is about $1, compared to 53 cents per hour for maintaining a fuel cell. He estimates that a warehouse or distribution center operator fitting the high-volume profile can save 15 percent a year by using fuel cells. This doesn't include the intangible environmental benefits that come from using a "clean" energy source, whose only by-products are water and heat, Ryan says.
According to an analysis by Raymond, a company operating a large distribution center with 125 trucks running two shifts will see an improvement of $3.2 million in its net present value through labor savings, reduced downtime, and increased productivity. That offsets the estimated initial $1.3 million investment in outfitting the trucks with fuel cell packs and developing storage and dispensing systems for the hydrogen, according to Steven Medwin, manager of systems and advanced engineering, and the official who prepared the analysis. Analyses from other companies in the fuel cell and lift-truck sectors peg the payoff time for fuel cell investment at two to three years, depending on fleet size and characteristics.
Hydrogen supply hurdles
But there are roadblocks. Opponents cite the cost of the fuel cell packs and the hydrogen itself, as well as the infrastructure required for storage and dispensing. Then there is the expense of building either an in-house hydrogen generation system or having the gas trucked in by industrial vendors. Relying on vendor shipping networks—the most common means today of delivering hydrogen to distribution centers—carries its own hefty price tag, especially if the gas quantities must support the needs of larger fleets and if the distance between the vendor's location and the distribution center is more than 100 miles.
Praxair Inc., one of the largest suppliers of hydrogen, does not have a presence in the lift-truck market, mostly because so few lift trucks use fuel cells. Yet Tom Harrison, hydrogen product manager for Praxair, predicts strong future demand for fuel cell technology, especially among the large manufacturers and retailers that run warehouses and DCs. "The market size right now doesn't appear to be a stumbling block," Harrison says.
Ryan says the cost of transportation and distribution is the main barrier to aggressive adoption of fuel cell technology. "If we had hydrogen generation centers around every corner, there would be a rush to the door for fuel cells, regardless of the other issues," he says.
Dickinson of AeroVironment says he "would question the value of fuel cells even for heavy-duty users." He says that the fast-charge battery process is far more cost-effective than using fuel cells, and that the charging can be completed on workers' lunch breaks or other off-duty periods so as not to drive up labor costs and impact productivity.
The only scenario where battery charging makes less sense than fuel cells, he says, is in distribution centers whose trucks operate with virtually no downtime and don't even have an opportunity for battery recharging.
Charging ahead
Still, companies who see the long-term promise in fuel cells are forging ahead. Billerica, Mass.-based Nuvera Fuel Cells Inc., one of the nation's few fuel cell manufacturers, has developed an onsite outdoor hydrogen generator for customers that use more than 25 kilograms (55 pounds) a day. The unit uses a steam-reformation process to generate hydrogen for $4 a kilogram (2.2 pounds), which the company says is the most cost-effective solution.
In October, lift-truck maker Crown Equipment Corp. of New Bremen, Ohio, launched a project to upgrade 20 of its trucks at the Pentagon's Defense Distribution Depot in Warner Robins, Ga., with fuel cell packs. The 20 trucks are "counterbalanced," meaning they have sufficient ballast to offset the lighter weight of fuel cells relative to batteries, thus avoiding the need to reduce the amount of weight the trucks handle.
Toyota Industries Corp. and Toyota Motor Corp. continue to test a prototype in Japan of an integrated, ergonomically advanced fuel-cell lift truck that was introduced at ProMat 2007 in Chicago. There is no set launch date, according to Cesar Jimenez, electric product planning & product marketing manager for Toyota Material Handling, U.S.A., Inc.
In April 2008, Raymond launched a joint venture with fuel-cell maker Ballard Power Systems to research designs for integrated fuel-cell trucks with Ballard's technology to power the vehicles. Medwin of Raymond would not comment on the project's status other than to say that it is moving forward.
Efforts to advance fuel-cell technology have received two important boosts from Washington. The bank bailout legislation signed by President Bush last October included an eight-year extension of a tax credit equal to 30 percent of a fuel cell's unit price or $3,000 per kilowatt hour of use, whichever is less. The $787 billion economic stimulus plan signed by President Obama in mid-February authorized until Jan. 1, 2011, a 30-percent tax credit, up to $200,000, for investment in hydrogen refueling systems. The prior ceiling had been $30,000.
The expansion of the tax credit for refueling systems should dramatically shorten the time needed to achieve a return on the initial investment, says Russ Keller, senior director of the alternative energy program at the South Carolina Research Authority, a Charleston-based organization that provides research and development support for government and academia. "The challenge [to obtaining a return on investment] is the fueling infrastructure," Keller says. The sweeteners in the stimulus law will "make a nice dent in reducing the ROI," he adds.
For all the promise, however, the jury remains out on fuel cells. Batteries and internal combustion engines rule the lift-truck world, and they are not expected to disappear. Jimenez of Toyota says there is room for both power sources to co-exist, with the choice of battery or fuel-cell power depending on the demands placed on the lift trucks. Companies that require their trucks to be used continuously will find fuel cells more practical and economical, while those that use their trucks less frequently and have more downtime will continue to opt for battery power, he says.
Those placing their bets with fuel cells say time and trends are on their side. When asked at what point the material handling industry can reasonably expect fuel cells to be a viable alternative, Erik Jensen, manager of new technology, research, and development at Crown, replied, "That day is today."
A coalition of truckers is applauding the latest round of $30 million in federal funding to address what they call a “national truck parking crisis,” created when drivers face an imperative to pull over and stop when they cap out their hours of service, yet can seldom find a safe spot for their vehicle.
According to the White House, a total of 44 projects were selected in this round of funding, including projects that improve safety, mobility, and economic competitiveness, constructing major bridges, expanding port capacity, and redesigning interchanges. The money is the latest in a series of large infrastructure investments that have included nearly $12.8 billion in funding through the INFRA and Mega programs for 140 projects across 42 states, Washington D.C., and Puerto Rico. The money funds: 35 bridge projects, 18 port projects, 20 rail projects, and 85 highway improvement projects.
In a statement, the Owner-Operator Independent Drivers Association (OOIDA) said the federal funds would make a big difference in driver safety and transportation networks.
"Lack of safe truck parking has been a top concern of truckers for decades and as a truck driver, I can tell you firsthand that when truckers don’t have a safe place to park, we are put in a no-win situation. We must either continue to drive while fatigued or out of legal driving time, or park in an undesignated and unsafe location like the side of the road or abandoned lot,” OOIDA President Todd Spencer said in a release. “It forces truck drivers to make a choice between safety and following federal Hours-of-Service rules. OOIDA and the 150,000 small business truckers we represent thank Secretary Buttigieg and the Department for their increased focus on resolving an issue that has plagued our industry for decades.”
Robotic technology has been sweeping through warehouses nationwide as companies seek to automate repetitive tasks in a bid to speed operations and free up human labor for other activities. Many of those implementations have been focused on picking tasks, a trend driven largely by the need to fill accelerating e-commerce orders. But as the robotic-picking market matures and e-commerce growth levels off, the robotic revolution is shifting behind the picking lines, with many companies investing in pallet-handling robots as a way to keep efficiency gains coming.
“Earlier in this decade and the previous decade, we [saw] a lot of [material handling] transformation around e-commerce and the handling of goods to order,” explains Josh Kivenko, chief marketing officer and senior vice president at Vecna Robotics, which provides autonomous mobile robots (AMRs) for pallet handling and logistics operations. “Now we’re talking about pallets—moving material in bulk behind that line.”
Kivenko explains that whether items are being packaged and shipped directly to a customer’s home address or moved as finished goods to a shipping bay for store delivery, those items are first moved in bulk in some way, often by human hands and with human-operated equipment. He describes warehouses as chaotic environments in which humans move pallets and cartons in multiple ways—up and down, side to side, from receiving to storage, from storage to shipping, or via cross-docking. Automation can help bring order to that chaos.
“What we’re trying to do is relieve some of the pressure [on the] humans [doing] this work,” Kivenko says of companies that develop pallet-handling robotic technologies. “At the end of the day, we’re trying to automate some of those flows, relieve labor pressure, save costs, and keep the goods flowing.”
But automated pallet handling isn’t right for every situation, so it’s important to understand the warehouse conditions required and the protocols and best practices needed to make it a win. Here are some guidelines for applying pallet-handling robots and gaining the most from your investment.
FIRST, UNDERSTAND THE TECHNOLOGY
Pallet-handling robots fall into four general categories, explains Rich O’Connor, vice president of storage and automation for Raymond West Group, a business unit of lift truck manufacturer The Raymond Corp. They include:
Palletizing/depalletizing robots, which are used to load or unload items onto and off of pallets, usually with the use of a robotic arm for picking and placing. Today, these systems are being increasingly integrated with automated storage and retrieval systems (AS/RS) to further streamline pallet handling in the warehouse, O’Connor explains.
Autonomous guided vehicles (AGVs) and autonomous mobile robots (AMRs), which are used to transport pallets within the warehouse. Often outfitted with lift decks or conveyors, or designed to tug or tow items, these robots move pallets from point A to B within a facility. AGVs, which often follow a marked guide-path or wire in the floor, have been around for many years, but the advent of high-performance guidance and vision systems is allowing them more flexibility today, O’Connor says. AMRs are self-guided vehicles that use software and sensors to navigate their way through the warehouse.
Forklift AGVs and AMRs, which can move products both horizontally, from place to place, and vertically, into and out of storage racks. They come in various styles—including stackers, counterbalanced trucks, reach trucks, and even very narrow aisle (VNA) vehicles for use in densely packed warehouses. These vehicles are more complex than those used only for horizontal transport, O’Connor explains. They must be “highly integrated” into the facility’s warehouse management system (WMS) or warehouse execution system (WES) so that they know precisely where to retrieve and deliver pallets within the facility.
Robotic pallet shuttles, which move pallets into, out of, and within dense storage racking. The Raymond Corp. describes such a system as “a standalone, automated deep-lane pallet storage system that utilizes self-powered shuttle carriages to move pallets toward the back or front in a racking channel. Shuttles are motor driven and travel along rails within a storage lane.”
O’Connor and others say that no matter which of these technologies you’re investing in, it’s important to remember that they are all part of a larger system designed to optimize operations throughout the warehouse.
“The expanding role of all these different styles working together is what’s amazing today,” O’Connor says.
SECOND, ENSURE THE TECHNOLOGY IS A FIT
Kivenko, of Vecna, also emphasizes the importance of pallet-handling robots working in concert, particularly AMRs and AGVs.
“The magic isn’t just that the robots are autonomous and driving by themselves. The magic is multiple robots—when you have a [whole integrated] system [in place],” he says. “[It’s] how the fleet operates autonomously and optimizes itself for continuous improvement. That’s where the exponential gains are. [It’s] not just about automating what a worker does; it’s about automating a system.”
But you can’t install these systems in just any warehouse and expect magic. Kivenko and others point to certain conditions that enable the best robotic pallet-handling outcomes, especially when it comes to transportation-based and forklift-type AMRs and AGVs.
“The robots that I sell are large-load machines with very expensive technology,” Kivenko explains. “They move material, generally, in larger facilities. And in order for them to produce a return [on investment]—because that’s the name of the game here—they have to be higher-velocity facilities.”
He says pallet-handling robots work best in large facilities running multiple shifts, usually more than five days a week. Wider aisles allow the equipment to move more freely through the facility and at higher speeds, to optimize efficiency and productivity. Strong Wi-Fi networks and clean, dry environments also help keep equipment running at top performance.
O’Connor agrees that pallet-handling robots are best suited to facilities with multishift operations, where they can ease labor constraints and boost productivity. And he says many customers are willing to extend the typical two- to three-year ROI period to five years in order to achieve those gains. But there is even more to it than that. O’Connor’s colleague John Rosenberger says customers must first step back and analyze their processes to ensure that, even if they have the right facility for pallet-handling AMRs or AGVs, they are moving material in the most efficient way to begin with.
“Many times, we find that the processes in place [are inefficient],” says Rosenberger, who is director of iWarehouse Gateway and global telematics for The Raymond Corp. He emphasizes the importance of analyzing existing data—from an equipment telematics system or similar—to determine the best path toward automation.
“Do you have congestion zones now?” he asks. “They’ll still exist if you automate [those processes exactly].”
THIRD, MAKE SIMPLICITY A PRIORITY
Another basic rule of thumb when implementing pallet-handling robotics: Keep it simple.
Andy Lockhart, director of strategic engagement for global warehouse and logistics process automation company Vanderlande, says that when designing a pallet-handling robotics system, “you want to minimize the processes you [automate]. When you can create [an automated system] that focuses on one task—for example, AMRs delivering pallets from a high-bay [storage rack] directly to the palletizing cell—you can do that efficiently and effectively. When you ask the AMR to do this and this and this … you are adding risk of failure.”
Lockhart’s colleague Jake Heldenberg advises customers to first test their target processes via pilot programs within the warehouse or DC. Heldenberg is Vanderlande’s head of solution design, warehousing, North America.
“If AGVs or AMRs for pallet handling are interesting [to a customer], the best thing to do is pilot one or two in an existing DC,” he says, explaining that the process can help companies troubleshoot, understand integration timelines, and gauge ROI. But pilot programs can add expense to a project, making it unaffordable for some.
“If that’s the case, then the best advice is work with a vendor who has experience integrating [the technology],” Heldenberg says. “Use their experience to benefit your business. You won’t have the same hiccups and challenges you would with a less-experienced vendor.”
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
While many companies are launching artificial intelligence (AI) products for use as generic “co-pilots” or consumer-focused gadgets, the Swedish enterprise resource planning (ERP) software vendor IFS says its “Industrial AI” version supports industry-specific processes in “hardcore” sectors based on assets such as power grids, cell phone networks, aircraft maintenance, elevator operation, and construction management.
“Industrial AI is at the very core the solutions we are powering for customers. They are pushing us for ready-to-use AI that they can adopt quickly to solve real industrial challenges like labor shortages, supply chain disruption, [and] stagnated productivity," IFS's Chief Customer Officer, Cathie Hall, said in a release.
In presentations at its user conference in Orlando today, known as "IFS Unleashed," the company said that its latest IFS Cloud 24R2 release supports more than 60 in-depth Industrial AI scenarios. They span generative AI examples like: content generation for training and reports; recommendations for sourcing and suppliers; and contextual knowledge for assembly instruction. The tools also include predictive AI applications like event forecasting; optimization of resources and capacity; and anomaly detection for proactive quality control.
In remarks from the keynote stage, new IFS CEO Mark Moffat—who was appointed to the top office in January—said the company may be less well known than ERP vendors such as SAP, IBM, Oracle, and Infor, but it benefits from a tighter focus on its core users. Instead of selling software across dozens of industries, IFS serves just six industries: aerospace and defense, construction and engineering, energy and utilities, manufacturing, service, and telecommunications.
Thanks to that tight approach, he said the company has earned top Gartner rankings for its software products in field service management (FSM), enterprise asset management (EAM), enterprise resource planning (ERP), and enterprise service management (ESM). And to compound that advantage, Moffat said IFS continues to grow swiftly through acquisition, having bought up a handful of companies in recent months: Assyst, Ultimo, Boka, empowermx, Bolo, Tobin, Merrick, and Copperleaf.
“You need an AI business plan” Moffat told the room. “If you have an AI business plan, that’s terrific, but you can improve it. This area is just moving so fast.”