Warehouse executives need to upgrade, not just replace, aging gear, Tompkins survey shows

As thousands descend on Chicago this week to examine the latest in material handling systems and equipment at ProMat 2015, a survey by a supply chain management consultancy found that much of the nation's material handling infrastructure has reached the end of its useful life and that executives should upgrade their equipment instead of duplicating the old gear.

"Do not replace to replace. Replace to evolve. Be smart about it," said Dale Pickett, director of supply chain services at Tompkins International, a consulting firm in Raleigh, N.C. "Every company needs to consider the right mix of equipment for what its mission is today."

The problem is expected to escalate in coming years as the material handling infrastructure, both technological and physical, requires increasing maintenance and repair, according to a recent survey of retailers, manufacturers, wholesalers, and third-party logistics firms conducted by Tompkins Supply Chain Consortium, a unit of Tompkins International.

Survey results showed that the average age of a material handling system is 15.3 years and that 35 percent of all companies surveyed have at least one material handling system that's at least 20 years old.

The most common byproducts are loss of employee productivity and considerable system downtime, each of which was cited by nearly one in five respondents. Other common headaches include excessive maintenance costs, lost throughput capacity, and customer service issues, the survey revealed.

"These systems last flawlessly for 10 to 12 years. If you do an ROI calculation, you can be confident they will last with only minor hiccups," Pickett said. "But after 15 years, most components will have reached the end of their useful life, and you can expect failure within hours, days, or weeks."

Without time to prepare for rerouting the flow of goods, that type of failure could lead to far worse problems than just a slump in productivity in the latest warehouse shift. The event could have long-lasting consequences, such as loss of sales, declining shareholder value, and loss of customer confidence, he warned.

These potential impacts make a compelling argument for facility owners to replace the old gear, but the most important part of the process is picking the perfect replacement.

Instead of simply replacing conveyor beds with conveyor beds, smart warehouse managers should examine both how their own business may have changed and how competitors have evolved, especially in an age where Amazon.com has come to dominate online retailing, Pickett said.

"Maybe your equipment was top of the line back then, but is that still applicable to what you're doing today?" he said. "If it was 10 or 12 years ago, that was before Amazon. Think about the impact of where e-commerce fulfillment has taken us in that time. Most companies have struggled and Band-Aided to make adjustments."

Many warehouses have been swept along by the trend that has distribution centers and fulfillment centers doing more e-commerce processing than store fulfillment, a profound change that may have altered the very types of products now flowing along material handling routes, chutes, and conveyors.