Thriving in the long haul: interview with Colin Yankee
As Colin Yankee of retailer Tractor Supply explains, it takes more than just stocking the right essential goods to grow your business during a pandemic.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
In the midst of the Covid-19 pandemic, retailers have been at the forefront of keeping us supplied with the goods that make our lives feel as normal as possible. But not all retailers have fared equally well in these difficult times. Some are on the verge of collapse, unable to withstand the one-two punch of mandated store closures and the e-tail tsunami, while others have pivoted successfully and actually grown their business. Brentwood, Tennessee-based
is one of the latter. Thanks in part to a formidable supply chain operation, Tractor Supply has managed to keep essential goods flowing to America’s “out here” locations throughout the health crisis while racking up double-digit increases in sales.
Executive Vice President and Chief Supply Chain Officer Colin Yankee is responsible for that supply chain, overseeing merchandise planning, inventory management, vendor operations, transportation, and distribution operations. Yankee gained valuable supply chain management experience during stints at Neiman Marcus and Target. Before starting his civilian career, he graduated from the U.S. Military Academy at West Point, New York, and served as a captain in the U.S. Army. He holds a master’s degree in supply chain management from Michigan State University and an advanced management certification from Columbia Business School.
Yankee recently spoke with DC Velocity Editorial Director David Maloney about Tractor Supply’s wild ride over the past year. Read or listen to the interview.
Q: Tractor Supply has stores in most parts of the country, but some readers may not be familiar with your company. First of all, your main line of business is not really tractors, is it?
A: It is not. Tractor Supply has been operating since 1938. It started out as a mail-order tractor parts company for small farmers, but the business has evolved over the past 80-plus years. Today, we operate over 1,900 stores in 49 states that cater to the rural lifestyle. We had about $10 billion in revenue this past year, and are publicly traded on the NASDAQ as TSCO.
We sell everything people need for what we call the “out here” lifestyle. Our product lineup ranges from workwear and footwear for people out on the job site to animal feed for both livestock and pets. We also carry truck tools and hardware parts, all the way down to make/model-specific parts for a particular piece of equipment. And then we have all kinds of seasonal goods. So, while in a couple stores, we actually do sell tractors, we also sell basically everything you need to live out in the country and be self-sufficient.
Q: A lot of your stores are located in rural areas, but I live in the suburbs of Pittsburgh and there’s a Tractor Supply store about a mile from me. So you’ve made inroads into urban areas as well.
A: Yes, we have. As the suburbs have expanded out into the country and as our store footprint has increased, it has changed the nature of some of our stores and created a need for a very localized assortment mix. In Texas, we have a store that’s out near oil fields, so we will cater to that customer. Or you may be in the suburbs of Pittsburgh, and we’ll have more of a pet and garden type of assortment.
Q: That obviously presents some supply chain challenges.
A: It does. The hyper-localization means that we need to keep close tabs on the assortment level at each store and what the inventory position is at each of the distribution centers. You also have to factor in the highly seasonal nature of our business. It is very weather-dependent, and inventory is deployed for stores based upon the time of the year. But that can be surprisingly complicated. For example, we have a DC in Kentucky that services about 290 stores stretching from Ohio to Louisiana. Because spring arrives at different times in different parts of that geographic region, that one DC services spring goods and winter goods all at the same time.
Q: Like all businesses, you’ve had to adapt very quickly to a new normal since the arrival of Covid-19. How has the pandemic affected your company and your supply chain?
A: We’ve had the good fortune to be designated an essential business, so we’ve been able to continue operating throughout the pandemic. We first started monitoring the whole Covid phenomenon back when it was still contained in China because we’re a direct importer from China. At that time, our main concern was how it would impact the flow of our goods into the United States for the spring and summer selling seasons.
But then in March, things really started to hit home here in the U.S. For us, that meant navigating an array of local requirements in order to continue our operations. At about that time, we saw sales start to surge because we were selling animal food and pharmaceuticals and items that people were stocking up on in those early days. The surge in demand and the need to replenish those stocks had a ripple effect throughout our supply chain.
Then as customers started spending more time at home and in their backyards, they began to focus on improving their homes and property. We saw the spring and summer home-improvement goods really take off. We had two consecutive quarters of 30%-plus sales increases. That obviously put a strain on our DC network and our supplier base.
Q: You mentioned direct imports from China. Did you have to change any of your sourcing because of the pandemic?
A: We did. This experience really exercised some muscles that already existed. We are constantly re-evaluating our sourcing, and Covid is really just a new chapter in what’s been a pretty active couple of years. For context, we have adopted a total-landed-cost view for evaluating our assortments, so that includes product cost, where we source from, freight terms, miles, and packaging. We look at all those things as they relate to the flow of goods to the DC and ultimately to the store and to the customer’s doorstep.
And because we have a highly seasonal business, we’ve been adapting our supply chain over the last few years to give us more sourcing flexibility—specifically, the flexibility to source a product overseas initially and then replenish from a more domestic supply base so that we can be nimbler with replenishment based on sales.
And then in 2018, the newly imposed tariffs on steel and aluminum forced us to change some of our sourcing—not only for the things we sell but also for our racking, material handling equipment, and other items used in the construction of new DCs. And then, the Section 301 tariffs shifted some production sources. We moved some production to the U.S. and Mexico.
We conducted many of those same evaluations in response to Covid. But it wasn’t just through the lens of cost; it was through the lens of reliability and supply chain resilience. I think in the near term, it's been about shifting sourcing to help our suppliers as they've dealt with new workplace hygiene protocols, labor availability issues, and the transportation disruptions we've been experiencing.
Q: Your company has been out in front in its efforts to leverage data to fine-tune its operations. How has Covid affected the way you process and use that data?
A: We use both structured and unstructured data in adjusting our operations. That can include information from stores and online sales, credit card and loyalty program information, and insights from our call center. Then we take that and integrate it with what we’ve learned from team members in our stores and the feedback we get from our regional leaders who are out there interacting with customers and suppliers, and then we combine that with market intelligence from economists and with other customer feedback. And that data impacts everything, including store staffing, hours of operation, our product assortment, and how we communicate with our customers.
From a supply chain perspective, our big focus has been on applying data to help coordinate activities across the value chain—from our planning team, to our suppliers, to our carriers, through the DCs, and into the stores. In particular, we’ve been trying to use data to solve a couple of problems. The first is how to get earlier visibility into vendor production and transportation issues and then use that information to be more proactive with respect to re-allocating inventory, shifting our transportation plans, and adjusting DC staffing levels. The second is figuring out how to communicate that information across the organization, with our suppliers, and with our finance organization—and ultimately, how we can use it to be the best supplier we can be for our customers.
Q: Your business has had to adjust to people staying at home, or at least not venturing into stores as much as they used to. How has the resulting shift to online sales changed your DCs’ operations?
A: We’ve been on a multiyear journey to “activate” inventory everywhere, in both our stores and our DCs. We now have the ability to let customers buy online and pick up in every one of our stores. Each of our distribution centers not only supports store replenishment but can also fulfill direct-to-consumer orders. So, we have that opportunity to use inventory wherever it sits in a variety of ways.
What we saw with Covid was the acceleration of trends that we thought would take two or three years to gain widespread acceptance. The timeframe got compressed down to two or three weeks in some cases, where customers started leveraging “buy online, pick up in store” a lot more in order to reserve inventory and have a contactless transaction. We had already been offering curbside pickup at all of our stores, but that volume definitely picked up. And then, customers have been using our same-day delivery options out of all of our stores.
At the same time, we’ve seen about a threefold increase in the daily volume of direct-to-consumer orders fulfilled out of our DCs, and they’ve handled that very well. We’ve had to increase our staffing—both in our stores and in our DCs—to support the shift to digital fulfillment. And looking forward, as many operators know, it's not the daily volume that's the challenge; it's the peak jumps. So, we focus on getting as much throughput from our DCs as possible.
Q: What are some of the trends you’re tracking?
A: We think that the trends we saw in 2020 with customers engaging more digitally and spending time in their homes and with their families are going to continue through 2021. We are preparing for that. We are also seeing a lot of disruption in the import market right now with equipment imbalances in trade lanes between Asia and the U.S. So, we’re looking at how to adjust our ordering patterns and shift our sourcing.
We also see continuing demand for online fulfillment, so we’re continuing to invest in our fulfillment capabilities out of our DCs and expanding our ship-from-store capabilities. I think that’s going to stay with us for 2021, 2022, and beyond.
Q: You mentioned at the recent Gartner supply chain conference that every company should be looking at industry leaders to help show them the way. Who for you is that industry leader?
A: I don’t think there’s just one for us. One thing I love about supply chain is that there’s an openness to sharing in the profession. Supply chain professionals understand that supply chain success derives from a combination of all their capabilities, not just one tool or system or piece of automation. And because of that, there isn’t one leader that we look to when we go to benchmark our operations. Instead, we use our network of retailers, carriers and their customers, suppliers, software providers, automation providers and their customers, and their extended networks to find great reference points—companies that excel in specific aspects of supply chain management.
For example, we’ve recently had conversations with a pure apparel retailer about order-management system logic for fulfillment. We’ve done some compare-and-contrast exercises on organizational design with a company in the beauty space. We’ve shared our perspective on transportation visibility in sales and operations planning with a food and beverage company that was looking at our operation as a benchmark.
So, while I think imitation may be the sincerest form of flattery, it would be a terrible idea to pull from just one example when you’re looking to benchmark in your supply chain. I think there is something we can learn from everybody. And there is something we can teach everybody, and that’s one of the great things about the openness of the supply chain profession.
This story first appeared in the September/October issue of Supply Chain Xchange, a journal of thought leadership for the supply chain management profession and a sister publication to AGiLE Business Media & Events’' DC Velocity.
For the trucking industry, operational costs have become the most urgent issue of 2024, even more so than issues around driver shortages and driver retention. That’s because while demand has dropped and rates have plummeted, costs have risen significantly since 2022.
As reported by the American Transportation Research Institute (ATRI), every cost element has increased over the past two years, including diesel prices, insurance premiums, driver rates, and trailer and truck payments. Operating costs increased beyond $2.00 per mile for the first time ever in 2022. This trend continued in 2023, with the total marginal cost of operating a truck rising to $2.27 per mile, marking a new record-high cost. At the same time, the average spot rate for a dry van was $2.02 per mile, meaning that trucking companies would lose $0.25 per mile to haul a dry van load at spot rates.
These high costs have placed a significant burden on the operations of trucking companies, challenging their financial sustainability over the last two years. As a result, 2023 saw approximately 8,000 brokers and 88,000 trucking companies cease operations, including some marquee names, such as Yellow Corp. and Convoy, and decades-long businesses, such as Matheson Trucking and Arnold Transportation Services.
More so than ever before, trucking companies need to get better at efficiently using their assets and reducing operational costs. So, what is a trucking company to do? Technology is the answer! Given the nature of the problem, technology-led innovation will be critical to ensure companies can balance rising costs through efficient operations.
One technology that could be the answer to many of the trucking industry’s issues is the concept of digital twins. A digital twin is a virtual model of a real system and simulates the physical state and behavior of the real system. As the physical system changes state, the digital twin keeps up with the real-world changes and provides predictive and decision-making capabilities built on top of the digital model.
DHL, in a 2023 white paper, suggests that—due to the maturation of technologies such as the internet of things (IoT), cloud computing, artificial intelligence (AI), advanced software engineering paradigms, and virtual reality—digital twins have “come of age” and are now viable across multiple sectors, including transportation. We agree with this assessment and believe that digital twins are essential to radically improving the processes of fleet planning and dispatch.
THE NEED TO AUTOMATE
Outside of attaining procurement efficiencies, trucking companies can achieve lower costs by focusing on critical operational levers such as minimizing deadheads, reducing driver dwell time, and maximizing driver and asset utilization.
However, manual methods of planning and dispatch cannot optimally balance these levers to achieve efficiency and cost control. Even when planners work very hard and owners strive to improve processes, optimizing fleet planning is not a problem humans can solve routinely. Planning is a computationally intensive activity. To achieve fleet-level efficiencies, the planner has to consider all possible truck-to-load combinations in real time and solve for many operational constraints such as drivers’ hours of service, customer windows, and driver home time, to name just a few. These computations become even more complex when you add in the dynamic nature of real-world conditions such as trucks getting stuck in traffic or breaking down or orders getting delayed. This is not a task humans do best! For these sorts of tasks, technology has the upper hand.
When a company creates a digital twin of its trucking network, it has a real-time model that factors in truck locations, drivers’ hours of service, and loads being executed and planned. Planners can then use this digital model to assess possible decisions and select ones that increase asset utilization, improve customer and driver satisfaction, and lower costs.
For example, a digital twin of the network can offer significant insights and analysis on the state of the network, including exceptions such as delayed pickups and deliveries, unassigned loads, and trucks needing assignments. Backed by AI that takes business rules into account, digital twins can allow companies to optimize their fleet performance by finding the most efficient load assignments and dynamically adjusting in real time to changes in traffic patterns and weather, customer delays, truck issues, and so on.
With a digital twin, carriers can optimize the matching of assets, drivers, and freight. Typically, an investment in this innovative technology results in a 20%+ increase in productive miles per truck, while also improving driver pay and significantly decreasing driver churn. Drivers get paid by the miles they run, so when they run more, they are able to make more money, resulting in less need to chase the next job in search of better pay.
ADDITIONAL BENEFITS
Digital twins also combat deadheading, another source of driver dissatisfaction and cost inefficiencies. On average, over-the-road drivers spend 17%–20% of road miles driving empty. Using a digital twin, a company can search across several freight sources to find a load that perfectly matches the deadhead leg without impacting downstream commitments. These additional revenue miles will help drivers to maximize their earnings on the road and carriers to maximize their asset utilization and profitability.
The traditional manual dispatch planning model is becoming increasingly outdated—each planner and fleet manager tasked with overseeing 30 to 40 vehicles. Carriers try to manage this problem by dividing the fleet into manageable chunks, which results in cross-fleet inefficiencies. Such a system isn’t scalable. A digital twin acts as an equalizer for small and mid-sized fleets. It enables carriers to expand by venturing beyond the fixed routes and network they were forced to run out of fear of additional logistical complexity.
A digital twin can also give an organization the transparency and visibility it needs to find and fix inefficiencies. A successful carrier will leverage the technology to learn from the hitches in its operations. While this visibility is beneficial in its own right, it also provides the first step toward a seamless, digitized operation. “Digital revolution” is a buzzword frequently heard at transportation conferences. Yet not too many organizations are dedicated to digitizing their operations past the visibility stage. The end goal should be using decision-support systems to automate key elements of the system, thus freeing up planners from their daily rote tasks to focus on problems that only humans can solve.
Finally incorporating a digital twin can also help trucking companies work toward the broader trend of creating greener supply chains. Because they have lower deadhead and dwell times, trucking companies that have adopted a digital twin can be more attractive to shippers that are looking for more efficient operations that meet their environmental, social, and governance (ESG) goals.
THE FUTURE IS HERE
It is important to note that the benefits described here are not dreams for the future; digital twin technology is already here. In fact, choosing a digital twin can seem daunting because there are already a spectrum of options out there. First and foremost, an organization must ensure that the digital twin it selects aligns with both the goals and the scope of its operation.
Additionally, the ideal digital twin should:
Operate in near real time. A digital twin should be able to refresh as often as the network changes.
Be able to factor in specific customer delivery requirements as well as asset- and operator-specific constraints.
Be computationally efficient and comprehensive as it considers thousands of permutations in milliseconds. The digital twin should be able to reoptimize an entire fleet’s schedule of multi-day routes on the fly.
Before implementing a digital twin, carriers need to make sure that they have robust data management processes in place. Electronic logging devices (ELDs), customers’ tenders, billing, shipments, and so on are already inundating carriers with a glut of data. However, the manual nature of operations in many carriers leads to poor data quality. Carriers will need to invest in data management approaches to improve data quality to support the generation and use of high-fidelity digital twins. Otherwise, the digital twin will not be representative of reality and companies will run into an issue of “garbage in, garbage out.”
REINVENTION AND TRANSFORMATION
While data management is critical, change management through the ranks of dispatch operations is often a harder task. In fact, the largest roadblock carriers face when undergoing a digital transformation is the lack of willingness to change, not the technology itself. Many carriers cling to outmoded planning methods. Planners, used to operating based on well-worn business rules and tribal knowledge, could be wary of the technology and resistant to change. They may need to be assured that, while it is true that every trucking network is uniquely complex, digital twins can be set up to model the intricacies of their specific dispatch operations and drive value to the network. A significant amount of time and resources will need to be expended on change management. Otherwise even though trucking companies may invest in cutting-edge technology, they won't be able to fully capitalize on the added value it can provide.
As the truckload industry works through the current freight cycle, it is important to realize that change is inevitable. Carriers will need to reinvent their operations and invest in technologies to ride through the busts and booms of future freight cycles. Recent global events point to the many ways that wrenches can be thrown into global transportation networks, and the fact that such volatility is here to stay. Digital twins can provide companies with the visibility to navigate such changes. But above all, an operation that uses the digital twin to drive decisions can make customers and drivers happy, and help the carriers keep their heads above water during times such as now.
Regular online readers of DC Velocity and Supply Chain Xchange have probably noticed something new during the past few weeks. Our team has been working for months to produce shiny new websites that allow you to find the supply chain news and stories you need more easily.
It is always good for a media brand to undergo a refresh every once in a while. We certainly are not alone in retooling our websites; most of you likely go through that rather complex process every few years. But this was more than just your average refresh. We did it to take advantage of the most recent developments in artificial intelligence (AI).
Most of the AI work will take place behind the scenes. We will not, for instance, use AI to generate our stories. Those will still be written by our award-winning editorial team (I realize I’m biased, but I believe them to be the best in the business). Instead, we will be applying AI to things like graphics, search functions, and prioritizing relevant stories to make it easier for you to find the information you need along with related content.
We have also redesigned the websites’ layouts to make it quick and easy to find articles on specific topics. For example, content on DC Velocity’s new site is divided into five categories: material handling, robotics, transportation, technology, and supply chain services. We also offer a robust video section, including case histories, webcasts, and executive interviews, plus our weekly podcasts.
Over on the Supply Chain Xchange site, we have organized articles into categories that align with the traditional five phases of supply chain management: plan, procure, produce, move, and store. Plus, we added a “tech” category just to round it off. You can also find links to our videos, newsletters, podcasts, webcasts, blogs, and much more on the site.
Our mobile-app users will also notice some enhancements. An increasing number of you are receiving your daily supply chain news on your phones and tablets, so we have revamped our sites for optimal performance on those devices. For instance, you’ll find that related stories will appear right after the article you’re reading in case you want to delve further into the topic.
However you view us, you will find snappier headlines, more graphics and illustrations, and sites that are easier to navigate.
I would personally like to thank our management, IT department, and editors for their work in making this transition a reality. In our more than 20 years as a media company, this is our largest expansion into digital yet.
We hope you enjoy the experience.
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In this chart, the red and green bars represent Trucking Conditions Index for 2024. The blue line represents the Trucking Conditions Index for 2023. The index shows that while business conditions for trucking companies improved in August of 2024 versus July of 2024, they are still overall negative.
FTR’s Trucking Conditions Index improved in August to -1.39 from the reading of -5.59 in July. The Bloomington, Indiana-based firm forecasts that its TCI readings will remain mostly negative-to-neutral through the beginning of 2025.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak. Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year,” Avery Vise, FTR’s vice president of trucking, said in a release.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index, a positive score represents good, optimistic conditions, and a negative score shows the opposite.
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.”