An organisation must choose
what warehouse operation is required to handle products when designing its
supply chain and logistics systems. The capital needed for the more
sophisticated systems can consume much of their financial reserves.
Considerations as to the type of warehouse materials handling system to use
will involve:
- The size of organisational
turnover, sales and profitability and the prospect of these increasing
over the foreseeable future, which could be the next ten years.
- The financial reserves that the
organisation must invest in such systems and the likely chance that the
required levels of return on the investment can be achieved.
- Product throughput in terms of
their characteristics. The weight, volume, and density of the products
being handled will determine whether a manual, semi-automated, or fully
automated warehouse is the best option.
- The sales policy of an organisation
can be cost-led, or the service given by the organisation to its customers
can be the dominant theme. The choice of warehouse systems will
significantly impact the service and the cost-of-service provision.
The provision of third-party
logistics services in the local area can also affect the choice and type of
warehouse system an organisation chooses. Third-party warehousing may be
available and operate as manual, semi-automated, or fully automated warehousing
types. The costs and capacities may be more suitable where the sustained output
of the volumes of products handled is still being determined.
Automated Storage and
Retrieval Systems (AS/RS) are computer-controlled systems that automatically
handle materials in, through, and out of a warehouse operation. AS/RS systems
are typically used in organisations where:
- Maximising warehouse or
manufacturing facility space is critical to ensuring the lowest unit
storage or manufacturing costs.
- Site-specific space constraints
exist.
- No final amendments are made to the
products between their receipt from suppliers and dispatch to customers,
and only finished products are handled, stored, and transported within the
facility.
- The accuracy of the received,
stored and dispatched products is critical because of potentially
expensive damages or because only limited amounts of costly products will
be purchased.
- An exceedingly high volume of
products is being moved into and out of the warehouse, especially if the
products are only handled by whole pallets.
An AS/RS warehouse is
typically used only for standard loads such as pallets, which come in 1200mm x
1000mm or 800mm x 1000mm configurations, meaning each standard load can fit
into a uniformly sized pallet racking space.
Standard loads simplify product
handling and make stock auditing easier. The utilised pallet configurations
mean that only pallets in the primary storage location must be counted unless
there are apparent signs that products have been removed from the pallet.
Using standardised pallet
loads within an AS/RS warehouse ensures that the costs of handling each pallet
or unit, if this is the preferred cost calculation, can be minimised if the warehouse's
throughput is maintained at or near its capacity.
Nonstandard loads can be
handled, but due to the irregularity of their size, the return on investment in
an AR/SR warehouse facility will be lower due to the decreased efficiency of
the space volume and the potentially slower speed at which nonstandard loads
can be handled. The potential advantages of initiating and using an AS/RS
warehouse might include:
- Reduced Staff Costs: Implementing an AS/RS warehouse
can decrease an organisation's staff costs in several ways. Some AS/RS
warehouse operations employ a single AS/RS system to replace a multitude
of picking staff, freeing staff to focus on more productive functions.
- Fewer Staff Constraints: Even if an organisation has the
financial means to employ a large body of staff, staff shortages can occur
due to the location of the AS/RS warehouse. The state of the labour market
and whether full employment or pay rates create a staff shortage, or the
demographic trends of staff not wanting to work in an AS/RS warehouse, can
constrain the markets for the labour available. Should turnover and
sales increase, AS/RS warehousing removes some constraints by allowing
material handling automation to replace staff. Warehouse staff can be
redeployed to higher-value tasks that make the organisation more
profitable. In contrast, standard low-value-adding repetitive tasks are
controlled by technology.
- Increased Safety: Staff become distracted from
their duties for several reasons, including fatigue, hunger, and
psychological or emotional stress. These issues can lead to increased
risks to health and safety and to mistakes made by staff when handling
products. AS/RS warehousing allows an organisation to eradicate some of
these issues by replacing staff with automated material handling
solutions.
- Increased accuracy: As mentioned above, humans are
error-prone, and no matter how well-trained staff are and how much
experience they accrue, errors will eventually occur, in addition to
increasing the safety issues of staff or damaging the product. These
errors can also impact materials workflows and lead to
inefficiency. A pallet delivered from storage to the wrong customer
could cause confusion, traffic jams, and a shutdown of materials handling
processes until the correct products that should have been dispatched are
found. Allowing an AS/RS warehouse system to manage the movement of
products means that these errors can be eliminated, ultimately reducing
inefficiencies and increasing output. All of this will allow the AS/RS
warehouse to become more accurate and, therefore, profitable.
- Better Use of Warehouse Volume and
Space: An
AS/RS warehouse carries another benefit for organisations. They are more
efficient at using space, which is critically important when an
organisation is constrained by the limited availability of land to
expand. By making better use of the space available in an AS/RS
warehouse facility, an organisation which has the constraint of not being
able to develop can utilise an AS/RS warehouse that typically uses less
space per pallet stored than is required for a warehouse in which
human-operated forklifts operate. Pallet racking can reclaim vertical
space, and automation allows high-density pallet storage that is difficult
to achieve by traditional means.
The disadvantages of AS/RS
warehouse systems might include the following:
- High Initial Investment: Implementing an AS/RS warehouse
system is likely to reduce staff costs and increase productivity, but
these benefits come at the expense of the initial investment. Like many
automation endeavours, implementing an AS/RS warehouse is more expensive
in the short term than hiring staff and utilising more manual systems and
processes for handling products using mechanical handling
equipment. The challenge is the high initial investment levels
required of small to medium organisations with limited capital or the
throughput of volume needed to justify such a facility to gain the return
on the investment necessary to make such a venture worthwhile.
- High Maintenance Costs: As with any equipment or
technology, an AS/RS warehouse will need routine maintenance and
occasional repair, which can be expensive and may lead to limited downtime
as occasional repairs and maintenance are also made.
- Suitability for Highly Variable
Materials Throughput:
An AS/RS warehouse best suits organisations with regular, predictable, and
repetitive demand characteristics. Organisations whose demand varies for
their products and/or services from week to week or month to month will
need help operating an AS/RS warehouse effectively and efficiently. A
decreased throughput of products increases the cost per unit, which, in
some cases, can eradicate an organisation's profitability.
- Technical Skill and Retraining of
Staff:
Staff employed within an AS/RS warehouse must be adequately trained to handle
AS/RS warehousing systems safely. This will lead to downtime during
training, which must be repeated when current staff leave the
organisation.
An AS/RS warehouse can dramatically increase productivity, efficiency, and profitability for many organisations. However, due to the vagaries of demand, it is only suitable for some organisations. The high investment required for an AS/RS warehouse requires a high and stable level of demand for the mandated return on investment to make such a venture worthwhile.
Therefore, the high investment levels required for an AS/RS warehouse facility must be carefully considered concerning the demand for an organisation's products, the effects of economic downturns, the cost of capital over the long term, and the impact on cash flow.
AS/RS Warehousing facilities can be extremely efficient and profitable, as the
risk of demand downturns can be shared over many product lines. This makes
these facilities ideal for third-party warehouse operators that handle the
inventories for several different trading organisations.
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