The Advantages and Disadvantages of Automated Storage and Retrieval Systems

An organisation must choose what sort of 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 its 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.

• The throughput of products in terms of their characteristics. The weight, volume and density of the products being handled will determine if 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 that operates as manual, semi-automated or fully automated warehousing types, and the costs and capacities of these may be more suitable where the sustained output in terms of the volumes of products handled is still being determined.
 

 
Automated Storage and Retrieval Systems (AS/RS) are the various computer-controlled systems for automatically handling materials into, through and out of a warehouse operation. AS/RS systems are typically used in organisations where:

• The maximum use of warehouse or manufacturing facility space is critical to ensure the lowest unit storage or manufacturing costs.

• Site-specific space constraints exist.

• There are no final amendments made to the products between the products being received from suppliers and dispatched 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 the fact that only limited amounts of costly products will be purchased.

• An exceedingly high volume of products is being moved into and out of the warehouse, primarily 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 the handling of products and make stock auditing easier as 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 throughput of the warehouse 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 that is made of the space volume and the potentially slower speed in which nonstandard loads can be handled. The potential advantages of initiating and using an AS/RS warehouse might include: 

• Reduced Staff Costs: by implementing an AS/RS warehouse, an organisation can decrease its staff costs in several ways, as some AS/RS warehouse operations can 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, eventually, errors will 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 within 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 that can be expensive and may lead to a limited amount of 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 for whom the demand varies for their products and/or services from week to week or month to month will need help to operate 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 safely handle AS/RS warehousing systems. 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 but is only suitable for some organisations due to the vagaries of demand. The high investment required for an AS/RS warehouse needs 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 against 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 where the risk of demand downturns can be shared over many product lines, making these facilities ideal for third-party warehouse operators that handle the inventories for several different trading organisations.
 

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