To remain competitive, organisations must take advantage of the latest technology. Automation of material handling is one area of innovation that has proven to be vital in mitigating operational risk, improving efficiencies and remaining competitive. By Amit Asthana and Charles Edwards.

Over the last few years an increasing number of companies have chosen to automate their operations. The $152bn global industrial automation market has grown at 6% per year for more than a decade, which is nearly twice as fast as the overall industrial production growth rate.

Automation technologies can significantly reduce reliance on intensive and repetitive labour, leading to safer workplaces, increased throughput volumes and reduced expenses. Due to these benefits, and the lowered costs of implementation, more manufacturing, warehousing, distribution and storage companies are turning to automation technologies to innovate their organisations.

The key consideration is what automation processes are applicable to your organisation. What are the potential benefits, the limitations and critically, the investment requirements?

Safer workplaces through automation

The implications of improved safety under automation are significant. Some of the most common OH&S risks in the manufacturing workplace include:

  • Accidents by mobile plant equipment.
  • Falling objects.
  • Lifting and repetitive bending (manual picking and put-away).
  • Slips, trips & falls.

Although enhanced processes and procedures can reduce the likelihood and impact of some of these risks, they cannot eliminate the risks altogether. However, automation technologies can re-engineer operations to eliminate entire categories of workplace risks.

Automated systems are typically capable of determining when there is an obstacle in their path and alter their course. Unlike humans, they never get tired, never get distracted and provide the same reliable service 24 hours a day, 365 days a year.

Four predominant categories of manufacturing and warehousing automation technology today are: automated guided vehicles (AGVs); automated storage and retrieval systems (AS/RS); automated truck loading systems (ATLS); and in-line conveyor systems. All categories offer the same benefits but to varying degrees of magnitude. They all deliver improvements in safety by reducing human physical interaction and mobile plant usage, they improve production throughput and reduce operating costs.

  1. Automated Guided Vehicles (AGVs)

AGVs can transfer stock between defined locations within a facility, effectively replacing manually driven forklifts. AGVs can be small – delivering mail around the office – or they can be enormous and invisible to the public eye – moving aeroplane wings between hangers. Often they appear not dissimilar to a tradition forklift. AGV technology has been around for some time but has developed rapidly over the last decade. Today AGVs are entirely autonomous, capable of taking alternative paths when obstructed, providing automated put-away and unloading trucks.

Research by GRA indicates that during operating times, one AGV is approximately equivalent to one forklift driver. Together with a well-integrated warehouse management system (WMS), AGVs can completely automate the warehousing process.

Organisations with warehouses that are already running on three shifts, handling high volumes with low-margin products have the most to gain from AGVs, which can improve operational efficiencies and drive down costs. AGVs are already used to manage pallets at Coca-Cola, massive shipping containers at the Port of Hamburg, assembly parts at Tesla, and millions of dollars in the US Mint. The potential applications are endless as AGVs are only restricted to what they are programmed to do. Any application of AGVs needs to also consider the requirement to recharge or ‘swap-out’ AGV batteries every 12 hours, this procedure can also be automated.

  1. Automated storage and retrieval system

An AS/RS can autonomously store pallets and packs using automated gantry cranes. These systems are more commonly seen in quick turnaround distribution centres. Compared to facilities with traditional racking systems, an AS/RS is capable of improving space utilisation by at least 60%. These systems eliminate any potential safety hazards from within the storage facility and provide enhanced visibility of pallet locations. Long-term benefits include reduced site costs from facility consolidation.

However, an AS/RS can unfortunately be quite expensive. A case study by GRA found that positive ROI does not occur for at least five years. Additionally, these systems are not entirely suitable for bulky and odd-shaped products. Further customisations may be required to suit your product range, which can pile on to investment costs. Nonetheless, constructing a warehouse from scratch together with an integrated AS/RS significantly reduces overall installation costs.

Given the expensive investment costs, AS/RSs are more feasible for high-stock-turnover distribution centres where throughput can be significantly improved with automation that works 24/7.

  1. Automated truck loading systems (ATLS)

ATLS are a recent technology, which stacks and arranges pallets to resemble a full truckload. When the pallets are ready for shipment, they are transferred ‘as is’ into a truck through a mechanical platform that either rolls or pulls the load into the trailer via a chain-driven conveyor system. This system is obviously limited to only enhancing the truck loading and unloading process, though its benefits in this area are noteworthy. Trucks only need show up when a load is ready to be taken (“Just-in-Time”) and truck loading time is significantly reduced.

GRA research indicates that an ATLS is capable of reducing the truck turnaround period for some organisations from over one hour to just a few minutes, cutting this process by 95%. These systems give the manufacturer greater flexibility, improved space utilisation by reducing the number of loading bays and reduced safety risks in loading areas.

  1. In-line conveyor systems

Conveyor systems remain the most common and are generally the cheapest automation systems to implement today. Using fundamental industrial engineering concepts of pull manufacturing, in-line conveyors can be implemented to automatically deliver stock downstream as and where required. These systems eliminate the requirement to store excessive stock in WIP areas, which take up expensive real estate and negatively impact working capital.

In-line conveyor systems reduce flexibility and do not provide an automation solution regarding storage or despatch. These systems often require at least some human interaction to complete storage functions. Previous GRA research indicates that in-line automated routing conveyors can provide a positive return on investment in less than two years.

Automation is here and it’s feasible!

GRA recently completed a feasibility study assessing the potential of the four automation concepts for a timber company that produces construction timber in bulky pack sizes. The client’s internal production flow was assessed to develop an ideal solution that would help them reduce safety hazards across their warehouse operations.

The study found that AGVs provided the best value for money, delivering a positive ROI within three years. AGVs alone were the most cost-effective solution capable of running transfers within internal WIP workflows, completing put-aways and delivering loads to the dispatch area.

The outlook for automation is positive, with the key technologies rapidly advancing, costs of implementation reducing, and scales of application growing. Nonetheless, there remain some constraints to automation in 2016, including the hefty initial investment outlays and ongoing maintenance and engineering running costs. Specialised technologies will also often require skilled operators and maintenance personnel to minimise system downtime.

The impact of automation of jobs

Debate is often sparked that automation takes jobs away from those within the manufacturing industry, and this argument can prove a road-block for major organisations. Although it is clear that a number of manual jobs will be replaced by machines, a disruptive manufacturing innovations survey conducted in 2014 demonstrated that approximately 70% of respondents believe robotic automation will actually provide more jobs on the whole from organisation growth and demand for skilled operators and engineers. Indeed, following the release of Kiva Systems, Amazon actually hired 61,000 additional employees.

Automation technologies improve safety, reduce costs and increase throughput. These technologies are not a futuristic ideology, they are here today and with a medium-term outlook the purchase price is justifiable. It is very likely that at least one of these automation technologies can enhance the way you operate your business and drive new-found profits and competitive advantage within three-to-five years.

Amit Asthana is a management consultant at GRA supply chain consultants. Charles Edwards is a consultant with GRA based in Melbourne.