The case for going paperless

by Lance Reese

Today’s distribution centre manager faces a host of business pressures that hinder the ability to achieve increased productivity and higher accuracy. There is a strong need for flexibility to adapt to the ups and downs of growth, economic influences and increased seasonal demand curves. Since mistakes can cost a company valuable customers, companies are placing a high value on accurate pick, check and pack processes.

Other variables add to the pressure, too: company growth, concerns regarding labour turnover and the need for a higher degree of real-time management insight, to name a few.

To meet these challenges, many DC managers are looking to automated order fulfillment solutions including pick-to-light and pick-to-voice. But is it for everyone? And what should be considered before making the move?

Start where you are

The best place to start is with a thorough analysis of the current DC operation to establish a baseline and identify points of weakness. This includes gathering at least six months of data for non-seasonal operations or at least 12 months for seasonal operations. Most automated material handling integrators have detailed operational analysis questionnaires that they can help the DC management to complete.

It is recommended to have data on the following variables:

• Location (the types of racks and shelving, the number of SKUs, etc);

• Labour (the number of shifts and the number people working as pickers, checkers and packers);

• Costs (of both labour and returns);

• Current pick methods;

• The typical order profile (the number of orders, lines, pieces, shipping data, error rates and error costs);

• The warehouse management system (WMS) and any other software in place; and

• The key problem areas in the DC.

Calculating ROI

The most common variables that fuel the return on investment (ROI) of a paperless system are productivity and accuracy.

When making the move from paper to pick-to-light, companies can realize productivity increases of 50 percent or more; companies that move from paper to RF or voice picking tend to achieve increases of approximately 25 percent.

Most automated fulfillment systems include software to monitor the productivity of workers on an individual or zone basis. Many also provide tools to help managers right-size the workforce, structure shifts and get more out of an existing facility. Gleaning this data from a paper picking and reporting system can be very difficult.

Because of these factors, if there is increased demand in the DC, applying automation to increase productivity may turn out to have a higher ROI than adding an additional shift.

Then there are accuracy rates, which are the foundation of success for the company, as they affect customer satisfaction and reduce the cost of returns. Pick-to-light and voice picking systems often yield accuracy rates nearing 100 percent.

Some manual operations with experienced workers get similar rates, since such employees tend to be more accurate order-pickers. But with the labour force changing, it’s harder for companies to rely on veterans. Furthermore, with resources in short supply, it can be tough to find the time and funds to bring a new recruit up to speed. Automating can help, since most workers can learn how to use a pick-to-light or pick-to-voice system in a few minutes.

Flexibility, insight and integration

Companies opting for automated processes may also be able to reap greater flexibility, management insight and WMS integration as additional perks.

Users often cite dynamic demand curves and seasonality as reasons for replacing a paper-based pick system. Automated systems can quickly accommodate accelerated orders—a significant challenge in a paper pick environment—without requiring the addition of emergency staff.

Then there is management insight. With senior leaders demanding increased quantities of data from every aspect of the enterprise, it’s important for management dashboards to be populated with accurate, real-time information.

Many of today’s pick-to-light systems can deliver total labour force transparency—including worker location, pick rates and accuracy rates—to the DC manager instantly. That is next to impossible with paper-based systems.

Another benefit of automating is the ability to integrate to the WMS, ERP or other legacy management application.

Lance Reese is Technical Solutions Director at Intelligrated.