By Bob Trebilcock,
Editor at Large -- 2/1/2006
With each new year, it's time to re-evaluate. And
from where Dick Ward, executive vice president of professional development for
the Material Handling Industry of America (704-676- 1190), sits, automated
materials handling is in the middle of a resurgence.
"Industry in general has come out of a
period of recession," says Ward. "Businesses have accumulated cash
and are now looking at where they can invest that money to get better
And for more and more companies, that investment
is going into automation.
That sentiment is echoed by suppliers of
automated materials handling systems. "I recently had the vice president
of distribution for a major retailer say to me, 'We're finally spending
money,'" says Susan Rider, senior vice president of sales and marketing
for Intelligrated (513-701-7300). "What many companies are realizing is
that by not doing anything, they're losing ground to their
Although the books have not yet closed on 2005,
MHIA is predicting that overall materials handling bookings for last year were
up by double digits. Better yet, the association expects that growth to
continue in 2006.
Within those numbers, certain types of automation
have been especially strong. For example, after four years of selling just 25
to 30 systems per year, 51 automated storage and retrieval systems (AS/RS) were
sold in 2004. Last year was another strong year, according to suppliers.
Likewise, 120 automatic guided vehicle systems (AGVs) were booked in 2004, up
from 84 systems the prior year. Not only were there more systems sold, they
were also larger: end users bought 605 new AGVs in 2004 compared to 360
vehicles in 2003. The trend continued in 2005.
"The number of systems was down through the
first six months of last year," says Mark Longacre, marketing manager of
the automated systems group for FMC Technologies (215- 822-4489). "But the
number of vehicles sold was up, which means that some large systems were going
Three words explain the renewed interest in
automation, according to Ward: productivity, productivity, productivity.
"There are so many ways by which materials handling technologies and
processes serve that need," says Ward.
The need for productivity is enhanced by a tight
labor market. "I just talked to a customer who said he knows that if he
builds a conventional distribution center, he won't be able to staff it,"
says Richard Rodgers, director of solution design, HK Systems (800-457-9783).
"The folks who are skilled and ready to work are already
However, other factors are weighing on the market
in addition to productivity. One is the emphasis on supply chain visibility as
manufacturers wrestle with more complex and extended supply chains. Web-based
software solutions track inventory between nodes in the supply chain. Now,
automated materials handling systems have the ability to collect and share information
about the processes inside facilities.
"If you have coordination everywhere but in
the warehouse or factory, you haven't achieved very much," says
Still other end users are turning to automation
to cope with evolving business conditions or the demand for new
The only constant in business today is change.
The variability in the volumes of business and product mix is a key reason many
companies are investing in automation now.
Industry leaders, for instance, see automation as
a way to leap further ahead of the competition. "Companies are realizing
that their supply chain can be a competitive advantage," says Ken
Ruehrdanz, business development manager for Siemens Logistics & Assembly
Systems (877- 725-7500). "Automation is one strategy that can help a
company improve its service quality and provide faster order fulfillment
New customer requirements are behind the adoption
of some technologies, like robotics for palletizing. "It used to be that
traditional palletizing was the norm and robotics was where you turned when you
were stuck," says Joe Campbell, director of strategic alliances for KUKA
Robotics (866-873-5858). "Now robotics is a starting
For instance, big box retailers may require loads
delivered to their stores with a specific pack or pallet pattern for an
end-of-aisle display. Often, those also require building pallets with multiple
stock keeping units (SKUs) or products on a single pallet. Rather than use
manual labor, robots are being used to depalletize pallets received from a
manufacturer and then rebuild them to the retailer's specifications.
Lower cost robotics and controls are also
allowing users to introduce automation into operations where automated
materials handling was previously too expensive. "We're able to automate
slower-speed, lower-volume lines that don't run seven days a week," says
Ken Thouvenot, vice president of project management and engineering for FKI
Logistex (877-935-4564). "You can combine three or four manufacturing
lines to one palletizing cell."
The cost and availability of labor is also
important for the adoption of technologies like AGVs. "The number one
factor driving the AGV industry is the cost of personnel," says Dwight
Williams, vice president of business development for Egemin Automation
(616-393-0101). "They're not necessarily replacing existing workers. They're
doing some tasks that people used to do so a company can expand without adding
The trend is not just limited to North America.
"We're seeing a number of projects in Mexico," says Bill Hawthorne,
vice president of marketing for Hytrol Conveyor Company (870-935-3700).
"To compete with lower-cost providers in South America, India and China,
they can no longer just simply add labor to expand their businesses and remain
Finally, the wave of company mergers and
consolidations is also leading to more automation. "When companies merge,
they may find they have two distribution centers within 30 miles of one
another," says Gary Cash, vice president of product management and
marketing for FKI Logistex. "They'll close one and then install automation
in the other to handle the volume of two DCs without adding
That may explain why many vendors say many
projects are being installed in existing facilities, not new facilities.
"A good portion of our sortation systems are going into existing
facilities," says John Sarinick, division manager for Beumer Corp.
(732-560-8222). "The driving force is the need for more throughput.
They've been doing things manually and just can't throw any more manual labor
at the problem."
Along with new business conditions, new business
processes are also pointing users to automation.
Take visibility. Automated systems can indeed
enable visibility into the movement of goods across the supply chain. They can
also provide much more granular visibility into manufacturing processes. Food,
beverage and pharmaceutical manufacturers, for instance, are required to
provide detailed information about the materials, processes and people involved
in producing a product. Capturing that information by hand is labor intensive,
error-prone and expensive. "Automated systems can capture an electronic
recording of every product movement thereby creating an electronic chain of
custody," says Ruehrdanz of Siemens.
Automation is also moving into new areas. Having optimized
distribution centers, some retailers are now implementing systems that sequence
containers to replenish the aisles in their stores, says Rob Schmit, vice
president of automation and systems for Schaefer Systems International
(704-944-4500). "If chewing gum goes on the left side of an aisle and hair
products on the right side, the system can direct you to load and stack totes
in the order they'll be put away on shelves," says Schmit. "If you
can take a few hours out of that process and do it over 500 stores in your
chain, that's a huge savings."
They are also extending automation to
shipping and receiving. "Once you get past palletizing, a lot of what goes
on in the shipping area is manual," says Brian Jaynes, director of
business development for the automated handling group
Webb (248-553-1220). "But
now we're adapting AGV technology to automatically load trailers. Not every
facility is a good business case, but large companies with a repetitive product
are looking at ways to automate that process."
The key to enabling these new processes, and
those in the future, are better control systems and software. "Controls
and software are making it possible to do things we've been talking about for
some time," says John King, vice president of sales and marketing for
Daifuku America (801-359-9900). "IT capability continues to get better and
better. That means more and more people are prepared to make a change in their
business models. As long as we have good data, we can take almost any level of
equipment, integrate it and give a great ROI."