Guest Commentary: Pushing Your Automation Project Over the Goal Line
Capacity, customer satisfaction and safety can strengthen your case
by Jeff Ross
With the assistance of your trusted financial teammate you’ve assembled what you believe to be a compelling case for your warehouse automation argument. The numbers look good, as the payback period and IRR are comfortably within the company’s criteria. But remember this: Your request is only one of several other “critical” projects seeking capital budgeting approval. You may need additional support to propel your request to the top of the list.
That’s why early in the process you recruited a corporate planner, a marketing strategist, a production guru and HR type to your team. You realized that aligning your automation project with the corporation’s strategies for growth, marketing’s drive to multi-channel distribution and industry-leading customer service, and HR’s concerns for employee recruitment, retention and safety would be the difference maker in this competition for funds.
Ensuring sufficient capacity to meet customer requirements, specifically for fast-growing companies is a critical and, to some degree, predictable operating variable. Admittedly, it’s a balancing act — you don’t want to drive up the cost of your proposal, but you must include sufficient scalability for incremental capacity increases to accommodate projected growth. The shortsighted DC manager adds automation in response to bottlenecks; the prudent manager plans for the future to meet senior management’s expectations.
The marketing payoff is another issue. Among today’s senior-level executives, there is an abiding perception of the high correlation between a positive customer experience and top line growth. For capital investments that have an “all things being equal” financial return, inclusion of specific service improvements can make the difference between approval and rejection. Improved distribution operations can be a tangible and measurable competitive advantage — an important differentiator — in attracting new customers, retaining existing customers, and encouraging both groups to purchase more product from your business. You and your team can plausibly argue that your DC automation will drive revenue growth.
Ask any grizzled DC manager what his number one problem is and you’ll get this very direct response: People. It’s no secret — finding capable and dependable labor is the most critical challenge confronting the service industry. Recruiting, training and retaining people with the right aptitude and attitude are increasingly difficult. Automation will ameliorate this more or less to the extent of its implementation. Workforce efficiency or productivity will improve as will asset utilization/return on assets metrics. But there are other key benefits of introducing technology and automated equipment into the DC environment. Safety is certainly near the top of the list.
Fatigue and exposure to work task risks can be significantly reduced through automation. New tools, such as voice recognition technology, can free up hands for more multi-tasking opportunities. A thoughtful marriage of workspace design with automation will result in improved ergonomics, furthering both worker safety and productivity. For example, eliminating foot or lift truck travel during the picking process, ensuring picking tasks occur at ergonomically correct heights and reach ranges, employing AS/RS for pallet loads and mini-load/shuttle systems for case picking not only result in a more productive environment but in a safer one as well.
Each of these issues — capacity, customer satisfaction and workplace safety — can improve your business case for DC automation. Make sure to include them along with their estimated financial impact in your project’s economic justification.
Jeff Ross is VP of Consulting with MHI Member FORTE. #forte
