Retrofit Considerations and How to Successfully Implement

Guest blog by Rob Glynn from MHI Member Company TGW Logistics Group
It has now been 60 years since the opening of the first “automated” high bay warehouse (HBW). The trailblazer was Bertelsmann’s “Book Silo,” which went into operation in Germany in 1962. Since then, thousands of HBWs and other automated warehouses have been built and some of them have been going for decades. After years of operation though, very few systems still exist in the same format as they were installed. Steel components may be sturdy, but IT and control elements, as well as mechatronics, must be regularly updated. And when product ranges, volumes, or customer demands change, modernization and expansion become necessary.

Adjustments, expansions, and modernization
Retrofit activities can be divided into three subcategories: adjustments, expansions, and modernization. Adjustments consist of actions taken within months of a system being put into operation in order for the company to keep up with new market requirements. The second subcategory, expansions, are particularly important for companies that experience strong growth after go-live. This is when a company adds capacity or new functionality to an existing system to meet market demands. Finally, regular modernization of the control systems and IT is usually necessary every four to five years due to technology changes or component obsolescence. Mechanical equipment, if properly maintained, doesn’t need to be upgraded for ten or more years. Importantly, if a company works with the right automation partner, any of these retrofit activities can be implemented during ongoing warehouse operations.

E-commerce, automation, and focusing on customer needs
An important driver in the application and implementation of an automation retrofit is the growing competition for customer loyalty in online retail. This has led to promises of shorter and shorter delivery times over the years. If the competition can fulfill customer demands faster and more accurately, a retailer runs the risk of losing sales because the competition is no more than a click away. As a result, companies have no choice but to establish a more highly-automated, resilient supply chain.

Unplanned downtimes, inconsistent labor availability, and high order variability are a nightmare for logistics managers, and long cycle times are a clear competitive disadvantage.

Information in real time
Technology is changing faster than ever, requiring companies to gear up for the future. A simple software upgrade can increase functionality, while a new warehouse management system enables better connectivity and more continuous data flow. On top of that, companies are now more often looking to integrate autonomous technologies like automated guided vehicles or robots into their overall system. Adding such technology can only yield optimal results if the warehouse is running on state-of-the-art IT systems that are able to exchange information along the value added chain in real time.

Another benefit that comes from a technology retrofit project is that future maintenance is faster and easier because of access to real-time data of system and component performance.

Sustainability as a decisive criterion
Sustainability is a critical component of many company strategies now and this has driven an increased need for retrofit projects. As companies pursue ambitious programs aimed at reducing emissions, they are more conscientious than ever about resources, carefully and thoroughly examining every link in their supply chain for potential reduction. In doing so, they delve deep into things like the energy consumption of different storage and retrieval machines or conveyor systems. The improved energy and space efficiency and extended lifespan of retrofit projects are the reasons they are inherently sustainable investments.

Finding an experienced partner
Once a company has recognized the need for a retrofit or expansion, they need to consider some important factors in order to ensure success. TGW Logistics Group has identified seven such considerations:

  1. Consider the lead time and start early enough
  2. Choose experienced partners and project managers
  3. Develop a structured plan
  4. Integrate specially developed retrofit solutions
  5. Create a comprehensive functional specification
  6. Clearly define migration phases
  7. Hold intensive employee training

Companies often assume they can wait until their system is near the breaking point before an upgrade. This thinking is not considering the lead time for the scoping, engineering, manufacturing and installation of the system. The whole process can take a year or more, so a general rule of thumb is to start the upgrade process when a system is at 85% capacity or at 85% of its usable life. This ensures that a solution can be implemented prior to an impact on operations.

Choosing experienced partners and their project managers is perhaps the most important step. An experienced partner will do a deep analysis of current warehouse operations data and use it to define a customized, structured plan that directly addresses growth or upgrade needs. Their industry knowledge allows them to select solutions that are specially designed for and best utilized in retrofit projects, and they are able to create a comprehensive functional specification that will guide the project. An experienced partner is also able to establish clearly defined migration phases for faster and easier implementation.

Lastly, employees need to be well trained. Employees need to know how to use the upgraded systems, and on-site IT specialists, engineers, and technicians must have a comprehensive understanding of all the changes. The stronger the training program, the more successful the retrofit project will be, as the team will be able to troubleshoot effectively, manage the system efficiently and ensure that automation runs as smoothly as it was designed.

The bottom line is, companies should not debate whether or not to undertake a retrofit, but rather when and how. Putting off retrofitting has significant risks. Spare parts can become obsolete or technology can become unavailable. Competitors can gain market share with better warehouse automation and shorter lead times. And knowledge can be lost when employees who know how to work with the current programming languages and control systems leave or retire—a real concern in today’s labor market. The best way to ensure a successful retrofit implementation project is to find the right moment and the right partner.