Category: Supply Chain

The Case for Automation

Beverage distributors face a lot of complexities when it comes to running their businesses, such as industry consolidation, rising operational costs, the proliferation of SKUs and increasingly varied product and package sizes. Distributors must continuously look for ways to make their operations more efficient and cost-effective, especially in this economy, and often automation can play a vital role.

According to i>Beverage World’s operations survey, more than 80 percent of distributors have yet to automate and are still moving cases through their warehouses 100 percent manually.

“I talk to so many distributors who say they really would like to cost justify automation, but the savings is sometimes hard to come by. Most people want to pay off an investment in automation in less than five years, and that’s difficult,” says Chet Willey, a consultant and owner of Chet Willey Associates.

Many medium-sized and smaller distributors often think investing in automation means becoming fully automated to the degree of large, high-tech distributors like J.J. Taylor or Monarch Beverage, as both are leading the industry in automation technology in their warehouses.

But warehouse operators can invest in automation technology in steps and phases that suit their budgets and operational needs.

And Willey stresses that the pay out for automating shouldn’t just be reducing labor costs.

“Distributors that successfully cost justify automation usually end up with significant delivery savings as well,” Willey says, pointing out that automated pick systems in the warehouse, also known as pick to go, make the delivery process more efficient and can often reduce the number of delivery routes by 20 percent.

Steve Golladay, a retired supply chain executive who spent 22 years at Coca-Cola Bottling Co. Consolidated, points out that it’s about scalability. “There’s this idea that distributors think they are too small and automation costs too much. But I think they are unaware that automation for them, as a distributor of 1 million or 1.5 million cases, is not the same as for that 20 million case distributor. Distributors are facing the same complexity whether they are small or large, but they are trying to survive with the way things have been for decades. And if they haven’t hit the wall with constraints, then they’re waiting until they have a problem and they’re not taking that step to find out what automation could do for them,” he says.

Warehouse operators need to assess their operations and their challenges and find solutions that work for their particular needs, he advises.

Voice pick, automated case picking and layer pick systems are technologies that distributors can look into and require a smaller financial investment than fully automated systems.

“Layer picking has always been used in soft drinks, but now quite a few distributors, such as J.J. Taylor, The Reyes Group and Andrews Distributing, also use layer pickers and they are able to pick cases at rates of 2,000 a minute, by using layer picks attached to a fork lift,” says Willey.

With route deliveries, there is an increased demand for smaller, more frequent orders as well as for a wider range of product variants, and layer picking helps to manage this complexity by building mixed pallets in the warehouse.

Dematic, for instance, offers a robotic layer picking solution, which combines an advanced robotic layer picker with patented software that enables the system to operate at efficiency rates up to 150 percent and, in some cases, eliminate as much as 80 percent of manual handling.

MillerCoors distributor Andrews Distributing invested in a number of new technologies and warehouse processes in its new 300,000-square-foot Allen, Texas beer distributorship opened this past year.

According to Mike Barnes, executive vice president and general manager at Andrews Distributing, a voice pick and layer pick system has helped Andrews operate more quickly and efficiently.

“We have forklifts with four-pallet- high storage and staging ability. And a forklift with a side mount layer picker attachment allows us to pick multiple layers quickly of our high volume SKUs,” Barnes says.

Automated storage and retrieval systems (AS/RS) are another technology that distributors are investing in to meet increased demand for mixed pallet deliveries and contend with more SKUs.

Westfalia Technologies specializes in AS/RS systems, especially high-density storage systems. Westfalia’s Satellite technology is a fully automated patented rack entry vehicle used in the AS/RS to store and retrieve pallets and rolls. The AS/RS systems can enable a multiple deep configuration, sometimes up to 12 pallets deep. And, according to the company, even smaller distributors can benefit from an AS/RS system and will see a return on investment.

Many companies are offering scalable automation to meet the needs of smaller volume beverage distributors without being very expensive.

Vertique, a part of ITW, designs customized systems specializing in mixed case picking and palletization. The innovative vertical tower system maximizes current warehouse space and minimizes warehouse labor. And, the company says it has built systems for distributors with as many as 30 million mixed cases to as few as 2 million mixed cases.

“If you only have to run 1,500 cases an hour, you create the system to not run as fast as at a much larger distributor, where perhaps they run 8,000 cases an hour,” says Golladay, who works as a consultant for ITW and Vertique. “And where they have a couple of palletizers, you would only need one palletizer. It’s not a lot of bells and whistles; it’s mainly conveyors and storage and it keeps the system running based on the orders coming through.”

Conveyor systems are another automation investment that can help eliminate manually transporting pallets from one area of the warehouse to another.

“That’s a simple, bare bones solution of moving product to eliminate stress and strain on the organization,” Golladay says.

Automated stretch wrappers are one area that could reap big rewards for smaller and medium-sized distributors looking to make more reasonable investments in automation. For an investment of $85,000 to $200,000, as opposed to several millions of dollars, automatic stretch wrappers require no operator as the pallet loads are brought to the machine via conveyor, Golladay points out.

Although not technically automated or high-tech, there are some low-tech options, such as improving warehouse layout and gravity-fed flow racking, that can make a significant impact in productivity and efficiency in the warehouse as well.

“I tell folks that regardless of your size, don’t be afraid to investigate and ask questions about automation solutions as you’d be surprised with what you can afford and can do as part of a five or 10-year growth strategy,” Golladay says.  

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