Top 4 Ways Automated Sortation Systems Reduce Ongoing Operating Costs in Distribution
If you’re considering making the switch from a manual sortation process to an automated sortation system, then chances are you are wondering if the initial investment of time and capital will ultimately be worth it. Will the new system save you enough money to justify being implemented? Here are some of the most important cost savings that you can expect when you make the switch to an automated sortation system and warehouse automation in general.
1. Automated sortation systems reduce labor costs.
If you aren’t using an automated sortation system, then you’re doing your sorting by hand. And if you’re doing your sorting by hand, that means that you employ personnel for the sole reason of overseeing the sortation process.
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By switching to an automated sortation system, you would no longer need your sortation to be such a personnel-heavy part of your operation. Depending on the size of your operation, an automated sortation system could easily reduce the need for additional warehouse workers, which either allows you to reduce your spending on labor or reallocate employees so that they are handling tasks that add more value to your operations.
For example, discretely picking case orders can be extremely inefficient if done with conventional forklift equipment from storage racks. By batch picking to conveyor multiple cases of skus that are then sorted out to the order via a sortation system, the rate achievable per hour by each picker can increase easily by 4 or 5 times. An item level order selection system, where the items are stored in a sea of shelving picking, can make up over half of the warehouse labor.
By allowing batch totes to be created, the number of units picked per hour in a zone can increase significantly when no care needs to be exercised to picking to the constraint of which skus are needed for an order. Instead, work can be grouped so that the operator can pick the items in their zone that are required for many orders. Multiple containers can then be brought to a unit sorter where all of the work is sorted out for each packer down to the order level as items in each container are consolidated with their brethren from other containers.
In exchange for the initial investment that it would take to purchase and implement an automated sortation system, order fulfillment operations can save a lot of money by eliminating the ongoing costs that accompany human personnel: Salary, healthcare expenses, retirement benefits, vacation and sick time, overtime pay, etc., which brings us to the second point.
2. They limit salary and benefit increases.
Employees expect their compensation to grow with their experience level and time with a company. Whether this is through yearly salary increases, bonuses, additional vacation time, better insurance, or a 401k match, with each year that passes, your workers will inevitably want more compensation for their services. This means that every year, your labor costs increase, eating into your margin and reducing your profit.
By replacing personnel with an automated sortation system, you remove this perpetual growth in labor expenses. In fact, while human workers get more expensive as the years go on, an automated sortation system becomes more profitable: Once a machine has operated long enough to recoup the initial investment, any additional proceeds that its use brings in is pure profit (excluding the cost of maintenance, repair, and energy consumption).
3. They increase order processing efficiency and accuracy.
Because sortation is critical in many steps of the order fulfillment process (receiving, picking, packing, and shipping), an automated sortation system can have a tremendous impact on your ability to efficiently and accurately fill an order.
Simply put: Humans make mistakes. When human workers are responsible for sortation at various steps of the order fulfillment process, mistakes are bound to happen along the way, costing your operation time and money. By replacing the human element with an automated system, you remove some of this potential for inaccurate workflows, ultimately reducing waste and increasing output, allowing your operations to become more productive and accurate.
This increased accuracy and efficiency will help you boost your KPIs, which can have big ramifications down the line. For example, lowering your total order cycle time by increasing your efficiency will allow you to get orders to customers more quickly, keeping them happy and ensuring that you will retain their business. Similarly, boosting your perfect order percentage by as little as 3 percent (thanks to the increased accuracies inherent in automated sortation systems) can increase your profit margin by 1 percent: A solid, respectable gain.
4. They save space, allowing you to build up rather than out.
In conventional operations, items are typically picked from racks that are separated by about 10’ aisles. Because most of the active skus are only located in the lowest rack level (so they are easily retrieved by pickers without having to use order pickers to reach elevated locations) this requires many more bays and ultimately much more space than if the entire vertical bay was used.
Because picking from an order picker is time-consuming and unproductive, pick modules are used to provide a pick slot for every item adjacent to an aisle. In these configurations, levels are stacked atop one another and are accessible by pickers who gain access via stair towers at each end. Items are picked to the conveyor on each level and convey out to a sortation system. At the sorter, these cartons can be sorted down to the order level and consolidated with the others required for an order.
Going vertical allows the cube within a warehouse to better utilized which reduced the total footprint required for an order fulfillment operation, and this reduced footprint can save an operation money in a number of ways. A smaller space means that less money is spent on energy to heat/cool and light the facility, and it potentially means that you will be liable for fewer property taxes (depending on your locale).
Making the most of the space you’ve already got will also allow you to put off other costly projects such as moving to a larger space or building out your current space, and who doesn’t like to save money?
Take it to the Bank
Implementing any kind of new system requires an investment of time and capital: That’s just how business works. As long as the new system allows you to recoup the initial investment through cost savings and increased performance, it is worth the upfront costs. An automated sortation system reduces current labor costs, removes future labor cost increases, and boosts your accuracy and profitability, making it a smart choice for any order fulfillment operation looking to modernize.
