More cold warehouse operators eye automation to fight energy, labor costs.

By Bob Garrison

Want to know what cold warehouse executives are concerned about? Find out what they’re talking about.

Automated material handling technologies have been one recurring theme at meetings hosted by the International Association of Cold Storage Construction, the International Association of Refrigerated Warehouses and, most recently, the Council of Supply Chain Management Professionals (CSCMP).

Among those at CSCMP’s recent fall meeting was Bill Leber, manager of business development for warehousing and distribution systems at Swisslog, Newport News, Va.

“In addition to standard return-on-investment calculations, we see more warehouse operators conducting lifetime cost analyses – also known as ‘total cost of ownership’ studies – involving their warehouse equipment,” he says. “The potential for continued volatility in energy costs is still a focus of concern in major investment decisions. This enhances the appeal of our automated storage and retrieval systems (AS/RS) . . . These issues were specific topics of discussion at the CSCMP annual conference.”

He continues, “AS/RS technologies offer several energy-saving options that substantially reduce energy consumption. This – coupled with the current economic environment of lower capital costs – is fueling interest and demand for automated systems.”

Interestingly enough, an AS/RS Industry Group – comprised of suppliers to all industries – dedicated its 2010 fall quarterly report to cold chain technology trends. Here’s an excerpt:

The food and beverage industry depends on the environmental control available with a fixed-aisle AS/RS. With the ability to handle higher volumes and larger product sizes, these systems meet special needs for distributors and retailers. In fact, tracking and traceability are becoming as critical for the food chain as they have been for pharmaceuticals.

An AS/RS can serve as one of the cold chain’s strongest links by making up for variability in the weakest link. These points are when product spends time outside a temperature-controlled space. The AS/RS owner’s goal is to minimize effects of those times by getting products into the system as quickly as possible. That requires the ability to ensure system capacity at a moment’s notice – while slotting those products by date and sequencing them by customer. Take milk, for example.

“The customer may need to see cases of milk in a specific order for simplicity of check-in at the store location,” says Swisslog North America’s Bradley Moore, co-chair of the AS/RS Industry Group. “That makes the downstream process more efficient for the customer. More system users are relying on supply chain benefits at both ends – on the pre- and post-DC sides – to help justify these systems. The DC doesn’t stand on its own any more.”

Neither do AS/R systems. Today, unit load systems work in tandem with case-handling mini-load systems to further automate the cold chain. A unit load’s volumetric or cube efficient pallet handling system can be dedicated to bulk storage. It can then feed product to a mini-load, where pallet loads will be broken down for case-by-case storage or staging in preparation for delivery to the customer – in the sequence that the customer needs them.

With interfaces to supply chain execution and enterprise resource planning systems, an AS/RS can be a window to product flow and environmental data from the manufacturing line to the store shelf. As the needs for environmental control and accountability grow in many industries, AS/RS users in the pharma and food chains will show how it’s done.

Addressing more operator concerns is Keith Berres, executive sales manager at Schaefer Systems International, Inc., Charlotte, N.C.

“There are many challenges in the cold storage environment. Operators are concerned about the length of time a worker can operate before required breaks, the “cost to cool the cube” required for the warehouse, overall space utilization and the increased cost for equipment designed to operate in this environment. An AS/RS improves the bottom line by addressing these challenges, as well as many others.

“The system decreases product damage (shrinkage) and – because it utilizes a smaller footprint – it can help operators stage product closer to their customers,” he continues. “Most of all, an AS/RS fixes addresses one of the most volatile issues – the labor costs of storing and moving product in and out of the warehouse. With the current changes in health care, possible cap and trade and numerous other government regulations and burdens, AS/RS provides a solution that should be insulated from these increased costs of doing business.”

Another expert with an eye for the numbers is Pete Hartman, president of Retrotech Inc., a Fishers, N.Y., engineering firm that can custom designs, installs and / or modernizes automated material handling systems. Hartman says Retrotech “pioneered” the AS/RS retrofit services industry by learning to control any and all equipment.

“One positive aspect of our current environment is low interest rates. This increases the attractiveness of investments that have returns in the 15 percent to 20 percent range,” he says. “The down side is uncertainty. Capital projects require a useful life of seven to 10 years to achieve their returns and variability in outlook assumptions makes this a difficult commitment.

“However, it is a mistake to attempt to compensate for uncertainty by demanding higher project returns,” Hartman adds. “This leads to companies bypassing some truly great opportunities. Worse still, some suppliers’ project evaluations paint unrealistic ROI scenarios. A better solution is to design in flexibility that will accommodate a greater range of possible futures.”

Cargill Meat Solutions is one processor that’s elected to convert a manual shipping operation to an automated solution. Retrotech recently installed and integrated an automated box handling and shipping system for Cargill Meat Solutions’ Schuyler, Neb., beef processing plant.

Hartman says the new order fulfillment system automates box handling down stream of the case sealers. It receives and buffers boxes upstream of shipping. As orders are processed boxes are automatically retrieved in a precise sequence and either automatically palletized or directly loaded on a semi-trailer clean, cold, correct and on time.

The new system supports 53,000 storage locations and can deliver boxes either as pallets or as a box stream to be floor loaded and can build mixed SKU pallet loads. Additionally the system can manage a variety of production and shipping scenarios without interrupting customer delivery schedules.

Hartman notes that Retrotech designed and installed customized software, which links the activities of the individual sub-systems while simultaneously integrating them into Cargill’s business system. The plan required installation of software three-to-four- months ahead of the designated completion date. This allowed Cargill employees to become familiar with the software before it went live. Cargill provided subject matter experts from their other facilities who had familiarity with the system to help train the Schuyler employees on the new software, significantly reducing the learning curve.

Brett Walters is a Cargill project manager.

“The project went live on the date as promised 13 months ago and within two weeks we set a single day shipping record of more than 39,000 cases,” he says. “The system is currently operating at incredible levels of order accuracy greater than 99 percent.”


Tech Talk

Q: How do your latest offerings address industry needs?

Bill Leber, Swisslog: We developed a triple-deep ASRS pallet buffer solution.

This addresses three increasing requirements in the market. First, there’s greater demand for high-density storage for better energy efficiency. It also addresses the fact that product SKUs are growing and becoming more extended. Third, operators are turning over stock inventories at a higher rate and need greater pallet in/out throughput per SKU. This triple-deep technology replaces satellite car solutions and it already is working at locations in United States and Germany.

Keith Berres, Schaefer Systems: Our Schaefer Case Picking (SCP) system stores individual layers of cases into a highly dynamic tray storage system. As orders are processed, the system sequences trays according to a store planogram or family group. These trays travel to a roller-picking system, which dispenses the required number of cases to the packing area. An automated pack station then assembles cases onto a pallet and creates a stable load that can be shrink wrapped and transported to the loading dock for shipping.

We believe the SCP handles product gently, uses space efficiently and offers both modularity and scalability, which translates to flexibility. Most of all, the SCP results in a lower cost per unit shipped.