– Supply Chain Insight –

It’s go time for warehouse investment

Back in April, Modern Materials Handling published results from their 2022 Warehouse / DC equipment survey.  Facing continuing pressure from e-commerce growth, increased consumer demand, and a highly competitive labor market, a lot of warehousing and distribution executives feel 2022 will be a big year for investment, not just in automation but in overall infrastructure to prime their operations for the future.

Survey results put the average anticipated spending on material handling equipment in 2022 at $459,316 – 40% more than what was expected a year prior for 2021. 

Of course, investment was down during the pandemic — save for operations that had to quickly adjust to the “new normal” — but this year’s spending expectation is still 25% greater than what was expected for 2020, before the start of the pandemic.

These numbers not only suggest that organizations are ready to start spending after a volatile and uncertain 24 months, but the underlying theme is that operations are no longer able to stay competitive operating at status quo.   During the pandemic, a lot of operations – for better or for worse – found out just how inefficient and unscalable they really were.

Decision-makers are no longer taking the wait-and-see approach, with 36% of respondents proceeding with their investment regardless of the state of the economy or any other external factors. 

Out of those respondents, the breakdown of how they expect to spend their budgets is as follows:

According to 57% of survey respondents,  this trend is only going to continue to increase over the next few years, as automation and robotics become more available to the average distribution operation and more and more operations feel the pressure to modernize and optimize in the face of mounting competition and ever-changing consumer buying habits.

So, what’s our interpretation? 

Well, as expected investment in automation, robotics and other types of more conventional material handling systems grows, the need for proper requirement planning will grow as well.   After all, you’re not spending $500,000 on new equipment unless you believe it will benefit you either in increased throughput, reduced labor expenditure, increased capacity utilization, or a combination of the three.

When it comes to maximizing return on equipment investment, whether we’re talking about conventional racking, robotics, or automated modules such as an automated sortation and retrieval system (ASRS), there are three critically important questions that you must ask yourself before the investment is even made.

  1. Does this new equipment / technology fit my requirements?
  2. What is the expected return and when can it be expected?
  3. Do I have a method of ensuring this new equipment is fully utilized year-round?

While all three are highly important, question number three is usually the one that gets missed more often than not, especially during implementation of specialized racking or automated modules.

Let’s take an ASRS crane for example.  These are typically multi-million-dollar investments and usually operations implement more than one if they have any at all.

The primary goal of implementing an ASRS crane, aside from increasing storage density, is to lessen forklift labor for a specific group of items.  To get the most out of this investment, it’s imperative that you’re utilizing your ASRS with the items that typically generate the most forklift activity.  In most seasonal operations, not even accounting for new items, this list changes weekly.

Whether you’re implementing an ASRS crane or just a conventional velocity-based concept such as case flow racking or a VNA aimed at minimizing footprint for your slowest items, consistent management should not be ignored. In fact, lack of consistent management of these areas can not only lengthen the return on your investment, but also cause unwanted bottlenecks that can throttle order throughput.

Find out how a fulfillment optimization system can give you peace of mind while investing in automation and material handing systems by not only ensuring that you’re investing in the right equipment but that the equipment will be properly utilized year-round.

Read more about skustream

Get started with a no-obligation Strategic Opportunity Assessment


Related Posts

[Register Now] Navigating the Pitfalls of Scaling a New Distribution Center: Strategies for Sustainable Success by Robbie Cluett on February 20, 2024
Navigating the Pitfalls of Scaling a New Distribution Center: Strategies for Sustainable Success by Hector Orozco on February 09, 2024
[Register Now] Transforming Operations: Strategies for Distribution Leaders Taking Charge of New Operations by Robbie Cluett on February 02, 2024