It’s good to keep the environmental changes in
mind when you’re focussed on a new technology to improve your company’s
service. What is the product-market-context and what is the impact of this new
technology on your costs, delivery and quality? In this blog we will focus on
giving insight in these matters.
Product-Market-Context
To understand the market
AutoStore is focussed on, we dive into the Product-Markets-Context (PMC). Not
every market is the same, so it is important to understand the right targeted
group. Product marketing is a process of promoting and selling products to a
customer. Based on the markets and the products and services, it is possible to
see which market AutoStore is in. The marketing must then be aligned to this
specific market.
Based on the Ansoff Matrix the
technology Autostore can be classified in ‘Product Development’. AutoStore in a
technology that focusses on existing markets: warehousing. AutoStore is
especially there for making improvement in responsiveness and total utilization
of available space. The technology itself is new. There hasn’t been a product
like AutoStore that is working the same way. There are more automated and
autonomously working warehouses, but they don’t use the same technology as
AutoStore. On that account AutoStore can be classified in the ‘Product
Development’ category.
The three key points of AutoStore are improving
on responsiveness, utilization of space and safety. By bringing the goods to the picker instead
of bringing the picker to the goods, the speed will improve drastically.
Through the grid-bin construction the maximum space will be utilized, compared
to the traditional way of warehousing. By making the goods move and keeping the
system closed, the safety will improve as well. These three factors are the
unique selling points of AutoStore, on which AutoStore can differentiate itself
compared to the competitors. They claim to have the best technology regarding
to those three indicators in warehousing. Lastly, the expandability of AutoStore
with zero downtime is also a strong selling point.
On the other hand, AutoStore is also limited in
some occasions. All the bins have a limited size and so on, the products must
fit in the bins to make the system work. For warehouse that are based on large
products, AutoStock won’t be the solution. AutoStore is designed for warehouses
with smaller products and is mostly focussed on responsiveness.
Compared to other warehousing solutions there
are a lot of options possible. It differs per warehouse and per company which
solutions fits the best, depending on the core values and KPI’s of the
company’s strategy. If AutoStore focusses on only their key point, they can be
the best in the market for whom are interested in those key points. For
different wishes and applications AutoStore won’t be the solution and a
competitor is more likely to meet with their requirements. For example,
competitors who focus on Automated Guided Vehicles (AGV) have different solutions
to offer and may fulfil the company’s requirements better than AutoStore. For
every alternative of AutoStore it is possible to name pros and cons, depending
on the company’s strategy and processes.
Impact on Context
In this section of the blog we will give some
insight in the impact of AutoStore in responsive warehousing. To define impact
we will be using the Quality, Costs and Delivery (QCD) analysis. QCD analysis
is used to assess different components of the main process. Quality can be
describing the product quality and the quality of the process.
Delivery
Delivery is the ability of an organization to
both hit their promise dates, as well as to get their products in customer’s
hands in a timely manner. Different aspects come to mind when giving insight of
delivery such as: speed, volume, variability, batching and reliability.
Speed
There is a clear difference between the regular
warehousing methods and AutoStore. In regular warehouses, where products are contained
in shelves, the picker first needs to search for the product. In some companies
this is completely automated where the picker knows exactly where a product is,
but in many companies this is not the case. Overall in regular warehousing a
lot of time is spent on searching for products, transporting them and most of
the time the shelves are unorganized. In terms of speed AutoStore will always
win. This is because no picker is needed to search for any product since this
is fully automated and taken care off by robots: good-to-man instead of
man-to-good. Furthermore, the system will also tell you when a bin is empty and
bins are never overcrowded nor will there be a wrong product in the wrong
place.
Volume
Now in terms of volume AutoStore is hands down
the number one in warehousing. The reason is simple: AutoStore was invented by
its manufacturer Hatteland, because they had their own warehousing issue
concerning volume. AutoStore uses 60% less volume since it’s unimaginably
compact. Therefor it utilizes the same amount of products in even less space (m²) which makes the system much more efficient and
effective. This example can be seen in the picture below.
Variability and reliability
Variability and reliability can be interpreted
in a lot of ways. We will be mostly discussing the difference in deviations and
reliability between the regular way of warehousing and AutoStore. By this we
mean the difference in an order getting late to the customer when it’s being
picked by a regular warehousing and when an order has to be picked which is
stored in AutoStore. As for regular warehousing, a lot of things can happen
that can cause the order for the customer to be delayed. For example the
product can be not in the designated area which means the picker has to search
for it. This will affect the company’s reliability towards the customer. This
eventually will result in the company either losing the client and/or losing
money. The deviation in AutoStore is less likely to cause any delays to the
customers since the variability is limited by AI (artificial intelligence). The
only thing that has to be done is for the robots to take the bin with the
specific product and the employee will take out a product. Therefor an order
processed by AutoStore will less likely cause issues with the reliability of
the company. Of course this doesn’t exclude the fact that we are talking about
a machinery and things can always go wrong with the internal software of a
system. However as far as we’ve heard from our client that hasn’t been the case
so far.
Batching
By batching we mean flexibility. A regular
warehouse needs to have an efficient separation of the shelves that the
products can be stored in. First products need to be assigned to specific
shelves and after that they need to be registered so a picker will know where a
product is stored. Now let’s imagine you as a picker need to collect 17 items
for an order. This means you need to work your way around 17 different
locations to collect these items. Of course some of these may be efficiently
stored but still this will take some time. Furthermore, you need to collect
them somewhere in a bin or maybe even by truck. This way of warehousing is less
flexible than AutoStore. In the case of our client Accell, they have
approximately 25.000 bins containing over 35.000 products and 40 robots working
on top of the grid to collect. This way small orders will be picked quite fast
and larger orders can still be picked quite fast since there are a lot of
robots to collect.
Quality
Quality is the ability of a product or process
to meet and exceed customer expectations. Customer’s requirements determine the
quality goals. It is almost always listed first, presumably because poor
quality often results in bad businesses. Quality can be measured by the
following aspects: tolerance, accuracy, defects, safety and environment. As
stated earlier, we will be looking towards the product side and the process
side of quality.
Tolerance
By tolerance we mean the extent to which a warehouse
system can store products. When it comes to regular warehouses the products can
be stored as long as there are enough shelves to store them on. Let’s say the
demand from customers keeps growing which means you need to have products
stocked. At some point there will be not enough space to store all your
products in which leads to either an expansion of your warehouse or another way
of storing the products. In AutoStore the tolerance is higher since it will
hold the same amount of products in less surface. An expansion of AutoStore is
also easily done and can be completely decided by the one using the system. You
can have 10.000 bins operated by 20 robots or you can have 40.000 bins operated
by 60 robots. Of course the manufacturer kept an eye on the optimum amount of
bins combined with robots to pick the bins. At some points it’s not efficient
anymore to keep building up your bins and robots since everything has its
natural limits.
Accuracy & Defects
By accuracy we mean errors and defects that can
occur when using AutoStore. The most defects that can occur are mistakes made
by humans. Compared to regular warehousing, the human factor has been removed and
is automated when by robots. Only the picking itself is still be done by
humans. Technically the only errors that can occur are when maintenance is
deferred. Also mistakes can be made when an employee is using the system in the
wrong way. Therefore, training is important to prevent these possible mistakes.
Environment
The environment will change when using this new
technology AutoStore. Since you don’t need as much space as a regular warehouse;
everything is much more compact. This means unused space can be used for other
purposes such as check-up points for products. In terms of quality the products
have less chance of getting damaged or dirty which can result in failures.
In case of working environment, this is way more
employee friendly. The products come to the employees and so on the employee
can stay at its place. The task of order picking becomes physically less
stressful and results in a nicer working environment.
Safety
Safety is an issue nowadays with all
warehouses. If you’ve been into a warehouse than you’ve probably noticed all
the safety signs telling you what to wear and where to walk etc. Naturally you
follow the rules to ensure your own safety. Even when products are stacked
there is a safety risk. A lot of companies are not scared to stock products in
height. The picking can also be
dangerous since products can fall, shelves can break or in worst case
scenario’s when safety signs are not being lived by.
With AutoStore safety is much more guaranteed.
When you store your product you just put them in a bin. The system will
automatically store them away for you. When you need a product the robot will grab
it for you. However, even AutoStore has its limits. Huge products can’t be
stored in AutoStore since the bins have a maximum height of 40 or 60 cm’s.
Therefor an accurate comparison can’t be made when it comes to bigger products.
Costs
Costs can be interpreted in many ways. However
in this context we will discuss the costs of investments, maintenance and usage
of this new technology.
Investments
It’s not easy to get the exact amount of
investments known publically. According to our sources though, we’ve managed to
get an indication of what AutoStore might cost you if you’re looking to buy
this technology. For an AutoStore warehouse of around 25.000 bins, the total
investment is estimated to be around 3 million euro’s. When buying a normal
warehouse the following have to be kept in mind: costs of the building and
design, costs of recourses, stock costs, and employee costs. An AutoStore warehouse
is more expensive than a traditional warehouse, but will recoup itself rapidly.
Maintenance
AutoStore requires a weekly maintenance if
being used the whole week. According to our sources at Accell a monthly bigger
maintenance is also required to check the robots, the grid and the overall
system. This can be labelled as preventive maintenance. Traditional warehouses
require maybe less maintenance since there is not so many technology involved. Once
this warehouse is placed, the maintenance is not too bad and not that influential
to the process. But, the extra costs of maintenance do not weigh up to the
extra savings thanks to AutoStore.
Usage
AutoStore is very efficient en energy saving.
The total energy costs will decrease drastically after implementing AutoStore.
The system is built so, that is as much energy efficient as possible. According
to our source Accell, their total energy costs decreased with approximal 25%.
Strategic
Options
Finally we take a look on a strategy level of
businesses. The question that comes to mind is: what kind of company strategy
is adequate for using a technology like AutoStore?
AutoStore is used for responsive and safe
warehousing. Companies that use this technology are focused on responsiveness
towards their customers and also value safety as one of their priorities. This means when orders are being received, a
fast reaction is necessary to fulfil the customer’s needs. When a company is
not focused on responsiveness or when a company utilizes bigger products, then
AutoStore might not be the right technology to use. In a strategy that focuses
on responsiveness, spare parts and flexibility, AutoStore will be one of the best
options to consider.
This page is summarized in the table below.
