Logistics companies think outside the box of automation

Faced with squeezed margins and a tight labor force, forward-thinking logistics service providers are taking a radical new approach to doing business with flexible automation, writes Jo Bradley, business development manager at Sparck Technologies.

A fundamental shift in the traditional 3PL customer relationship around automation is emerging. While a 3PL typically gets an order first and then may install automation if deemed appropriate for efficient and profitable execution, some 3PLs are now attempting to invest in automation first and then pitch their solutions to potential customers.

The risks for the 3PL associated with automation have always been considered too high – especially with the dominance of short-term contracts. So what has changed? The catalyst was the advent of readily available, inexpensive, and highly flexible automation—such as intelligent mobile robots and advanced custom packaging systems.

A typical contract with a customer runs for around two or three years, and now that there is so much uncertainty in the economy, customers are looking for shorter rather than longer commitments. That would almost certainly be less than the time required to achieve a positive return on investment (ROI) for many traditional forms of automation.

The risk for the 3PL has always been that if automation is tailored to the needs of a particular customer and that customer does not renew – or worse, goes out of business – the 3PL may not see ROI as quickly as expected. Even if the customer is retained, volumes achieved on existing or renewed contracts may well be lower than planned – a positive return on investment will be delayed and the equipment may not easily meet the needs of an additional customer using the now spare capacity .

At least that is the traditional way of thinking. Now, however, highly flexible automation is changing the dynamics of the warehouse, especially in the e-commerce space – and this is changing the way 3PLs can present their service offerings. Autonomous mobile robots (AMRs) are transforming picking processes, and in the packaging area, a common pain point for throughput and labor, advanced automated resizing packaging systems offer maximum scalability and flexibility to meet a wide variety of order profiles—and across multiple tenants.

Automated fit-to-size packaging systems not only provide the efficiencies of high volume throughput, reduced labor, improved material usage, and better transportation efficiencies that 3PLs and their customers demand, but most importantly, the necessary flexibility that future-proofs the investment.

If we look at efficiency, simply put, advanced right-sized packaging systems, like Sparck Technologies’ CVP Everest and Impack machines, scan the item(s) in 3D, determine the optimal box shape and size, and cut, build , seal and label each package at speeds of up to 1,100 packages per hour. Both solutions can have up to three card mills feeding endless folded cardboard of different widths (e.g. 60cm, 80cm, 100cm), ensuring optimal use of the cardboard on the fly, reducing waste and minimizing costs . Or in the case of a 3PL, the three card mills could include card feeders with individual brands, allowing multiple brands (customers) to be packaged by a single machine.

Over the last few years, Sparck Technologies has analyzed around 10 million packages across sectors ranging from the toy industry to multinational contract logistics and fulfillment companies, so we can rightly claim that our numbers are robust. Achieved improvements will of course depend on how efficient existing arrangements are, but on average case volumes are reduced by up to 50% or more (83% have been recorded) with benefits in the form of more efficient use of costly transport and greater consumer satisfaction – not at least through the elimination of void fillings.

Meanwhile, average savings in cardboard used can be as much as 30% or more – for a global logistics company, calculations range from 36% for the widest cardboard to 60% for the narrowest – a saving that directly impacts the bottom line.

On the working side, with a throughput of up to 500 cases/hour on the Impack line or 1,100 on Everest, anywhere up to 20 manual packing stations can be replaced by one or two line operators: workers who, if you’re lucky, can be used for more rewarding and value-adding tasks. The potential for significant cost reductions is obvious.

So we can demonstrate serious cost savings – what about flexibility? These packaging systems are “flexible” in several respects. First, they can pack orders for multiple customers in random order (identified by barcode). This can be achieved with either the branded pre-printed continuous card feed, or we can also offer in-line black and white or CYMK printing of neutral cards on three sides – from a simple ‘This Way Up’ message to QR/AR -Codes or full color customer branding.

As such, there is no downtime or changeover time as different client orders move down the line, and a new client’s needs can literally be accommodated once the artwork is digitized. Obviously, the ability to construct “right-sized” cartons from a small number of stock widths avoids the need to carry large numbers of preform SKUs (even larger numbers if they are customer-branded), which in any case only about ‘right’ are size’.

But we can also offer flexibility in another sense. Even with all the efficiency gains outlined, payback within the lifetime of a contract may not be certain. As a result, Sparck Technologies’ packaging systems can be rented rather than purchased outright. The 3PL can minimize the risk of a downturn — or happily lease additional lines when business is booming.

This low-risk approach, combining proven efficiencies and maximum flexibility, is being adopted by a growing number of leading 3PLs in Germany, the Netherlands and the UK – high-profile names such as CEVA Logistics, Van Eupen and Global Freight Management.

Creative thinking around automation actively helps 3PLs win new business and, just as importantly, plays an integral role in delivering value to existing customers, helping service providers retain customers, protect margins and extend customer contracts .

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