Talk about the promise of technology to warehousing executives and expect heavy sighs that can mean one of two things: either they are mired in manual systems, and don't want that to be known, or they are wired for the fast track, and don't want that to be known -- lest they compromise their competitive edge.
Indeed, the upper hand falls to those equipped with even modest technology such as paper-based computer putaway systems. The competitive advantages multiply exponentially with the introduction of radio frequency technology, real-time communications networks and paperless systems.
Systems to drive productivity and track inventory in a precise manner are available and getting less expensive every day, executives say, but getting them into the distribution center continues to be an uphill battle for many.
"Most of our technology is going into the store. There are cash registers in the store, not here," said a warehousing executive for a major East Coast chain frequently cited for its progressive in-store technology.
Another warehousing executive, who's lobbied aggressively for investments in technology, lamented the state of affairs: "There are opportunities being wasted. We're very slow to adopt technology in the distribution center," he said.
"We have technology and information available to use in the form of bar codes, for example, but once bar codes reach the distribution center, few of us are in a position to take advantage of what that can do to increase productivity and service levels," he added.
The executive successfully obtained approval to purchase a warehouse management system using radio frequency technology next year "and I'm not going to let it slip through my fingertips," he said.
Distributors who are making strides in warehousing technology, many of them introducing systems such as RF that have been available for more than 10 years, consider their projects matters of national security and are willing to part with few details.
Price Chopper Supermarkets, Schenectady, N.Y., is among those progressive retailers willing to tip its hand a bit. Installation of a radio frequency receiving system began in March and will be completed in all distribution centers next week.
"One of the general benefits is the increase in inventory accuracy," said Tom Bird, director of warehousing. Price Chopper is still evaluating performance of the new system but already has recorded a 10% increase in pallet moves per hour in one of its smaller warehouses.
Reducing pallet moves -- and making smarter maneuvers overall -- is essential to achieving high efficiency and squeezing out labor savings in the warehouse, retailers and wholesalers told SN. The key to choreographing this "dance of the lift trucks" is warehouse management systems driven by radio frequency and real time communications.
"You need a fully directed system, not people, directing the moves," one industry observer told SN.
He said such computerized warehouse management systems can instruct a forklift operator to remove a pallet from a specific reserve location and transport it to a particular selector location. Upon arrival at that location, the operator can confirm the task was completed by scanning it into a portable or truck-mounted device and, in response, be assigned another task immediately.
The productivity levels possible in an automated warehouse environment are astounding compared with what manual operations typically achieve.
Lift operators working in a manual operation may average 10 to 12 pallet moves per hour "and the reason for that is he is spending anywhere from 50% to 60% of his time trying to find the next thing to move or moving things that didn't need to be moved at all."
Going from a completely manual operation to a fully computer-directed, real-time environment with engineered labor standards and performance incentives can boost that rate to 30 to 35 pallet moves per hour, he said.
The economical equation is not a difficult one, he added. The cost to move a single pallet in a manual warehouse where lift operators earn $18 an hour and move 12 pallets per hour can cost $1.50 each. By comparison, technology, labor standards and incentives that result in 30 pallet moves per hour can bring the cost-per-move down to 60 cents.
Tracking inventory movement with precision is an equally important objective of warehouse management systems, which can quickly pay for themselves.
"More accurate inventory tends to require less inventory and less inventory means more disposable income you can use to enhance other areas in the facility," one wholesale warehouse executive said.
At Brenham Wholesale Grocers, Brenham, Texas, warehouse staff are currently undergoing training for computerized inventory systems. Glen Neutzler, manager of warehousing and facilities, said the conversion to computerized systems will be gradual.
He said the company's 140,000-square-foot warehouse is still on a manual system and that it will be two or three years before the project is complete.
"We will be going into scanning all our cases on inbound and outbound freight," Neutzler said, adding that radio frequency technology for forklifts is also under review.
Hy-Vee Food Stores, West Des Moines, Iowa, is also giving consideration to radio frequency technology in receiving operations, said Marty Baker, director of warehousing. He said a move is not imminent, however, and that the company's inventory control system has proven to be a valuable tool in managing the warehouse.
"It helps us keep track of our inventory, where before we used the old clip board. You know, 'Write it down when you put it away and erase it when you take it away.' Now it's all computerized and the system tells us when we receive it, where to put it and then tells us where to replenish it from and all of that on a first-in, first-out basis," he said.
Many retailers and wholesalers interested in using radio frequency and other technologies often cite cost as the major obstacle. Managing the effect of cultural change, also, presents challenges many are not yet ready to confront -- but should, according to one executive.
"Everybody is so afraid to make that big move, and I can appreciate that because it's a major cultural change throughout your organization. It involves a lot of retraining and taking areas of productivity that you've never measured before, measuring it, and holding the worker accountable."
However, the task can be accomplished if approached in a reasonable manner, even piecemeal, he said. Resist the temptation to pursue the perfect system and be realistic about what's attainable.
"If you say, 'I want a pallet broken down the minute the last case is taken out of that pallet for selection,' it's never going to happen. Instead, you have to start with a simple system, one that's flexible and can be built on.
"Commit to building on it," he added. "Every six months or every year put in a new piece and expand the system."