Questions to Expect From a Material Handling Integrator
The first step in any material handling project or consultation is getting to know your business.
As the world continues to increase the amount of automation to supplement operations, integrators are called on to help shape the future state technologies that align with the company's strategic goals. This future state can be customer defined or up to the integrator to evaluate the various options in the market and build a case.
If you are the latter, it is important to know the types of questions you will be asked up front and the types of individuals throughout the organization you will need to call on to help build the direction of the future state. By no means is this a finite list, but it is meant to help structure the types of questions you will be asked and aid in preparing for the conversations with the integrator to develop a solution.
The Data Request
An integrator will want to evaluate the vast array of options against a quantifiable representation of the current state business. An integral part in defining the current state is evaluating the data that represents what your business looks like. Typically, an integrator will have a formal data request, but some sample datasets are shown below. Recruiting internal help to build these key datasets will be an important step in providing the integrator information they need to build a quantifiable business case.
The more accurate and detailed the data provided, the better the design. Knowing how far the data can take the project team in defining requirements is also important to define up front so key assumptions can be made when the integrator is scoping out the project.
Example data requested:
- Outbound customer order demand – This would be at the order line level, ideally for a full year.
- Inbound receipts – This would be at the SKU level, ideally for a full year.
- Inventory snapshots – This would be at the SKU level, ideally a full year of multiple snapshots (i.e. weekly or monthly).
- Item master – Including unit of measure conversions and dimensions.
- Staffing – Including quantity of staff by function and estimated current state productivity rates.
- Layout – Overall building layout in AutoCad.
The Design Year Horizon
The data request is crucial to define the current state base year. However, shaping these assumptions into the future state becomes a critical decision throughout the organization. All capital investments have a targeted future state design year. It is impossible to predict the future, but it is important for a design to include all assumptions surrounding potential strategic goals on the horizon.
When considering an investment in automation, it will have a finite capacity that is targeted to meet the design year requirements. Sometimes, the design will accommodate a 10-year plan with the initial build to accommodate the first five years of forecasted inventory and demand. This approach allows for planned expansion beyond the 5-year mark.
These requirements are developed based on a set of assumptions and a defined percent growth year over year. Building assumptions around growth becomes a strategic decision within an organization when making a large investment in equipment and the integrator will rely heavily on the project team to define any of these goals.
It is important to realize that this may be a mixture of a financial growth question and operations growth question. Ultimately the design needs to include growth percentages in terms of the affects it will have on the operation. If the company plans to grow three percent year over year in terms of revenue, it is important to understand if that is going to equate to operational unit growth as well.
- What is the targeted design year?
- What is the percentage growth year over year?
- Are there certain categories of the business that grow at different rates?
- Are there major strategic goals in the future that would alter order profiles? For example: driving more ecommerce sales.
- Are there going to be any changes in the inventory strategy for the stocked products in the future?
The Characteristics of the Business
It is important to always have the end customer in mind. There are technologies that may make a lot of sense for your business and generate many efficiencies in the operation, however if there is no appetite to change the customer experience, it could eliminate a lot of options that are on the table.
If any of the characteristics of how the orders are fulfilled can be modified in the future, it is important to state those possibilities up front. Some of these changes in customer experience can have drastic changes on the technology considerations.
- Do all the units from different zones need to be consolidated into a single carton or pallet?
- How important is the sequence of product? Do fragile items need to be on the top? Do hardline items need to be packed first?
- Is the business considering a tighter SLA that decreases the required order cycle time?
- Is the business planning to offer incentives to order in larger case or pallet quantities?
Key Decision Criteria
In pursuing a variety of technologies to support an operation, it is important to determine the key decision criteria within the organization that a potential solution will be evaluated against. Typically order fulfillment falls into the category of a cost center. Considering options to improve an operation are hinged on quantifying savings. Any improvement to an operation can decrease labor or improve the space utilization. Most solutions will be evaluated against their potential to meet a return on investment.
The integrator will rely on the project team to help quantify the current state "do nothing" scenario. What are the imminent costs on the horizon that could be avoided with considering an alternative operation? Evaluating the anticipated costs against an alternative operation helps build the case for the possible cost avoidance of staying the course.
Oftentimes integrators will also ask for the upper limit of the budget. The purpose of this question is to help the Integrator keep the solution within the range of the available budget limit. It makes little sense to design a solution that costs $10M when the upper limit of the budget is $3M. Sometimes the integrator may identify a viable potential solution with an attractive return above the budget limit. If the capital budget does not support the solution, it should be set aside. Knowing the upper limits of the budget is very helpful to the Integrator providing the best solution for the available budget.
- What is the upper limit of the budget?
- Does the budget need to include building modifications?
- Are there potential costs of expanding the building if continuing the current state?
- What is the targeted return on investment period?
- What is the operating cost per square foot and how valuable is space savings?
- What is the current staffing and the productivity rates that are achievable in each functional area?
Hopefully this helps in starting to frame the types of conversations you will have with an integrator when shaping a design. Bastian Solutions’ Consulting team is dedicated to helping an organization approach automation that makes sense for their business. In the end, it is not just about our questions, it’s also about the questions you have for us! We look forward to the questions you have for us when considering the next chapter in your business.
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