Semi-Automation Brings Competitiveness to Small Retailers

The shift toward e-commerce and online retailing over the last two years has changed the game for retailers of all sizes — particularly those that are small- to medium-sized. With stockouts during the pandemic affecting even large retail bemouths like Amazon and Walmart, it brought greater attention to storage and fulfillment processes of smaller players. Once the world started to recover from the most volatile period of the pandemic, consumer expectations returned. Today, customers again expect product availability and same- or next-day delivery.

How does this impact smaller retailers? Consider the ongoing labor shortage coupled with the pressure to provide a seamless, easy-to-navigate e-commerce platform. It has forced small- to medium-sized retailers to examine their storage and fulfillment operations if they are to remain competitive.

Understand Your Processes and Key Performance Indicators

Last-mile delivery remains a critical discussion point when it comes to storage and fulfillment. Don Ponticello, manager, integrated services for SSI SCHAEFER, says smaller retailers have several decisions to make. Can or should I ship from store? Should I maintain smaller storefronts but use the backroom as a dark warehouse? Does consolidating orders really provide a cost savings for shipping?

Often, those challenges are exacerbated when operators lack a true understanding of their order profile and KPIs, says Ponticello. How many orders per day is the warehouse handling? How many lines per hour? Is there guided picking and a put-away process? These considerations are important whether it’s a manual or automated warehouse operation.

“There’s no instruction booklet. Yet, many companies still rely on paper for processing orders. Anywhere from five to 20 minutes per day can be spent sorting through paper orders and zone assignments,” says Ponticello. “Not only is the workforce waiting for their directive, but that wasted time adds up over a year, especially in a manual warehouse.”

Transition From Manual to Semi-Automation

That begs the question — when should small- to medium-sized retailers make that move from manual to semi-automation? A fully automated operation is most likely overkill for mom-and-pop-style retailers. However, semi-automation provides that happy medium between affordability and efficiency. 

Ponticello says the barometer for shifting from manual to semi-automation is when a warehouse reaches 125-600 order picks per hour, per person. A warehouse operation below 125 picks should have a dedicated manual solution and process. While a vertical lift module (VLM) would bring efficiency within a highly manual warehouse environment, Ponticello says it won’t deliver a high impact on labor savings.

“You could be more organized and attain a smaller footprint, but until the facility reaches 125 picks per hour, that’s when automation really brings value in productivity, efficiency, and cost savings. And you can couple a semi-automated picking solution with a warehouse management system (WMS) to fully integrate a digitized, automated operation.”

Unfortunately, many retail startups lack a commercial WMS and instead build a homegrown system to manage orders, says Ponticello. This creates issues later when the retailer wants or needs a commercial system and is unable to transfer data because of incompatibility.

“Retail startups are experiencing tremendous growth, but they lack the time to set up a WMS that’s designed to grow with the business,” he says. “It’s unadvisable to wait until you’ve outgrown a homegrown or e-commerce platform that can’t scale with the business before requiring a commercial solution.”

Other obvious signs that it’s time to make the shift from manual to semi-automated picking is when shipping deadlines are missed and there is a high rate of returns. Ponticello says these are a sure sign that several picking or put-away errors are occurring. Anytime there is a spike in return rates and dissatisfied customers, operators need to look internally.

“When you examine your SKU velocity, what items are commonly sold together and how are those items slotted? You want to avoid putting all your fast-moving products in one picking zone and through one automated solution,” he says. “Not only does it create congestion but flowing all “A” items through one piece of equipment can lead to maintenance issues as well. You want to balance the workflow and the picking and put-away processes.” 

Evaluate Your Facility for the Appropriate Solution

When it’s time to bring automation into your small- to medium-sized retail operation, Ponticello provides some essential questions to ensure you choose the appropriate solution. First and foremost, warehouse operators must know the current state of their operations.

• Perform a thorough data analysis by reviewing one to two years’ worth of history of your business. This provides a foundation for which KPIs to use.
• Review the picking and fulfillment processes that you have in place.
• Match the storage technology and velocity with the equipment being considered.
• Decide on what type of fulfillment system to deploy. Will there be batch, wave, or waveless picking?
• Balance which of those workflows makes the most sense for your business and e-commerce fulfillment. It could involve a hybrid approach depending on the dimensions of the products. Some products may require storage racking or be non-conveyable due to their size and weight.

Select Your Semi-automation Solutions

Once the need for semi-automation has been determined, the benefits defined, and the facility, evaluated, then it’s time to explore the solutions themselves and make the investment for the next phase of your warehouse and e-commerce fulfillment operation.

SSI SCHAEFER provides three types of semi-automated picking solutions that bring efficiencies and space utilization to the warehouse.

Vertical lift module. It is an investment to bring automated picking into your warehouse operations. Rather than choose a costly, fully automated system that will take twelve to eighteen months or more to install and significant space to build, a semi-automated vertical lift module (VLM), like the LOGIMAT, is an ideal choice. With the ability to double or triple your capacity by leveraging the vertical space in your building, a VLM can be operational in three months and provide a level of automation while maintaining some manual control.

How does a VLM work? Ponticello says a VLM is an automated storage and retrieval system (ASRS) with an enclosed storage system with two columns of tacked trays accessed by an elevator in the middle. Using a computer interface, the trays are automatically stored and retrieved for the operator. The elevator picks a specific tray according to interface commands and brings it down to an ergonomic position in the pick window or access opening.

“With little involvement from the operator, a tray automatically comes down with an SKU that needs to be picked. A laser pointer can also be used to indicate the location of the SKU on the tray,” says Ponticello.

A VLM is not only suitable for smaller items but larger SKUs with various weights. Ponticello says a VLM system can be integrated with a WMS, combining pick-to-light technology as a complement to the picking process. Operators can confirm their picks using a radio frequency (RF) inventory scanner, signaling the next item for retrieval by the VLM.

“In conjunction with two VLM machines, the operator should never be waiting on a tray,” says Ponticello. “With two VLMs side by side, an operator can retrieve between 90 to 120 lines an hour. And that would reduce walking distances to as little as 14 to 24 feet versus traversing multiple aisles picking SKUs.”

How prevalent are VLMs in warehouse operations? Market Research.com reports that the VLM market increased to US$358.19 million in 2018, compared to $268.73 million in 2014. The market is expected to reach $596.41 million in 2025. According to Mordor Intelligence, VLMs are viewed as critical intralogistics solutions because of the space savings and operational benefits attained — by delivering SKUs to the operator, productivity of a VLM can increase as much as 66%.

Retailers are taking new approaches for business by using VLMs that create greater space and enable fulfillment efficiencies in-store. Ponticello says SMB merchants in European countries, for example, are minimizing the amount of merchandise in the storefront.
“There may be one or two items on display, but the bulk of the inventory (e.g., size and color variations) are stored within the VLM in the back room. With limited floor space, retailers are utilizing a VLM solution so that associates can focus on the customer,” says Ponticello.

Pick to light, put to light. This semi-automated picking solution provides paperless picking and eliminates errors with a signal lamp that is attached to each storage compartment. As the picking container nears the storage compartment, the lamp indicates the exact location and displays the quantity of articles to be picked. Pick to light can also be integrated with conveyor systems and warehouse management systems like the SSI SCHAEFER WAMAS solution.

Similar to VLM, Research and Markets reports that the pick-to-light market reached a value of US$409.113 million in 2020, with an expected market size of $951.915 million by 2027. It’s an affordable semi-automated solution for SMBs looking for warehouse efficiencies and cost savings.

Ponticello says utilizing a put wall, put to light system alongside a VLM can increase productivity and efficiency significantly. Knowing your orders and the SKUs, operators can take all the articles required from the VLM tray and place them in the put wall cubby for pickers to retrieve and fulfill their orders. Rather than accessing the tray multiple times in an hour for the same SKUs, they’re collected at one time.

Mobile robots. Another solution that works well in combination with VLM is mobile robots, says Ponticello. VLM works well for items six inches and smaller because you gain a lot of density, especially if they’re stored vertically. When you have items that are 12 to 16 inches, they start to consume more space inside the units. Thus, items like jewelry, medical devices, shoes, tools, etc., are ideal for VLM storage and retrieval.

“For larger items, mobile robots can retrieve and transport those SKUs in large tubs, eliminating travel by workers. Keep workers in a small area between the VLM and put walls and rely on mobile robots to retrieve and transport bulky items to the pickers for fulfillment,” says Ponticello. “You avoid person-up order picking from shelving systems 25 or 30 feet high. The efficiencies gained are immense.”

Being a small- to medium-sized retailer doesn’t mean operating an archaic warehouse. The opportunity for semi-automation exists with affordable options that can transform a once-manual operation. Whether it’s VLM, pick to light, mobile robots, or a combination of intralogistics solutions, the complexities of e-commerce now make it essential to employ semi-automation into your order fulfillment processes.

Inventory Management and Retail Competitiveness

The retail landscape will continue to evolve, with e-commerce likely to gain more ground against brick-and-mortar buying. How can smaller retailers prepare and compete? Ponticello advises warehouse operators to track their KPIs or data analysis quarterly or every six months to review potential buying trends and operating results. What SKUs are moving or remaining idle? Where are there potential task inefficiencies?

“If you have SKUs that haven’t been touched in six, 12, or 18 months, those products are taking up valuable space when faster-moving items could increase your bottom line,” says Ponticello. “Really explore where your category A, B, and C stock is located and what drops off quickly. There’s a problem if you have 50,000 SKUs and only touching 10% of them.”

Ponticello also says operators can use their automation to monitor their labor costs and gain efficiencies. Are your warehouse workers as efficient as they need to be? Where are areas of underperformance? Use automation strategically to perform tasks that take much shorter time and with greater accuracy.