MHI Solutions Improving Supply Chain Performance
Maybe your manufacturing plant or warehouse was an early adopter of automation, but that original material handling equipment is now showing signs of age. Or maybe your automated systems were built for the business‑to‑business selling model, before the shift to business‑to‑consumer e‑commerce. Or maybe robust order growth and SKU proliferation are pushing your automated systems—and the four walls of your facility—beyond their limits.
Even the best‑designed automated systems can become obsolete over time due to changing business dynamics, emerging technologies and years of steady use. That’s why it often pays to take a fresh look at automated equipment to determine whether it’s still the optimal solution for your operations.
Jason Effing, chief revenue officer at MHI member Systems in Motion, said many factors can alter a company’s automation needs, including mergers and acquisitions or changes to the customer base and service‑level agreements.
“Maybe the systems they put in place five, 15 or even 30 years ago were appropriate at that time, but their business needs have changed, so they’ve simply outgrown their system and need to make some changes,” Effing said. “With older automated systems, the issue could be capacity because the business has grown, but many times, it’s actually obsolescence. A lot of this technology does have a shelf life and can become obsolete.”
Effing said it’s not uncommon to walk into a facility that’s 20 years old and see that the automated equipment is still running on the original programmable logic controllers (PLCs), which may be so old that you can’t get replacements from the original equipment manufacturer (OEM). In some cases, the OEM has gone out of business or the people familiar with that system have retired, leading facilities to turn to online retailers such as eBay to source parts.
“That’s a really obvious technology gap that you see in some cases,” he said. Key performance indicators often provide clues that a facility has outgrown its automation, Effing said. A common tell is a steady increase in labor costs. When automated systems can’t keep up with order volume, the quickest fix may be to throw additional manpower at the problem. That’s hardly a sustainable solution, however, as companies face a prolonged labor shortage, high turnover and rising wages.
On‑time shipping and delivery rates also tend to suffer when antiquated equipment is used, leading to dips in customer satisfaction due to unmet service‑level agreements. Customers may expect to get deliveries the next day as long as they submit orders before 6 p.m., for example, but as order volume grows and equipment fails, that cutoff time no longer assures on‑time delivery.
In other cases, customer satisfaction scores may decrease due to quality‑control issues. Customers may get the wrong type or number of products, or more products will arrive damaged. Return rates tick up, and net promoter scores decline. Managers may see changes in other KPIs such as order fill rate, perfect order rate, order cycle rate, dock‑to‑stock time and inventory accuracy rate.
“You could have a simple capacity issue where a conveyor sortation system was designed for throughput rates from 15 years ago, and the company has tripled its throughput, so now you start to see bottlenecks show up,” Effing said. “The equipment wasn’t designed to handle that additional throughput, so if you keep trying to push more product through it, you’re going to get logjams.”
Taoufik “TK” Haddadi, sales manager at MHI member Ryson International Inc., said unplanned downtime is another key metric. As automated equipment experiences wear and tear, facilities may see more frequent breakdowns, leading to costly production delays.
Accordingly, facilities may see a steady uptick in maintenance‑related costs, including labor, spare parts and the space needed to store those parts, Haddadi said. In some cases, upgrading the PLCs or variable frequency drives (VFDs) can bring new life to older equipment, but in other cases, it’s best to replace entire systems with something newer and more capable.
“When you start seeing frequent breakdowns, bottlenecks or excessive maintenance costs year‑over‑year, and you’re adding more maintenance professionals to keep the machines going, that’s an indicator that there’s probably something out there that’s more reliable, more efficient and would last longer, with less maintenance,” Haddadi said.
“Whether it’s individual components that have become obsolete or even high‑level software such as a warehouse management system, warehouse control system or warehouse execution system, you want to make sure that it’s still supported by the OEM,” he added. “If not, then you want to be proactive and start looking for a replacement before you experience more problems.”
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