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Supply chain dynamics creating new applications for loop sorters in cross-docking

By Contributing Author | 06/11/2018 | 6:00 AM

By Brad Radcliffe, VP of Sales—Sortation and Distribution, BEUMER Corporation

A proven technology for achieving high efficiencies in the parcel industry is finding similar effectiveness for distribution centers and warehouses where a change in dynamics is justifying the cost of implementing a high level of automation.

Exploding transportation costs, an increasing number of SKUs, rising labor costs and the lack of available labor all have shifted the ROI formula for equipping DCs with high-speed sortation systems. Within the supply chain, companies are most concerned with managing skyrocketing transportation costs that are largely a result of the increase in less-than-truckloads dispatched to accommodate just-in-time deliveries to retailers. Keeping full truckloads moving and reducing the amount of inventory in transit are the greatest challenges.

More and more, today’s DCs resemble parcel facilities where a high number of packages need to be moved quickly and efficiently in a cross-docking environment. Manual labor and fork trucks can no longer handle the volume of product that arrives in bulk on pallets and must leave as caseloads with minimum dwell time. Automated loop sortation systems—in the same or smaller footprint with considerably fewer people—can sort 40,000–60,000 cartons an hour all day long. Some companies have been able to replace up to three facilities with intensive labor requirements with one automated facility.

At the heart of the supply chain transformation is the desire to achieve a lower Days Sales in Inventory. For example, global healthcare giant GSK in 2013 reported a DSI of 53.7 days. By reducing its DSI by five days (or 10%), the company realized a savings of $67.6 million annually. For mega retailers like Walmart, Target and Walgreen’s, there are huge savings for every day of inventory that can be cut.

High-speed loop sortation systems are an ideal solution for companies with regional DCs serving 2,000 or more retail locations. A secondary market is 3PLs that are building consolidation networks for smaller retailers that don’t quite have the volume, but they need the service to be competitive.

To achieve ROI on automated, high-speed sortation in a cross-dock facility, a minimum of 10,000 packages an hour is a good rule of thumb. Volumes in many DCs have risen to 600,000 to one-million packages a day. A huge volume, along with a large sort complexity, makes ROI go through the roof.

Automated systems with high-speed induction and sorting capacity can easily handle the complexity of pulling inventory from multiple vendors, and even reserve stock, to achieve full truckloads. Sorters are smart enough now to fill trucks as quickly as possible and typically in conjunction with the customer’s business rules about how they want to distribute those inbound items across their RDC or store network.

 

Brad RadcliffeBrad Radcliffe has been with BEUMER Corporation since 2016, leading the North American Sales and Application Engineering teams focused on developing "Best in Class" solutions for the Parcel and Warehouse/Distribution industries. He is responsible for developing integrated solutions that are flexible, modular and sustainable. His career experience includes design engineering, supply chain optimization, project management and business development. Radcliffe has a B.S. in industrial engineering from the United States Military Academy, West Point, New York.        

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Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.



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