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Revamping outdated warehouse automation systems: the challenges and solutions
The Challenges of Renewing and Replacing Automation installed in the early 2000’s
The fantastic opportunities that automation, robotics and ‘big data’ provide us with means that there has never been a more exciting time to be involved in Supply Chain and Logistics. However, some operators installed their original automated warehousing systems in the early 2000’s and these are now approaching two decades of operation.
These systems, once at the forefront of technology, are now grappling with a myriad of issues that stem from their age. In addition, the landscape of the businesses that invested in this technology have changed significantly during this time, with the growth of Ecommerce, growth of store formats, requirement for improvements in store friendly deliveries, the cost of energy and wage inflation, changes in product ranges and pack sizes, the introduction of shelf ready packaging and challenges to effectively manage inventory levels.
‘Change is the law of life and those who look only to the past or present are certain to miss the future.’ — John F. Kennedy
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With this backdrop of significant change, the business with aging infrastructure is focusing on several key areas to maintain business continuity and continue to fulfil orders:
Increasing Maintenance Costs:
As these systems age, the cost of maintenance escalates. Components wear out and the frequency of breakdowns increases, leading to higher repair costs and downtime. The proprietary nature of these early systems often means that maintenance must be conducted by specialised technicians, further driving up costs and adding operational risk.Software Support:
Software that runs these systems may no longer be supported by the original manufacturers and is often integrated with other packages that require regular updates. The result of this is that upgrades require a significant amount of testing both on the update itself and a level of integration testing. All of this can result in significant operational downtime. This potential lack of support poses significant risks, including security vulnerabilities and the inability to update or patch the software, potentially leading to system failures.Parts Availability:
Finding replacement parts for older systems can be a challenge. Manufacturers may have discontinued the parts, and third-party suppliers may be limited, leading to increased costs, a requirement to hold more inventory and longer lead-time on parts. In some cases, we have seen in house engineering teams shift to manufacturing their own replacement parts in on-site workshops.Migrating to New Technology:
Transitioning to new automated technology is not a simple upgrade. It involves a complete overhaul of the existing system, which can be costly and disruptive to operations. Finding the space to build new automated solutions while running the old ones is a logistical challenge and requires support from stakeholders across the business when the investment is so significant.Justifying New CAPEX:
Investing in new technology requires a substantial capital expenditure. Justifying this expense is challenging when the current system, despite its flaws, is still operational. This is often compounded by any change requiring both the continued investment in repairs and maintenance of the old system whilst investing significant new sums in the next generation of automation. The decision to invest in new technology must be weighed against the ongoing costs of maintaining the old system, along with all the benefits that new technology will allow you to deliver."The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency." - Bill Gates.
In summary, automated warehouse systems installed in the early 2000s are now facing the consequences of technological obsolescence. The challenges include rising maintenance costs, the potential lack of software support, difficulty in sourcing parts, and the complexities of migrating to new technology.
If these challenges are resonating with you, we recommend the following approach:
Re-assessing your Maintenance Strategy:
Assess the cost to upgrade with ongoing preventative maintenance.
Evaluate New Maintenance Technology:
Assess the benefit of introducing new maintenance technology to provide you with data-based insight on your breakdowns, preventative activity, and costs.
Monitoring and Evaluation:
Establish KPI’s to monitor performance and effectiveness of the automation. Understand the point at which it makes operational and commercial sense to invest in new technology.
Complete a Technology Assessment:
Evaluate different automation technologies to find the best fit for your company’s needs. What business benefits can be delivered by investing in new technology. Consider compatibility of integrating with existing systems. Ensure the solution aligns with the company’s strategic goals and objectives.
Develop a Replacement Programme:
Complete the business case for change, considering the full life cycle cost of new technology, the cost savings along with capacity, productivity, and service improvements.
Support Stakeholder Management:
Clear communication of the benefits of the investment to all business stakeholders is vital, this must be done at all levels in the organisation.
Managing the Change:
Develop a detailed implementation plan which includes timelines, milestones, risk map and key responsibilities that allows you to prepare for a seamless transition.
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