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© iStockphoto/Thinkstock A lights out warehouse can open the door to increased operational savings. behind your industry? If so, by how much? Are you so far behind that not moving into (or at least down the path toward) a lights out approach will put the business in jeopardy? How are labor costs affecting you? Labor is one of the largest expenses in most businesses, so any sudden increases may make going lights out more attractive. Obviously, your current financial state will have a bearing as well. If the business is thriving, or you are stable with strong cash reserves, it's easier to justify the up-front expense involved with moving to a lights out operation. Finally, you want to look at the stability of your market, and market conditions in general. Is it time for a bold move, or are you better off staying the course for now? If your industry is already changing—such as moving from a retail-only model to a goods-to-person or hybrid approach—you may have to make changes anyway. In that case, it's worth considering a move to lights out. Flexibility. Another aspect to look at is the amount of flexibility required for your day-to-day operations. As mentioned previously, automation works best with simple, repetitive tasks. While strides are being made to build more flexibility and problem-solving capabilities into machines, the industry still has a long way to go. Humans are still far superior at decision-making and adjusting to unplanned or non-standard events. At this point, the fewer variables you have, the better-suited your warehouse or DC will be for a lights out operation. Seasonal Adjustments. The economics of automation are best realized when it is used 24x7x365. The seasonality of most retail operations, however, requires significant spikes in the workflow capabilities of the warehouse or DC at certain times. Supplementing the baseline automation capabilities with a seasonal manual operation is often an important part of a well-crafted automation 48 AUGUST 2013 • FOOD LOGISTICS plan. At the minimum, you need to consider the equipment required, the space for the equipment (and the people to work with it) and how these manual processes will be integrated into what is a fully automated operation the rest of the year. All at Once or Small Bites? Legend has it that when Cortez reached the New World, he burned his ships behind him to show his crew that they were committed to the venture they were undertaking. That's a fine symbolic gesture, but not necessarily appropriate for every business. You need to decide whether business conditions dictate changing the whole operation all at once, or whether you can move into full automation a piece at a time. For the latter, you may want to start with installing or expanding some islands of automation to test the processes and see how they integrate with the rest of your operation. Keep in mind, though, that even if you are opting for incremental moves you'll want to put together a comprehensive plan and roadmap to get there. You need to be sure all the pieces will fit together seamlessly, and that they can be easily managed—preferably using a common interface that can be accessed over the Internet, since no one will be on-premise to react immediately to any problems. Which brings us to… New Construction or Retrofit? Designing a brand new lights out facility offers many advantages. You can create the warehouse or distribution center specifically for its intended use—not just from a warehouse equipment standpoint, but also from the perspective of how typical building considerations such as lighting, heating/cooling, plumbing, etc. are incorporated. You don't have to worry about creating safety zones for robotics, office space for supervisors, washrooms, lunchrooms or other amenities, so you will have the ability to maximize floor space. You can also run electrical power and computer networking more easily, which is good considering you will need more of both. With a retrofit, of course, you have to work with what you have. Equipment has to fit into available space, and you may have to perform some extra work to get things such as power and network cabling everywhere it needs to be. You'll want to plan carefully to make sure you understand the space and its requirements. While it's always a good idea to create a simulation first to ensure that what looks good on paper works properly in reality, it is especially important when you are retrofitting new technology into an existing space. Staff Expertise. Although the facility may run lights out under normal conditions, that doesn't mean humans will be taken out of the equation completely. You will need some sort of staff to monitor the operation (either onsite or remotely) and troubleshoot any problems that arise. At least until the machines acquire enough intelligence to fix themselves, which is still a ways off. With that in mind, you need to be sure you have a staff that understands how the machines operate and the supply chain outcomes you're trying to achieve. Both aspects are important. Expertise with the machines will help ensure they are running properly, that any potential problems are identified and corrected quickly, and that exceptions are handled in a timely manner. Expertise in the supply chain is also required, however, to help develop the larger picture and incorporate continuous operational change and improvement. Going lights out is about increasing efficiency, so the more you can learn and improve upon your original design the faster you'll get to payback. Lighting the candle While the materials handling mainstream may still be a few years away from a true lights out facility, the candle has certainly been lit. Rather than cursing the darkness, warehouse and DC operations teams would be well-advised to embrace it by fully understanding the business conditions, processes and technologies that will turn a dark facility into a brighter day. It's the best way to ensure your lights out strategy is a lights out winner. Mike Scheck is Chairman of the Board of Wynright Corporation, a leading, independent U.S.-based provider of intelligent material handling systems. He can be reached at mscheck@ wynright.com. ◆ www.foodlogistics.com