Material Handling: Welcome to the Boardroom

Jan. 1, 2001
For thriving commerce, the writing is on the wall: Put material handling into your business plan first.

Material Handling: Welcome to the Boardroom

Thanks to e-commerce, the message for the decade is: Put material handling into your business plan – first.

by Clyde E. Witt, executive editor

Dot-coms are beginning to litter the berm of the Internet superhighway like so much electronic roadkill. What happened? Was the pot of gold at the end of the IPO rainbow just a mirage? Does speed kill?

The easy answer is that many of the highly capitalized e-commerce companies have a major flaw that is almost a common denominator. They fail to put material handling into their business plans beginning on Day One. It’s not until the flashy Web site is up and orders start tumbling in, that they ask how those orders will be fulfilled.

According to a study by ActivMedia, Internet-generated revenue will rise from about $2.9 billion in 1996 to an estimated $1.234 trillion in 2002. Whereas in 1997, 42 percent of the companies surveyed by USA Chicago Inc. had no Web site and 45 percent did not have e-mail, today only about nine percent of the companies have no Web site plans and nine percent do not have e-mail. In 1997 only 16 percent of machinery manufacturers used the Internet. Today about 81 percent do.

Often as not, the managers at the highest level of a company do have a business plan. It’s just that they fail to make that plan known to their logistics managers, or logistics is considered secondary. Because the e-commerce model for finding customers and marketing products is new and different, managers think the methods for distribution must also be different. Not so.

To a small degree, the material handling techniques are different. Mostly because companies now ship in small batches rather than palletloads. But as for the technologies of e-commerce, they already exist. As Ed Romaine, director of e-commerce development with Remstar International, says, "The solution is the proper selection and integration of today’s technologies. When applied correctly, the integrated solution meets and exceeds these e-commerce companies’ three-year and beyond business projections."

Sharing the vision

Problems that arise among business managers and material handling managers are commonly communications problems. How fast is fast delivery? For the CEO, fast delivery means the next day. For the vice president of logistics, it might mean three days. And how accurate is accurate order delivery? Is it 100 percent every time, or is 99.5 percent an acceptable rate? And what are your customers’ demands and expectations?

The material handling system a company implements can make all the difference. As a material handling professional, here are some of the things you’ll have to take into the boardroom.

The owners of the company might be thinking of selling millions of widgets, but you have to think in terms of eaches. You might receive in cases or palletloads, but chances are you’ll be shipping one at a time. Or maybe you’ll be shipping a single stock keeping unit (SKU) to multiple locations. If you’re a manufacturer, you’ll have to think of mass customization – making a lot of the same product, only with variations for every customer.

If yours is a business-to-business company, don’t think you’ll escape the demands of e-commerce. Most experts are predicting that B2B e-commerce will be more important than business-to-consumer in the years ahead.

Only when you know the company’s business plan can you make the proper material handling response to e-commerce. And vice versa. Only when company managers understand the realities of material handling can they make accurate predictions and proposals. A typical first response by companies when they get into e-commerce is to do the best they can with what they already have. Bad move. Putting on another shift to handle increased orders is not the correct response. But it appears to be the low-cost way of doing e-commerce. The high-cost approach is to build a new facility.

A smarter move, sort of between these two approaches, is to create islands of automation. If you’ve been paying attention, you’ll say, "Wait! A couple years ago the gurus were saying don’t create islands of automation." And you’re right. But that was then and this is now. Business models have changed.

In the past, islands of automation meant you installed a piece of automated equipment amid manual processes. All it achieved was to create faster logjams.

A material handling toolkit

Today, experts who recommend islands of automation mean you should create a separate area within your distribution center or factory just to handle e-commerce. This area is designed for picking eaches with the aid of carousels, flow rack, pick-to-light, or voice-data recognition technologies. It might even have its own inventory management system for order control.

Creating islands of automation brings to your business plan the things you’ll need most for success in e-commerce:

• Scalability;

• Flexibility;

• Speed;

• Accuracy;

• Minimal risk.

Companies that have brick-and-mortar operations as well as on-line stores have taken this islands-of-automation approach. Retail giants and their on-line stores, such as, have dedicated inventory just for on-line sales. Seattle-based has used separate inventories since its inception in 1993. It also uses a third-party fulfillment center for its shoe business.

A distribution system that is scaleable can expand and contract, even be physically moved to achieve maximum throughput of orders. A whole genre of equipment has arisen to create scaleable systems. Depending on products, speed and manpower, you can choose from horizontal or vertical carousels, vertical lift modules, voice-data recognition systems, simple flow rack or pick-to-light racks. Often these kinds of equipment are used in concert because they complement one another. As business patterns change and cycles flow, the equipment can be expanded or contracted to meet demand.

Flexibility usually refers to a system’s ability to change SKU profiles. The profile might change in terms of physical size, quantities or distribution requirements – picking, consolidating or buffering stock.

Speed can mean different things to different people on the management team. For the CEO, speed might mean the time it takes to go from an idea’s concept to the moment the first order leaves the dock. His or her e-commerce business plan might define long-term projection as a matter of weeks. For the logistics manager, speed is usually the measure of inventory throughput. And the speed of your throughput can be a measure of customer service. How late in the day can you take orders and still ship the same day?

Order accuracy, as managers in the dot-com world quickly learn, means 100 percent correct every time. Depending on your business, a mispick can easily cost more than $100. Then you have to figure in the ill-will created with that customer. It does not take long to justify an automated or mechanized orderpicking system.

If your company is getting into e-commerce, risk should be a major part of the business plan. The risk of adding automated or mechanized material handling equipment is low, or minimal, compared with other parts of such a plan. The trick is to find the balance between risk and reward.

Rather than find a balance, you might have to determine the CEO’s level of tolerance for risk. The balance will be achieved only down the road. Adding shelving is a no-brainer. When you start talking about voice-data recognition systems, you’ll get his attention.

But each level of risk brings greater rewards. By adding carousels to your orderpicking operation, you increase throughput about 400 percent, according to manufacturers.

Getting the boss’ attention

Your ticket into the boardroom is information. Show the managers of your company how it will benefit, financially, by adopting sound material handling practices. You have to build a financial case for your programs, but if you follow the money, it’s an easy case to make.

To make your case you’ll have to know what the company projections are. There is a plethora of material handling equipment available that can change the way business is done. Making the right choices can fine-tune a business plan to meet or exceed the goals of the company.

To gain acceptance and thoroughly understand the company business plan, you have to know the basic business functions like accounting, labor relations and finance.

Finding help

Many companies are turning to consultants, systems integrators or third-party suppliers for material handling expertise. The reasons for this have been well documented.

Steve Ackerman, president, Alvey, says the sooner a systems integrator or equipment manufacturer can be brought into the business plan the better.

Ackerman notes that even early in the planning stages of a project, managing the data flow has to be of prime consideration.

"Our chances of greater success are better when we are brought in at the concept part of a job," says Ackerman. "For convenience, companies are looking for single-source solutions."

Walt Swietlik, customer relations manager for Rite-Hite, echoes that sentiment. "The earlier we can get into a job, with our expertise, the more money the customer can save."

Swietlik says even the dock area is feeling the impact of e-commerce, one thing most business plans did not anticipate. Many companies are still receiving products in conventional palletloads but are shipping out in smaller units and loading into different-style trailers. Also, trailers might spend more time at the dock because they are being hand loaded.

There’s an important point Swietlik makes about how material handling, particularly dock equipment selection, has changed in the last 10 years.

"Dock equipment used to be thought of as a commodity item," he says. "But when we can get in early and understand the client’s needs, we can put together a safe, productive system much faster." MHM

Help in a Flash

Innovative programs from material handling equipment distributors can get material handling into your business plan – fast.

Whether starting with a plain sheet of paper or retrofitting your existing building, there are numerous ways to determine the requirements of your next distribution center. The options range from guessing, applying cookie-cutter solutions, to more sophisticated methodologies such as data analysis.

Wayne Lewis, manager of data and systems analysis, Peach State, a resource integration company based in Atlanta, says whatever measurement you use for success, if you do some systematic data analysis up front, you can make intelligent decisions about what kind of material handling equipment is required to support your business.

"FlashCube is a data analysis methodology we’ve developed," explains Lewis. "It’s the way we go about determining the appropriate order fulfillment methodologies as well as storage and retrieval sub-systems and all the various material handling components that go into designing a distribution center."

Lewis, and system designers at Peach State, take a process-approach to defining design parameters. For example, the process for defining the requirements of conveyor and sortation systems would involve the statistical analysis of historical activity levels, coupled with growth projections over the planning horizon. Within that process and methodology they use off-the-shelf software applications such as Microsoft Excel, Access, or Corel’s Paradox to establish a historical baseline. The process focuses on generating the historical product and activity profiles that describe the client’s business. By establishing these historical distributions, Peach State can identify trends and anomalies that will aid the decision process for defining future requirements.

Many companies are looking for a rapid solution, and speed to market is critical. Often that means pulling together a very tight implementation schedule from design development to detailed engineering to integration and, finally, going live. Because FlashCube’s methodologies are well defined, Peach State can rapidly generate the necessary design parameters. The company has standardized the entire analysis process to create template-driven analysis tools. Using the customer’s raw historical data, the information is imported into a database application, and, along with forecast information, analyzed in one of the templates.

Lewis says a key feature of the FlashCube process is the ability to look at historical peaks and valleys and model those trends into the future. Rather than defining throughput requirements around averages, or a one-time peak, systems can be designed around statistically relevant rates.

"We do a lot of what-if modeling," says Lewis. "We can do it live, on the fly in front of the customer, showing a number of sensitivities around the design rates recommended." This on-the-fly capability allows Peach State to manipulate design variables and assess the impact on throughput or systems required.

The FlashCube methodology also helps to identify potential capacity constraints of equipment and people that could limit throughput. For example, if the model shows that a specified conveyor throughput rate will be exceeded during peak periods and there are no operational alternatives with which to compensate, then the customer may want to move to the next level of automation to ensure adequate capacity.

Lewis says he’s worked with some companies that have robust, historical data and essentially all of the data elements needed for thorough analysis. "And we’ve had some customers with no data," he says. "One particular client was entering into e-commerce and had no history or clients. For them, we developed an assumption model, a sub-set of the FlashCube process."

In the case of the company with no data, Lewis says Peach State collaborated with the customer to create a two-year design forecast for three facilities. They modeled order profiles, throughput rates, facility sizes, receiving activity, inventory levels, SKU distributions and manpower requirements. The process was built primarily around some key assumptions for customer types, order profiles and anticipated volumes.

"We didn’t create the data arbitrarily," he says with a chuckle. "We sat down with the customer and worked through all the various, detailed design parameters."

He created an interactive model so that critical variables, such as orders per customer type, could be manipulated, then assess the impact on design requirements.

"By analyzing data and creating models, we feel we come up with objective solutions," says Lewis. He lets the math dictate the system design. The FlashCube methodology gives something quantifiable to base the design around. By doing the data analysis, they can develop objective, lower-risk solutions as part of the business plan. MHM

Plan Ahead -- Save Money

The merits of reusable pallets and containers have been proven time and again, particularly in the automotive industry. But are reusables for everyone?

Well, almost. If your company is focusing on single-source suppliers, or if you have the opportunity to close the loop among your suppliers and your company, you’re a candidate for reusables. Also helping you close that gap are numerous third-party providers.

Before putting returnable containers into your business plan, you should know the most challenging aspect of reusable systems is tracking. By putting reusables into your logistics business plan, and by tackling the tracing issue before it becomes an issue, experts say you can save thousands of dollars by not replacing containers or pallets that go astray.

"Bar code technology and radio frequency identification [RFID], if used in combination, can optimize efficiency at the lowest possible cost," says Jerry Backus, vice president, supply chain technology, Hoover Materials Handling Group.

According to Backus, only about half the companies in a recent survey put bar coding into their business plans, and about 17 percent were using RFID for tracking. The speed and accuracy of scanning bar codes or, in high-volume operations, RFID tags, can improve productivity many times over.

A new technology, Internet Tracking Resource and Asset Management (iTRAM), enables companies to track returnable packaging throughout manufacturing, storage, distribution and recovery.

Another new product on the market is an RFID tag produced by Intermec specifically designed for returnable plastic containers.

The tag operates at 915 MHz (UHF) frequency band, with a single-antenna range of up to four meters. Recently the Uniform Code Council recommended the UHF band as the preferred standard for RFID supply chain applications. Intellitag products support all existing and emerging standards, so putting RFID into your business plan now will not hinder you in the future.

Winston Gillory, vice president of Intermec’s Intellitag business group, says, "In distribution center environments, the signal range translates to accurate scanning anywhere within a standard industrial doorway or portal."

A study by Dr. Diana Twede, Michigan State University School of Packaging, predicts that the use of reusables in the United Kingdom is expected to increase by 50 percent by 2002. In the U.S. there are an estimated 100 million reusable plastic containers at work.

Intellitag’s dynamic read/write capabilities mean information stored on the tag can be continually updated, allowing shippers, retailers and packaging companies to track the movements of the container as it progresses through the supply chain.

The new tag measures 83 mm x 19 mm x 8 mm and is encapsulated in a durable polycarbonate/polyurethane polymer outer shell designed to withstand the same repeated washings or outdoor use as returnable containers. Operating temperatures range from minus 40 degrees to 85 degrees centigrade. The tag has a 1024-bit memory. MHM

Case History: Third-Party Provider Plans Ahead

Letting someone else do your distribution might be part of your business plan.

by Clyde E. Witt, executive editor

Halo Distribution LLC, a third-party fulfillment company, recently began operations in the U.S. to pick, pack and ship products to the end customers of retail clients. Third-party fulfillment is expected to grow into a $3 billion business over the next few years as dot-com retail sales proliferate.

Halo positioned itself on the ground floor of this fulfillment niche by developing a highly flexible, 40,000-square-foot distribution center that can readily accommodate change as the e-tailing business model changes. It currently offers clients 24-hour shipping (four to six hours optional) via a wide range of carrier options.

How it works

Keys to fast, efficient and accurate picking-to-shipping carton operations are a workstation consisting of two 25-foot long, 20-carrier horizontal carousels (Remstar International), with pick-to-light controls for broken-carton picks. The carousels are teamed with a pick-to-light flow rack system for full-carton picks, plus a pick-to-light shipping carton batch table. Driving the automation is Remstar’s Fastpic4 software, which operates the equipment and has been integrated with the facility’s warehouse management system.

"Our target was to pick 450 lines per hour with one operator covering both the carousels and flow racks," says Stu Gilray, general manager. Preliminary calculations proved very accurate. One operator has been consistently able to pick 450 to 500 lines an hour, working at a steady pace. If more output is needed, a second operator pre-stages the light shipping cartons and provides other assistance. With two operators, output rises to 700 lines per hour, depending on order profiles.

A typical Halo client has a database of several thousand consumers ordering products on an irregular basis. The average shipment is two lines totaling five items per carton. Halo’s server receives orders from clients, and fulfillment is completed by controlled induction of batched orders. Most products are relatively small and fit into one of three standard carton sizes. In addition to retailers, Halo is now serving a computer systems integration client for which it ships components to the integrator’s customer sites for installation.

"We investigated a variety of product storage and picking schemes, selecting horizontal carousels and Fastpic4 because they provided the highest productivity for the least cost," says Gilray. He adds that carousels are also extremely accurate, gentle in presenting inventory, and efficient in handling restock of the few returns it sees.

When accuracy counts

Every pick is automatically double-checked, first by the pick-to-light light bars on the carousels and flow racks, then by the light bars on the batch table. Additionally, a conveyor scale in the packing area checks carton weights. Post-audits with clients have shown 99.82% accuracy, says Gilray.

Part of the business plan to accommodate future volume increases, the warehouse was designed to accept two additional carousels and additional flow racks at floor level. For more capacity, all four carousels can be lengthened to 40 carriers. To achieve the highest volume, a mezzanine can be added to provide a total of eight, 40-carrier carousels, and 32 pick lanes, all controlled by two operators.

Should volume continue to grow and a larger DC be required, the carousels can be moved to a new distribution center relatively quickly and inexpensively. "That’s an important advantage of this type of storage/retrieval system in this kind of business," says Gilray. MHM

Material Handling Integrates Manufacturing

Material handling systems take on greater importance as companies look for better ways to meet customer demands.

By Leslie Langnau, senior technical editor

On one hand, material handling is playing a crucial role in integrating and coordinating manufacturing and assembly processes. On the other hand, it can be a challenge to integrate material handling components and systems into manufacturing processes thanks to legacy systems, skilled labor shortages, continuing reliance on manual processes, and real-time issues. Much will depend on the decisions managers make.

A new, key role

"Material handling is no longer a support function to manufacturing," said Mike Kotecki, senior vice president, material handling systems, at HK Systems, "especially as manufacturing changes from a batch to a continuous flow process."

But it’s not the continuous flow of building hundreds of one kind of item. The effects of e-commerce have forced fundamental changes in distribution to ship quantities of one. These effects are starting to ripple back through other organizational departments. Now manufacturing and assembly processes must change to build one kind of item one at a time.

Helping manufacturing processes make a range of products in mixed order is the new role of material handling systems. "These systems permit a flexible flow of material among assembly processes," said Edwin Newell of Square D, Schneider Electric. "Merges and diverts are key to getting material to where it needs to be when it needs to be there. The material handling function is becoming integral to the whole manufacturing system design."

"As customers get ‘closer’ to the factory floor, integrated material handling systems make it easier to build to demand rather than to forecast," continued Newell.

"And, by keeping product in flow only when it’s needed," said Dave Skelton, director, Automation Systems Group, Phoenix Contact, "storage needs are reduced."

Some companies are eliminating storage all together. "Several of the consumer electronics companies, for example, have their assembly area just outside of their distribution area," said Ken Thouvenot, vice president, project management and marketing at Alvey. "Once a product is assembled, it’s immediately packaged and shipped. There’s no stocking or assemble-to-order."

Aiding labor

There are other strategic reasons to integrate material handling into manufacturing operations. For many companies it’s a solution to their manpower issues, particularly labor shortages. In some areas the labor market is so tight, that normally manual processes must be automated to get done, noted Kotecki.

In other cases, it makes it easier for people to do their job more accurately and efficiently. "Caterpillar uses automated material handling to improve the reliability of work in process and human assembly," added Kotecki. "It can drive the pace, as it does at Harley Davidson. Just be sure this capability doesn’t go too far, forcing ‘Lucy’ to eat all the chocolates coming down the conveyor just to keep up."

"At Gillette," continued Kotecki, "shaver parts are pulled out of an automated storage and retrieval system (AS/RS), and delivered via AGVs to a manufacturing machine at the last possible second. When the machine is finished, it places an electronic call to the material handling control system that orchestrates this fulfillment process. It’s almost like a tiny supply chain within manufacturing."

"But there’s another side to the integration of automated material handling systems," said Thouvenot. "Managers should bear in mind that sometimes the automation itself can raise the skill levels required of the workforce."


For the most part, integrating material handling components into manufacturing is not difficult. The time and cost will depend on the decisions and choices managers make. Those judgments that will have the most impact on time and cost will revolve around legacy systems and real-time processes.

One of the first decisions is whether to replace older systems. New inventory and warehouse management programs will integrate easily with recent and new material handling equipment. But it’s not always feasible to replace older equipment.

Legacy systems usually require working with older programming code formats and proprietary communication protocols. "Manufacturing engineers tend to replace equipment only when it stops working or when they fail to get what they need," noted Newell. "These systems won’t prevent integration, but they can lengthen the time it takes to complete a project."

Software exists that can integrate older controls and computers with newer material handling equipment. "Here at the Palm Beach military division of Boeing," said John Horvath, project manager, "our inventory system runs on a 30-year-old IBM mainframe located in St. Louis. When we reconfigured our warehouse to accommodate a 100,000-square-foot loss of space, we looked into installing a conveyor and carousel system from Diamond Phoenix. In addition to the hardware, Diamond Phoenix has a middle level software program that helps integrate the mainframe with the carousel. They also brought in Catalyst Warehouse Management Software [WMS], which handles another portion of the integration. Thus, we were able to purchase packages that bridged the mainframe to the carousel. We didn’t want to modify software if we could help it. We made the decision in the planning stages to change processes to accommodate the software. Overall, we were able to meet this goal, making only minor changes to some of the software packages."

Then, there’s the issue of real-time processes, which are critical to systems integration. "Most ERP and legacy systems are not up to the requirements for real-time information flow needed to coordinate material handling equipment with assembly equipment," said Thouvenot. "These coordination and integration activities are typically much more than people anticipate."

Managers will have to decide which systems should handle real-time needs and which should not. Mainframes are usually not the best system for real-time functions in inventory and warehousing. Installation of a middle layer of software that accepts data from a mainframe and handles real-time needs can be a viable solution.

"At our facility," continued Horvath, "we get picking requirements for C-17 aircraft components from the mainframe every night. Once the mainframe downloads these orders to the WMS, execution becomes real time. We decided not to integrate the mainframe system into the shop floor automation system. Parts putaway, parts pick, and move parts processes needed to be real-time because the production line always wants to know where the order is, so we looked for warehouse management software that could handle this requirement.

"In addition, the number of processes that must be handled in real time has increased as we’ve shrunk our cycle times from 10 days to four. This will continue as we shrink the cycle times to two days."

Other suggestions to keep in mind when integrating include:

• Have clear, measurable objectives for integrating material handling into manufacturing.

• Be sure you have a strong, dedicated team with members from all involved companies. And be sure that everyone is committed to working on the project for the long haul. Employee turnover will delay the project.

• And, of course, evaluate and choose all suppliers thoroughly.

Going with the flow

"The level of coordination between manufacturing and material handling will only increase," said Skelton, "as companies strive to keep product in flow only when needed. Finally, software and access to information has reached a point where these needs can be met." MHM

Case History: Alcan Joins the AGV Movement

AGVs offer a simple solution to coil movement.

by Robert Brooks, contributing editor

At Alcan Aluminum Corp.’s Oswego (NY) Works, two recycling centers and hot- and cold-mill modernizations have significantly increased capacity and throughput. But moving so much more aluminum through the plant changed material handling requirements. Alcan’s solution is to use automated guided vehicles (AGVs) to pick up the pace.

The plant has straightforward equipment requirements – two slitters, a leveler and a packaging line. However the evolving plant layout made coil transport a fairly tricky issue.

A laser-guided AGV, such as the Mentor AGVS system developed for Oswego, appealed to Alcan engineers because of its simplicity. All components install above the floor with no separate structure needed. Plus, the system can transport heavy loads. Finally, its flexibility allows easy modification of the operation, as it’s the function of the AGV system to organize the flow of processed material to the packaging stations.

Coordinating flow

AGVs were first installed at the cold-rolled area of the mill. After the metal comes out of the cold-rolling machine, it moves to two slitters that cut the wide strip into the raw material ordered by different beverage can manufacturers. Then, the slit coil is wound onto a rewind mandrel. An exit coil car removes it from the mandrel and sets it into a holding pocket for an AGV to pick up.

The AGV transports the coil to the feed pocket at the packaging line’s front end. Should material back up at this point, the AGV deposits its cargo to holding pockets nearby and moves on to the next load. Coil data and packaging instructions pass from the mill-scheduling program directly to the packaging line.

Seeing the light

While AGV technology is not entirely new, Mentor AGVS’ custom installation demonstrates how far these systems have come. These three-wheeled vehicles are powered by 48-V electric motors. Loaded, they move at 120 feet per minute. With electromagnetic brakes they stop to within ±0.5 inches of their destination.

Unlike earlier AGV designs that follow a track embedded in the floor, these vehicles are laser-guided. Targets arranged around the working area respond to the rotating laser head attached to the car mast and guide the AGV’s movements.

A digital controller, which holds an electronic map of all possible pathways, links to the AGV’s receiver, sending instructions and receiving updates on the vehicle’s position 20 times per second.

Keeping the vehicles powered is not a problem, according to Jerry McManus, the project’s electrical engineer. Batteries are rotated and inspected about once a month. Just as important, though, is the system’s "opportunity charging." Charging "shoes" located at the front end of the packaging line keep the AGVs charged without operator intervention.

Reconfiguring the system is no more difficult than positioning the targets to a new plan, or replacing circuit cards in the digital controller. Safety features include lights and alarms that indicate vehicle movement; front and rear bumpers that stop the AGV on contact; and infrared "slow-down" sensors that identify distant objects.

Early last summer, Alcan installed two more vehicles to transport hot-rolled coils from Oswego’s hot mill, which is adjacent to the cold-rolling area. Replacing a chain conveyor system, these AGVs free up floor space. They carry the semi-finished coils (up to 40,000 pounds) safely while protecting them from damage.

Alcan has another AGV system on the drawing board for its Kingston, Ontario, plant where a large scale expansion is under way to boost automotive strip capacity.

Case History: Automation Software Helps Drive Saturn Conversion

Software integrates manufacturing and material handling.

Change doesn’t always have to be difficult. There are tools that ease conversions. For Saturn, Cimplicity industrial automation software from GE Fanuc was the tool to help convert the Wilmington Assembly plant from GM Malibu cars to Saturn L-Series sedans and wagons. This plant is one of the largest installations of the Windows NT-based software. It performs 11 million updates per second on 85,000 I/O points.

In addition to handling automation tasks, Saturn engineers wanted the software to manage inventory levels, schedule resources, and route material more effectively for faster time to market. "By separating processes and managing data for our entire operation, we can meet customer demand in less than 10 days," noted Steve Maxwell, Saturn IT manager. "This version of Cimplicity provided the scalability and enterprise-wide reporting tools we needed."

Cimplicity’s Tracker feature, for example, automatically logs specific feature information, such as color, model and other special characteristics for every car. This information goes to each station where the proper components are gathered in preparation for assembly. The system also sends control commands to the production equipment that processes and routes material. This capability is key to quality control, as assemblies in need of rework can be routed to the appropriate station instead of going through the process to return to the beginning.

Currently, Saturn is using the software to develop a system that groups batches of components to be painted the same color. "We expect to reduce set-up time and cut solvent waste by bunching same-color assemblies together into one paint booth," Maxwell explains.

The software also keeps everyone informed of process status. Workers receive information through a series of 75 marquee message boards mounted in factory aisles. If there is a problem on a line, the software’s Marquee tool sends messages that are then displayed on the marquees for all area users. Line workers can then move to other tasks while maintenance or other personnel attend to the troubled area.

With dispatch

The heart of the system is the dispatch center, a four-person, 24-viewer operation. "Here we use Cimplicity to keep cars moving through the production process," says Paul Taylor, dispatcher.

From detailed, real-time graphic screens representing all areas of the assembly line, the team alerts maintenance and repair personnel to stations in need of attention.

In addition, an automated paging feature sends alarms to about 50 standard external paging systems. Through the WebView feature, users can view process information using standard Web browsers and Saturn’s Intranet-accessed Web site. Supervisors can know when a line needs attention, receive current production counts and conditions, and obtain alerts when a process shuts down.

Several managers use the Action Calendar feature of Cimplicity to set up, maintain and execute a schedule of manufacturing events and actions. This feature automatically resets and stops assembly counters when generating production reports that reflect shift changes. It’s also used to configure, maintain and control lights, heat and equipment through simple point-and-click actions.

The system also triggers alarms for out-of-spec assembly before a car exits the local production zone. The line will continue to move while the specific quality problem is addressed. It will only stop if the problem is not resolved before the vehicle reaches the end of the current assembly area.

"All in all," says Maxwell "the system has allowed us to reconfigure the old GM assembly and do it in a way that’s flexible, adaptable and expandable."

Manufacturing Software: Making the Right Choice

No matter whether your manufacturing line is mostly manual or fully automated, software selection is key to controlling inventory cost and filling customer orders.

by Christopher Trunk, managing editor

When MHM last covered manufacturing systems software, it was from the automotive perspective (See May 2000, page 57 "Manufacturing Systems Software: Bridging the Information Gap"). And major automotive manufacturers’ demand for JIT delivery certainly continues to drive a multitude of vendors to implement manufacturing software.

But there are all types and sizes of manufacturers who can benefit from the kind of control and tracking that manufacturing software can provide for raw goods, kits, work-in-process tracking and finished goods. Some manufacturers have automated storage systems, automatic identification and conveyor systems, and others rely on static shelving, manual data entry and lift trucks to get the job done. In either case, following expert advice and tried-and-true selection methods can help your company win the race.

Software trends

Manufacturing software is such a broad and growing area today and includes MRP II, Web links to trading exchanges for procurement, Web links for customers, Web site-building software, routing, inventory management, advanced planning and scheduling, and even financials.

But an important part of any manufacturing software package must be the ability to detect and eliminate production bottlenecks. Tom Baionno, product manager for manufacturing applications, Lilly Software, says, "Bottlenecks are detected through finite scheduling of workers, machines and material. The software should measure the dollar cost of a particular bottleneck so you can gauge the right solution."

Scheduling modules within manufacturing software are meeting the demand for just-in-time production and postponement. "Our software assigns material to specific manufacturing/routing steps, allowing you to postpone buying material if all items aren’t needed immediately," adds Baionno. This is a must-have feature for those who assemble highly engineered items over several months, typically using computer chips and the like with short shelf life.

"Today, there’s more emphasis on tracking material, not just tracking production," says Stephen Critchfield, senior systems specialist for Majure Data. "Production is tracked as in the past for worker incentives, but inventory tracking is the key to squeezing maximum productivity out of your manufacturing plant." Manufacturers are now looking to drive out lost manufacturing time that is spent looking for missing material.

Selecting software

When in doubt, ask for help.

Consultants can help you select software vendors that best fit your manufacturing needs with an independent approach. "They can determine if the software considered can integrate easily with existing software and give visibility across the supply chain," says Mike Bolan, account executive with HK Systems Inc. "We offer consulting service at, among others who offer this service."

But don’t put the cart before the horse, says Mike Judis, vice president of automotive for HK Systems. "You shouldn’t even consider looking at software until you’ve first done a thorough problem definition, an analysis of your manufacturing problems. Money spent on a consultant at this intial stage can save so many headaches and delays later," adds Judis.

Once you’ve sorted out your needs, Baionno suggests you look for inventory tracking and control modules to keep track of the many parts needed for complex assemblies, as well as:

• Part costs;

• Delivery dates;

• Build histories.

In all cases, make sure the software you choose lets you store and report this kind of data seven ways from Sunday.

Here’s a short list from Lilly Software on selection. Make sure manufacturing software:

• Addresses both current and future production needs.

• Integrates with a logistics execution package (LES).

• Schedules for JIT manufacturing to reduce inventory.

• Allows for easy copying of parts lists. Some assemblies have many parts and are mostly the same from job to job. It must allow for parts list copies to be made with exceptions allowed to lessen time spent typing.

• Is Windows-based. Workers are used to this, and it makes for a speedier learning curve.

• Offers an integrated package of modules like advance planning, scheduling, customer relationship management, inventory control, quality/inspection documentation. This helps the small-to medium-size manufacturer avoid the time and resources spent looking for a number of best-of-breed software packages.

For more on selection, see "Manufacturing Software Selection Checklist" by Marty Schubilske, senior systems engineer of HK Systems, at

How to qualify a software vendor

Baionno describes some milemarkers to look for on the road to success when searching for the right vendor. Small-to-medium-size manufacturers would be wise to hire a consultant with both manufacturing and software experience.

A consultant can:

• Quickly narrow the the list of vendors to those four or so that serve your particular kind of manufacturing.

• Help you understand your processes and match those processes to standard software.

• Keep the implementation project on track.

What you want to steer clear from, Baionno suggests, is going onto the Internet and finding dozens and dozens of vendors, each of whom you send a request for proposal and demonstration. Going this route can take months or years.

Also, avoid buying software that requires custom programming for one or more of your critical manufacturing needs. That would unnecessarily expose your company to the risk of untested code for critical functions.

It is permitted to have custom coding on non-critical functions. Asking your list of vendors to respond for just the most critical functions is an easy way to sort them out.

Avoid at all costs

Baionno suggests that 10 percent of these software packages fail for not allowing sufficient resources to do the job. "Resources mean the right workers from the IS department, from senior-level management, from customer service, manufacturing production, from material management and financials. A well-rounded team is needed for success. Regrettably, additional projects are dumped on these people, and plenty of responsibility and little authority are granted the team," explains Baionno.

Another five percent fail due to mismatched, poorly chosen software. Buyers don’t do the up-front work needed to understand their business, and don’t really know the right criteria for choosing.

Buyers of manufacturing software make their worst mistake when letting their Information Systems staff solely dictate the software decision, rather than also allowing those with manufacturing experience like manufacturing supervisors and floor workers to make their needs known, believes Critchfield.

"Rather than buying a new, state-of-the-art manufacturing software product, IS might try to continually tweak its existing planning system in an effort to bolt on one or more functions that are now needed and avoid the effort needed to seek out a new software package. This further complicates the code and can require the revision of the entire existing package. The software can, by addition, become a whole new animal," says Critchfield.

This effort can leave you with software that isn’t as useful or flexible as new is designed to be, and effectively leaves a user with a homegrown ERP package that’s harder to customize in the future.

"In a sense, the manufacturer becomes its own software vendor as the IS department is forced to upgrade its software time and again as new technology is needed, including new data collection and RF equipment," he adds.

Critchfield says that software vendors spend their time developing, testing and upgrading their software to present new functions that incorporate the latest in new material handling equipment in a flexible way.

Marty Schubilske of HK Systems warns that a lack of attention to the implementation plan often causes problems. "Keeping to a well-thought-out plan is even more necessary when adding software to a multi-shift manufacturing operation. Deviation from the plan can affect your whole manufacturing output," says Schubilske.

Another pitfall is bolting on a narrow customization to homegrown software. You miss out on the benefits that state-of-the-art packages offer for directed orderpicking and tracking of individual items at every step of the process. "Most homegrown software and old MRP II systems aren’t sophisticated enough to track eaches," concludes Critchfield.

For more on manufacturing software, contact Bolan at [email protected] and Judis at [email protected]. MHM

Case History: Manufacturer Cuts Cost, Improves Control with Software

Albertson’s Stores Mill in Payson, Utah, is a medium-size, 198,000-square-foot manufacturing/storage site that employs 124 workers in the fabrication of retail store fixtures, like pharmacy furniture and photo booths.

The manufacturing software handles all the business functions, except payroll, and saves the company $400,000 annually in labor and freight cost. The software automated some key processes, redeploying four office workers ($200,000), eliminating a quarterly manual inventory ($150,000) through better daily tracking, and another $50,000 in air freight costs because of rarely missed ship dates.

"The software improves our inventory control," says Duane Lundell, general manager. "Before buying Visual Manufacturing, we had a bunch of miscellaneous software packages. Now, as inventory changes by the moment, we can update inventory instead of having to do physical counts of what we have on hand. If we need to locate a fixture in stock, all we have to do is go to a computer terminal to look up, with certainty, its location."

This lets Alberston’s Stores Mill order replacement inventory more accurately as well, cutting down on safety stock. "It’s a double-edge sword though. The former safety stock levels allowed us to easier handle unexpected orders. It’s good to have less inventory, but reaction time to rush orders can be less favorable."

The software lets the mill track waste percentage better for panel stock. "This waste tracking has benefited manufacturing greatly," says Lundell.

When the mill began its search for ERP/manufacturing software, it identified about 100 ERP systems on the Internet and provided them a list of 20 critical manufacturing needs. "We whittled it down to just 10 vendors based on response, then rated them from one to 10. We invited the top three to do a demonstration, and made the decision based on how well the software handled retail tax considerations for fixtures used inside the Albertson stores and for those sold to outside customers. Visual handled that process the easiest and got the nod," says Lundell.

The search for the right ERP package required five years, and Lundell believes that the process could be shortened by identifying clearly what the manufacturing business needs in advance.

"I recommend that you check on a software vendor’s service support by calling current customers. Ask about how well they fix software glitches and about support during software upgrades. I guarantee you, for the first six months, there will be problems with integration, and you’ll need that support."

Also, make sure that both the vendor and you understand the terminology used in production. "That was the biggest glitch in integration; we called a widget a gadget and they called it a thing-a-ma-jig. This complicates things," adds Lundell.

Manufacturing process

Incoming goods are cataloged by part numbers, manually entered into PCs and assigned storage locations by the Visual Manufacturing software package (Lilly Software Associates). Material stored includes high-pressure laminates, plastic and wood sheets as well as small parts and fasteners.

The storage area feeds a mill operation, which in turn feeds the assembly area. The manufacturing software prints a sheet that lift truck operators use to deliver the right goods to the mill. Labor and job status are tracked manually.

Once millwork is completed, parts are transported by lift truck and pallet jack to the assembly station. The software tracks all jobs by work order number with all parts and material put together before a job hits the floor. One worker visually inspects each set of components for color, size and quantity before they enter the assembly area.

Each station completes work on an assembly, top to bottom. Workpieces stay put, and workers move from one station to another, performing a task at each.

Items received and tracked manually now will use bar coding by the end of 2001. Bar coding will benefit the operation for tracking work in process (WIP) rather and finished goods inventory.

For more information, contact [email protected], or go to

-- Christopher Trunk

Purchasing Checklist

Stephen Critchfield, senior systems specialist with Majure Data, provides this list of "must haves" for your manufacturing software purchase. The software must:

• Interface well with workers. Software has to be easy to understand, use familiar industry terminology, screens and prompts. It must be visually comfortable and use few screens.

• Offer easy physical access for workers and for data input, like RF terminals or PCs. Sometimes an environmentally hardened RF terminal is needed when an area is dusty or oily. Some workers may require a wireless handheld scanner to let them wander a short distance from the fixed terminal in their workstation.

• Provide instant data on warehouse location for each raw material and finished good.

• Tie data together to create a build history or product genealogy, including machinery used, worker ID, individual components and lot numbers. This kind of information is critical in product recall or problem situations. Once you discover a particular batch or lot of component is bad, you can find out what finished products and WIP goods have that defective component. Then you can communicate effectively to your assembly workers, vendors and buyers.

• Track productivity and report by shop or by operator. This lets supervisors coming into a new shift generate a quick status report on what was accomplished today, what the shift before did and what production status is. This data is critical to assigning labor as supervisors can send workers to a new area if you’re ahead or divert more workers to the line if you’re behind.

• Cut down on physical inventories and provide real-time data on where goods are on the assembly line once manufacturing begins. Manufacturers can fall into a pattern of doing daily, time-consuming physical inventories to gather essential data on raw goods, WIP and finished goods.

• Be flexible enough to integrate with a variety of ERPs and homegrown software.

• Train the trainers who will subsequently train the workforce.

Contact Critchfield by e-mail at [email protected] or visit his company’s Web site at

Manufacturer-Friendly Ergonomics

Compliance or efficiency? Both are powerful motivators to be ergonomic, but the latter offers a bigger and faster payback.

by Tom Andel, editor

Efficient material handling is synonymous with ergonomics. Chances are, if you’ve invested the time and money to minimize handling and cut travel distances in your plant, you have a good head start on any ergonomics mandates, whether from OSHA or from your own company’s top management.

At the John Deere Dubuque Works, for example, flow-through manufacturing was designed to reduce parts-in-process, shorten material flows, improve quality and mistake-proof operations. Parts move only a few feet from where they were originally manufactured to each manufacturing station until they leave the shop floor as a finished vehicle frame.

This facility manufactures backhoe loaders, crawlers and engines. The pieces for these products are big and heavy, making any manual lifting a dangerous proposition. Deere identifies areas that could be potential problems when new products are in the engineering stage. Even with all this planning, reactive ergonomics is still practiced here.

"We don’t know the effects of a particular job on an employee until we start running in a production mode," says James Jegerlehner, P.E., ergonomics coordinator at this Deere plant. "We’re getting better. Everything is designed on the computer now, and we have computer programs that superimpose the human figure into a 3D setting. This helps identify where there will be interference or reach problems. But a lot of times these problems aren’t resolved until the piece actually hits the floor."

Still, in automating many of the labor-intensive fabrication processes, this Deere plant has gone a long way in creating an ergonomic environment. For example, all fixtures used in assembling parts for the welders have hydraulic clamping. By taking manual clamping out of the picture, this plant has also improved quality, because the clamp always closes to the same pressure. Welding ergonomics were also improved, reducing trauma injuries associated with the static postures taken to produce long welds. Now welders simply put the parts into fixtures, clamp them, tack them in a few places, then let the robot execute the long welds. This operation is also more efficient because as one part is being welded, the employee is getting the next part ready.

Flow is also more efficient. Instead of delivering a half dozen different tubs of parts to a welder who would then have to pick individual parts out of the tubs to build a subassembly, now the preceding operation puts only the parts the next operator needs for three subassemblies on a cart. That person pushes this waist-high cart over to the welder, and the welder has only the parts needed for three subassemblies.

This eliminates the need for storage space around the work area. The welder simply uses a hoist with a magnet on it to put the part into the fixture.

"Parts used to travel miles through the factory because one department was dedicated to drills, another to bending, another to welding," Jegerlehner explains. "Now everything is put together so it flows through. These things weren’t done for ergonomic reasons, but the ergonomic benefits have been amazing."

Even if companies were to concentrate only on reducing injuries, the savings on insurance premiums would be significant. Peter Budnick, Ph.D., CPE, president and CEO of Ergoweb, an ergonomics consulting firm in Midway, Utah, tells of a client in the food processing industry that analyzed its losses in great detail. They found that simply by reducing injuries and ignoring any productivity and quality issues, they could reduce premiums by $12 million. That laid the groundwork for looking at automation options.

"Using that ammunition about cutting their losses, they were able to go to the CEO of the company and make an economic case," says Budnick. "The company turned around and said ‘This is good business and a competitive advantage for us.’ It then invested many millions into capital improvements such as putting in lift tables, putting in dock levelers, testing new casters, and came up with a 40 percent reduction in push/pull forces."

However, success doesn’t come just by installing equipment. When you’re designing operations for the human body, you must also consider human nature. Proper training is key, but even that alone is not sufficient. For example, you may have a job where the design of the facility is encouraging people to work in an inefficient or unsafe manner.

"You can do all the training you want, but if the design of the work is contrary to good lifting practice, people will not follow the training," Budnick adds. "That’s human nature. The employees want to be efficient in their work. When the supervisor is not there it’s likely people will resort to the fastest way to do the job."

Budnick suggests you first pinpoint the problem. For example, if the task involves pushing and pulling in an inventory picking situation, the problem might involve the design of the cart that pickers are using. The casters might be the wrong size for the job, the handle height might be wrong, the floor might be in poor condition, etc. Just make sure when you do something to remedy these situations that you don’t throw something else out of kilter.

Let’s say you’re following a recommendation that people should lift from waist height. To do that, you put people on a platform. That could turn into a safety problem if there’s a tripping hazard or if the platform is high enough that people face significant injury if they fall off.

Share the learning

Learning such lessons by experience is painful, but if those experiences keep getting repeated throughout your company, you could be bleeding green as well as red. Communication is key. At John Deere that takes the form of a monthly safety meeting. A different safety topic is discussed every month, and representatives from every department participate. Ergonomics is just one of the topics covered. Deere has also addressed lockout/tagout, lift truck training, winter-time driving, home safety – even boating safety. These topics elicit varying levels of interest, but everyone in the organization has an equal stake in ergonomics, according to Jegerlehner.

"I want to make sure our engineers have the same awareness as the people on the shop floor," he explains. "We shouldn’t be designing new products and letting them reach manufacturing without all the ergonomics issues addressed. Engineers need to identify a potential problem at the electronic build phase, when the product is still on the computer screen. They have to recognize if the assembler will have some kind of interference problem, and the opportunity to act gets smaller and smaller with every new product."

At Deere, wage employees work with the engineers on prototype builds. The engineers will build a dozen units and the wage employees will point out problems. But sometimes a problem isn’t identified until the product reaches production. That’s why Deere is looking at appointing a manufacturing liaison to work between production and engineering. Deere is also setting up a Web portal that will be used by all the ergonomics specialists throughout the Deere organization nationwide. They will be able to share success stories and remedies. Users will be able to click on a key word, like hoists, air tools, scissors lifts, clamps, etc., to call up success stories involving that equipment.

Right now the ergonomics specialists from all Deere factories get together once a year for a two-day conference in which they share two or three jobs they improved in the past year. Jegerlehner says that’s how Deere got its best ideas.

"That’s been a good way for the newer plants to get their ergonomics programs up and running," he concludes. "Almost all the plants have wage employees dedicated to working on ergonomics projects."


Deere is motivated by the need for efficiency. Others may need cost justifications. And many others aren’t motivated until threatened by regulatory sanctions. With OSHA’s ergonomics standard signed into law, all companies have a stake in being safe. But Franz Schneider, a consultant at Humantech, an Ann Arbor, Michigan, consulting firm, says legislation should be lower on everybody’s concern list – below operational efficiency and cost of ownership.

"In manual material handling, the least efficient use of a human being is having him move objects vertically through space," he says. "Every time you touch or move a product it should accrue value. Moving it up and down doesn’t accrue value, so we’ve done a lot of benchmarking studies that take a look at the cycle time invested in manual material handling, and 25 percent to 30 percent of it is vertical movement. Replace that with a scissors lift or some kind of palletizing device and you have a return on investment that’s two or three months if you take a look at the value-added side of the equation. That also reduces your risk exposure for many of the manual material handling related back disorders."

TRW’s automotive division has done just that. Its inflatable restraints assembly plant in Cookeville, Tennessee, reduced lost work days by 90 percent in two years. This was done with little capital investment during a time when production volume was increasing by 15 percent over that same period.

Working with Humantech, TRW identified objective risk criteria and quantified the impact of interventions before implementing lean manufacturing projects. It used Humantech’s BRIEF survey to quantify ergonomic risk at workstations. They combined these data with input on operator discomfort and past illness/injury data to develop a site risk map for prioritizing opportunities for improvement. TRW involves operators in this study through formal reviews of new job designs and through Kaizen processes for continuous improvement.

OSHA’s ergonomics standard? It doesn’t ask you to do many things other than you would normally do, says Schneider. A well-deployed health and safety initiative will automatically live up to what OSHA wants. So it’s a good law, right?

"The standard is inequitable," Schneider admits. "It’s probably one of the worst pieces of legislation in health and safety because it doesn’t tell me what’s safe or acceptable. It just tells me what I need to do. We don’t have that in noise, lockout/tagout or fall protection. From an employer’s point of view, I’d be very dissatisfied with it, but it’s reality now. But you can buffer yourself against the legislation by having a fundamentally good ergonomics initiative."

The value of an ergonomics law is debatable, but ergonomics in practice is good business. Don’t let fear of fines be your motivation. You’ll miss key benefits like employee buy-in, streamlined workflow and material handling efficiency. Those are manufacturing’s best friends. MHM

For more information ...

on ergonomics resources, contact the following:

The Ergonomics Advisory Board, Dr. Alan Hedge: [email protected]



Inventory Operations Consulting:

The National Ergonomics Conference & Expo:

OSHA Compliance Bootcamp:

OSHA ergonomics standard: www.osha-slc/ergonomics-standard/index.html