Managers of spatially challenged DCs may not realize it. But a technology often marketed as a means of boosting picking productivity can also solve their space woes.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Space may be the final frontier to Captain Kirk, but to the average warehouse manager, it's territory well explored. Chances are, that manager has mapped out his or her warehouse to the last millimeter in a bid to make the most of the available storage space.
But sometimes that's just not enough. For one reason or another—soaring sales, an acquisition, the launch of a new product line—the manager finds himself scrambling to find room for 20,000 SKUs in space designed for 10,000. It seems there's little choice but to move on or build out.
There may be another option. What managers may not realize is that a technology typically marketed as a means of enhancing picking productivity can also solve their space woes. The technology? Automated storage systems.
Automated storage devices are computer-controlled machines designed to store and retrieve items from defined locations. They use moving shelves to deliver products directly to workers. For DCs that store small parts that are picked by the piece, installing an automated system (typically an automated carousel or vertical lift module) means order pickers no longer need to scurry around the DC searching for items.
Automated storage systems also require very little floor space. These systems provide extremely dense storage. And because the storage and retrieval functions are automated, they eliminate the need for aisles.
Better still, they oftentimes take advantage of unused ceiling space. In fact, two of the three systems most widely used for small parts operations—vertical carousels and vertical lift modules—are designed specifically for high-rise storage. And the third—horizontal carousels—can be stacked one atop another if desired. (See the accompanying sidebar for descriptions of these systems.)
How much space can a DC expect to save? Companies that have replaced conventional racks and shelving with automated systems report that they've saved as much as 75 percent of the floor space formerly devoted to storage. "Vertical systems ... can provide huge savings in real estate. A 40- to 50-foot high system offers tremendous storage in a very small footprint," notes John Molloy, president of White Systems, a storage systems manufacturer.
Installing an automated system may even eliminate the need to expand the facility or move to a larger building, points out Michael Fanning, national sales manager for Hanel Storage Systems. And these systems generally require only a modest investment. Automated storage systems typically pay for themselves in about two years.
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defensive maneuvers
The tale of Northrop Grumman's Apopka, Fla., facility will sound familiar to many DC managers. Over the past three years, business had tripled for the defense contractor's Laser Systems division, which is housed at the site. Inevitably, the manufacturing operation began to run out of room. And just as inevitably, the manufacturing people began to eye the space that had traditionally been given over to storage.
But instead of pushing storage off site, managers found the space they needed by eliminating a stock room and replacing it with three vertical lift modules (VLMs). Installed in the facility this past October, these automated units (made by White Systems) occupy only one-fourth of the footprint of the former stockroom, yet hold 1.25 times more than the stockroom could accommodate.
The VLMs, which are 30 feet tall, each hold 90 trays of electronic components used to manufacture lasers. Each one comes equipped with a lift unit, which works as an elevator to transport trays between their storage positions and an access station at the bottom of the unit. When needed, these parts are delivered directly to workers.
That's proved much quicker than sending workers out to scour the racks for parts. "Productivity was not the main reason we installed these systems," admits Dave Carlton, manager of operations engineering. "But we expect significant gains [now that] the parts come directly to them."
Turbocharged picking
Given the potential space savings, you might wonder why automated storage systems are frequently touted for their productivity benefits. That's easily explained. On average, companies that install automated storage systems can expect their order picking productivity to triple. "One person can usually do the work of three when using automated storage," says Greg Jarvis, product manager for Kardex USA, another storage systems manufacturer.
And that's by no means the outside limit. For those who have set their sights even higher, there's the option of incorporating pick-tolight technology into their storage systems. Light-directed picking further boosts productivity because pickers no longer have to stop to consult paper lists or handheld devices for instructions. Instead, the warehouse management system (or another type of software) automatically directs the carousel unit to spin to the shelves where the required items are stored. A beacon next to the shelf lights up to indicate which models to pick and how many.
Automated storage systems can also be designed with put-to-light capability, which means they're outfitted with additional lights to indicate which totes or cartons should receive the various items being picked. "This allows you to batch pick orders," says Ed Romaine, vice president of marketing for Remstar and FastPic Systems. With batch picking, workers can fill multiple orders in the time it would ordinarily take to fill a single order, he explains. "Often, anywhere from five to nine orders can be filled simultaneously."
Getting it right
Of course, no one would care much about picking speed if it meant sacrificing accuracy. But there's no danger of that with automated storage systems. These systems maintain a detailed and accurate accounting of all items stored on their shelves or in their slots. That's helpful for two reasons. First, they share that information with the DC's warehouse management system or other enterprise software, which virtually eliminates the possibility that a product will be tossed on a shelf and forgotten. And second, because a worker can only pick what is presented to him or her, there's almost no chance of error. Eliminating errors associated with manual picking also minimizes the hassle and expense of managing returns. It helps cut down on fines as well. "Many retailers are now penalizing distributors if their [order] is incorrect," notes Robert Rienecke, vice president of sales for Diamond Phoenix, an automated storage systems manufacturer.
There are labor advantages as well. Rienecke reports that installing an automated system reduces a company's dependence on a large pool of skilled workers. "Since the systems are automated, they are easy to use," he says. "[They're] also ideal for companies that have difficulty finding qualified labor."
Safe and secure
Along with speed, accuracy and space savings, automated systems can keep their contents safe. Vertical carousels in particular offer environmental advantages for DCs that process items sensitive to dust, heat or humidity. Because these systems are enclosed, the air inside can be heated, air conditioned and kept relatively dust free.
Automated systems also enhance security—a big plus for DCs that handle high-value items like jewelry, precision parts and high-end computer chips. That's particularly true of vertical systems, which essentially act as a high-rise steel safe.
And if that's still not enough security to guarantee that the DC manager sleeps well at night, added security features can be built in. Automated storage systems can be programmed to limit access to trusted workers and even to create an audit trail of who has handled each item and when.
what's what in automated storage systems?
When it comes to automated storage systems, there's one for every orientation. Companies that handle small parts have a choice of horizontal carousels, vertical carousels or vertical lift modules. Here's a look at each:
Horizontal carousels are the most commonly used of the systems designed for automated small parts storage. They work much like sandwich vending machines, but on a much grander scale. A horizontal carousel consists of a circular track that spins, known as a pod. But instead of holding sandwiches, the carousel has hundreds of shelves, typically six or seven high, that hold a wide range of products. The carousels' main advantage is that they deliver products to the worker, eliminating the need for workers to roam all over the DC.
A typical horizontal carousel system has two to three spinning pods of carousels per workstation. While a picker is selecting product from one pod, the remaining pod or pods are spinning to bring other needed items to the picking face.
Vertical carousels are similar to their horizontal cousins, except, as their name implies, they travel vertically to take advantage of overhead space. The shelves rotate around a central core much the way carts rotate on a Ferris wheel. Though the shelves remain in fixed positions, bins of varying sizes can be placed on the shelves to accommodate a wide range of small items. The shelves can also accommodate cartons. When workers need access to a shelf, the vertical carousel spins until that shelf is aligned with an access opening. The worker simply reaches through that opening, which is set at an ergonomically safe height, to deposit items onto the exposed shelf or retrieve items from it.
Like vertical carousels, vertical lift modules (VLMs) are tall structures that take advantage of ceiling space, minimizing the footprint. But unlike vertical carousels, they don't spin. Instead, small elevators carry products to available storage slots, then slide the products into the space where they'll be stored until needed. When it comes time to retrieve the items, an elevator brings the products down to an opening at the bottom where they're accessible to workers. The VLM's primary advantage is that it offers extremely dense storage. Most systems have sensors that gauge the size of the load to be stored so that the system can assign storage locations for maximum density. Loads are often stored no more than an inch—or even a half inch—apart.
Southco gets a handle on storage
For cabinet hardware maker Southco, the decision to automate was an open and shut case. Cabinet hardware might sound like a small, specialty business, but it turns out it's not so small after all. All the screws, hinges, latches, handles, locks and so forth stocked in Southco's Philadelphia DC add up to a whopping 20,000 SKUs, making manual picking impractical.
Today, Southco uses a combination of stacked horizontal carousels and conventional horizontal carousels (all supplied by Diamond Phoenix) to store and retrieve those parts. The stacked carousels consist of three pods each, stacked two carousels high. Only case quantities are stored here, with the products loaded into totes. The system uses an automatic extractor to insert and remove the totes from the 6,200 storage slots housed in the three pods.
Meanwhile, six conventional horizontal carousels hold products that will be picked as split cases. These are arranged in two pods of three carousels each. As a worker picks from one carousel, the other two carousels spin to locations containing subsequent picks so that picking can continue uninterrupted.
The two types of systems work in tandem to fill orders. For instance, if a customer orders 500 of an SKU that comes 200 pieces to the case, two full cases are extracted from the stacked carousels, while the remaining 100 pieces are picked from the split-case conventional carousels.
The results? "The productivity improvements ... are astronomical," says Ed Baginsky, the DC's operations manager. "One of my guys can pick three times more than what they can pick out of the racks."
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."