There was a time not too long ago when a warehouse was simply a four-walled storage facility-nothing more, nothing less. Even within the broader supply chain sector, warehousing had an image problem; it lacked the ‘wow factor’ of a huge cargo plane, it was fairly low-tech and dirty, and the activity that took place inside was rather ho-hum. Not anymore. One could practically argue that warehousing has even become sexy (seriously).

Converging trends

“There is a convergence of trends in the third-party warehouse logistics world,” explains John Zevalkink, the current chair of the International Warehouse Logistics Association (IWLA) and CEO of Columbian Logistics Network (www.columbianlogistics.com). “The industry has really evolved from storage companies to entities where, if you can dream it, it can become a reality.” Developments are being driven by customers who are not only competing against other shippers, but who are likewise working to meet their own customers’ demands.

“Customers want higher levels of control and visibility. They want better information flow and more expertise than ever. And, it’s not letting up,” says Zevalkink. “There is so much equipment and technology in warehouses today-the investment in a 3PL facility rivals that of a manufacturing plant. The software systems, including the installation, training, and maintenance, are very expensive. Even forklifts have some type of computer technology that allows the operator do his or her job better and more efficiently. In addition, racking systems are also becoming very sophisticated.”

As if this weren’t enough, rising real estate, labor, and transportation costs are also coming together to drive changes in the warehousing industry. “Real estate in the top 30 metropolitan areas of the U.S. has become very expensive,” adds Zevalkink. “In many cases, vacancy rates are the lowest they’ve been in years, which pushes up the cost per square foot. The REITs (Real Estate Investment Trusts) are also buying up 3PL space that has a good tenant in place. The capital markets are doing their part to push up the price spiral.” And the pace isn’t likely to subside, says Zevalkink. “Nearly half of our membership at the IWLA is forecasting double-digit growth in their business this year; that’s a lot of warehouse capacity to add to the marketplace.”

Automation is key

“It used to be that 3PLs wouldn’t really invest in automation, they just threw more labor at the problem. But, that’s changing,” says John P. Clark of Dematic (www.dematic.com), a leading supplier of automated material handling systems. “Conveyer solutions are much more modular today and they can do more. For example, conveying and sorting of product used to be two separate processes. We’re getting to the point where we can use one solution to address both of those functions; it’s a much more dynamic approach.” And, while speed is typically desirable in this industry, it’s meaningless if the throughput doesn’t improve, he says. Strategically placing boxes very close together on the conveyer helps improve throughput, as does ‘dynamic gapping,’ which allows each section of the conveyer to speed up or slow down independently. “It’s like a highway. If everyone is going the same speed you can be very close together. Dynamic gapping increases or decreases the amount of space you need between two products to achieve better throughput.”

Even the physical aspects of the warehouse are getting fine-tuned to enhance productivity and efficiency. “The new generation of T8 lighting systems are cheaper to operate, and in our experience, are about twice as bright as traditional warehouse lighting systems,” notes W. Paul Delp, President, Lansdale Warehouse (www.lansdalewarehouse.com). “Lasers are also being used to flatten and smooth out warehouse floors to enhance forklift operations; even floor joints are carefully sealed to reduce friction.” Delp concurs with other warehouse industry executives about the expanding role of warehousing. “Value-added services are huge right now,” he emphasizes. “If you can change something even slightly before it gets to the final customer, then you become substantially more important.”

Central DC or regional warehouse?

Weighing the pros and cons of centralized distribution centers versus small, regional warehouses is an ongoing debate. According to John Nofsinger, CEO of the Material Handling Industry of America (www.mhia.org), “The issue is more a sector-specific argument. For example, in the pharmacy sector you used to find fairly large DCs covering large geographical regions. They’ve come to the conclusion, however, that small and more automated facilities are more efficient in most cases,” he says. In a typical retail pharmacy store, about 25 percent of the inventory is pharmacy and the rest is ‘other stuff,’ adds Nofsinger, yet, the pharmacy products are responsible for most of the revenue. And, maintaining the right inventory mix is critical. “If you have too much, you’re eaten alive by inventory possession costs. On the other hand, if you don’t have something in stock, the customer can walk down the street and find another store that does have it. The pharmacy sector walks a very fine line on the speed and velocity of replenishment. Many stores are doing daily deliveries and some even more than once a day.”

The amount of investment being made in warehousing is also an indication of the increasing importance the sector has in supply chain management. “The kinds of investments that are required in warehousing and distribution will affect a company if they’re not made right,” notes Nofsinger. “There’s more cautious application when it comes to technology. And, when it comes to advanced technology, it’s being applied with eyes very wide open and with a lot more disciplined analysis.” wt

Sidebar: Ensuring a Dependable Forklift Fleet

Just-in-time supply chains are a bit more dangerous when you go global, which means that warehouses and DCs are coming back into fashion as “insurance” against supply chain breakdowns. This, in turn, means that forklifts are becoming more important, in terms of reliability (dependability of operation) and performance (speed of operation).

When it comes to ensuring a fleet that is available to operate 24/7 and do so at maximum efficiency, there are three major considerations. The first is the initial purchase of the fleet. The second is efficient operation. The third is a well-managed maintenance program.

Fleet purchase

When purchasing a forklift with reliability and maximum performance in mind, there are three elements to address. The first is the reliability/dependability of the vehicle itself. The second is the performance features of the forklift (speed of operation). The third is ergonomic features that allow the operators to work efficiently (speed of operators).

Reliability: “These days, customers are insisting on products that are dependable and that also have additional features,” reports John Colborn, marketing director for The Raymond Corporation. “They look for manufacturers that don’t make trade-offs in these areas.”

In general, manufacturers are designing trucks that can operate dependably with longer operating times between scheduled maintenance intervals. For example, some can run as long as 500 hours between maintenance intervals, as compared with 200 to 250 hours in years past.

According to Paul Laroia, president of Hyster Co., Hyster builds reliability into all of its forklifts, but not equally. “For example, when you’re talking about an intermodal or container-handling lift truck, reliability is more important than it is for a smaller pedestrian truck,” he explains. “The customer may have 25 of these smaller ones available, so if one of them experiences downtime, they can use a replacement.” However, they may only have one of the large trucks.

Unless you have a need for extremely large and powerful forklifts, which will generally have internal combustion engines, most experts these days recommend electric forklifts for overall dependability. Electric models require less maintenance, because their motors don’t have brushes that need to be replaced. They also tend to break down less, because they have fewer moving parts, in general. In addition, since electric motors run cooler, they are less likely to cause heat-related damage to other parts of the truck, such as hoses and wires.

Greg Mason, general manager of products for Jungheinrich Lift Truck Co., offers three additional features to check. “Trucks manufactured with thicker steel and other materials are going to be more durable, especially when loading trailers with heavy loads,” he states. “You also want to make sure the electronics are shock-mounted and shock-tested to withstand the jarring.” Finally, switches should be sealed to protect them from dirt and debris.

Performance: Once you have found forklifts that are built for reliability, the next step is to inspect the performance features, which will determine how quickly operators can perform their work with the forklifts. In general, smaller and lighter trucks allow for better maneuverability, and thus improved speed of operation. Again, unless there is a need for extremely large and powerful units, electric trucks can work in more confined areas, creating more storage space and saving money from a real estate standpoint.

Some trucks have controls that allow managers to select limits on acceleration, top travel speed, and tilt speed, based on the experience of the individual operators. It makes sense to utilize these features. The reason: Asking all operators to perform their work at top speed is not always the best strategy. While experienced drivers may be able to work ‘all out’ most of the time, inexperienced drivers need to work more slowly in order to reduce the risk of accidents (dropped and damaged loads, as well as injuries to other employees).

Ergonomics: “To a large extent, ergonomics will determine the level of productivity,” states Jungheinrich’s Mason. Ergonomic design leads to improved operator comfort, which leads to the ability to work more quickly and productivity, and the ability to work longer without becoming fatigued.

Key ergonomic features to look for include comfortable seats, tilted steering wheels, extra leg room and head room, cushioned floor mats, and swivel seating. Swivel seating allows operators to quickly shift the directions they are facing, which allows them to operate in reverse without having to constantly look over their shoulders.

One of the most important elements of ergonomics is easy-to-reach controls. “Controls need to be positioned for ease of understanding and ease of use,” states Mason. “Ideally, the truck should really be an extension of the operator’s hands.” When controls are intuitive and easy-to-access, the operator is able to operate the equipment more quickly and productively. One example is controls that are color-coded.

Efficient operation

Having a fleet of reliable forklifts with the best performance features and excellent ergonomics is a first step toward maximizing productivity in the warehouse or DC. The next step is deploying the fleet efficiently. Having a fleet of 20 trucks doing the work of 20 trucks makes more sense than having a fleet of 25 trucks doing the work of 15 trucks.

Work with the dealer to set up a fleet performance program. This will involve finding ways to schedule the trucks in the most effective way, so that they are operating as many hours as possible and are doing so as efficiently as possible, with as little wasted usage time as possible.

Maintenance

There are three elements to an effective maintenance program. The first is daily in-house maintenance. The second is scheduled preventive maintenance performed by professionals. The third is timely repair of breakdowns.

Daily Maintenance: According to Hyster’s Laroia, one key to preventive maintenance is to perform daily checks before begin operating machine to be sure in good working order.

For electric trucks, the most important part of daily maintenance involves the batteries. “Even a maintenance-free battery requires some maintenance, such as keeping it clean,” notes Jungheinrich’s Mason.

“One thing that improves available usage of equipment is maintaining the battery, especially proper charging and cooling down,” adds Susan Comfort, marketing director, order pickers and VNA products, for The Raymond Corporation. “In fact, for customers who want to use their trucks 24 hours a day, battery maintenance is as important as truck maintenance.”

Scheduled Preventive Maintenance: According to Raymond’s Colborn, customers want equipment that is running constantly, so they want to be able to extend the scheduled maintenance interval. In addition, when maintenance does occur, they want it to be done very quickly and efficiently.

Who should perform regularly scheduled preventive maintenance? If you operate a large facility and can afford to hire an expert, it may make sense to do so. Otherwise, third-party experts, who will usually be employed by the local forklift dealer, should probably handle maintenance.

Sidebar: The Dealer Connection

Irvine, California-based Toyota Material Handling U.S.A. (TMHU) is very proud of the reliability and performance features of its forklifts. However, executives are quick to point out that the real key to a dependable and productive fleet is a close working relationship with local dealers.

According to David Morzella, warehouse products sales manager, the most reliable brand of forklift may or may not be your best purchasing decision, because a product is only as good as its aftermarket support. “The goal should be to make a purchasing decision that balances initial quality with effective dealer support,” he explains. “The real cost is unplanned downtime.”

Morzella recommends looking for brand leadership and service strength within the geographical region where you are doing business.

Selecting an effective servicing dealer is more important than a “brand decision,” according to Morzella. Factors include uptime, minimizing down time, service parts fill rates, service response time, and trained technicians.

Actually, it makes sense to look at forklift ownership as an overall system, according to Bruce Marti, national manager, parts and service field operations for TMHU. “It involves more than just buying a reliable piece of machinery. It involves creating a system to make sure you end up with the most reliable, cost-effective piece of machinery possible.”

To improve fleet management, get the dealer involved with your operation. “This involves having them analyze how the trucks are used, then share information on the cost of ownership for each truck over time,” states Marti.

Finally, partner with a sales professional who is willing to understand your business needs, and not just broker trucks. “A solutions-based salesperson can often recommend solutions that minimize your exposure to inefficient storage methods, over-buying of lift trucks, double-handling, and excessive downtime,” concludes Morzella.