LPC International

Level Playing Field

admin — Tue, 17 Jan 2012 22:13:23 +0000

Level Playing Field

In this month’s article in the series from members of the Automated Material Handling Systems Association (AMHSA), David Hayward-Browne, Director of Logistics Planning Consultants International (LPC), explains how the process of acquiring automation can affect system selection.

When fitting out a warehouse and considering a mechanised or automated handling system as an alternative to a more conventional operation, the objective is always to achieve the optimal solution. However, the process of obtaining quotations, comparing the differing solutions and determining the optimal offer can affect the outcome. Any shortcomings in the process tend to have greater effect when comparing options involving differing levels of technology or complexity.

Tender conditions

The tender conditions are a key part of the process – how you frame the tender in terms of what you ask for and when you ask for it impacts the answers you get. The first point to consider is how much time is allowed for the tender response. If the tender is large or complex, sufficient time should be allowed for the design work to enable the solution to be developed and costed accurately. Many suppliers are integrators of equipment from other companies as well as their own factories; they require sufficient time to complete the design and seek quotations. If time is short and the integrator cannot get fixed prices, cost estimates will be used. This will lead to an analysis of the risk involved, which in turn will be factored into the contingencies allowed, leading to higher prices in the tender return. If time is tight, it can be helpful to conduct a pre-tender exercise to ascertain the willingness of suppliers to bid and their capability to meet the programme, including the tender process.

Investment payback times

When reviewing the potential solutions, the expected life of the investment should be considered. An automated system will generally have a longer life than forklift-based systems. A company policy to depreciate/write off equipment over a standard period of, say, eight years will favour conventional, less capital-intensive solutions over automated systems – which, when a whole life cost is considered, can deliver greater savings. As a general rule, conveyors and sorters can be expected to last 20 to 25 years. Cranes can last 25 to 30 years, though it should be noted that control systems generally require upgrading earlier.

3PLs

The procurement of equipment can be complicated enough when only a client and a supplier are involved. However, when an operation is outsourced to a third-party logistics provider (3PL), there is another party and their interests to consider. If 3PLs are bidding for an outsourcing contract that includes the provision of a facility and fit-out, the type of solution will be affected by the length of the 3PL’s contract. Shorter contracts of 3 to 5 years favour lower capital and/or leased equipment solutions. These are typically conventional solutions with higher operating costs. The option to reduce the operating costs by investment in automation is not possible if the 3PL cannot achieve a return on the investment within the life of such a short contract. There is therefore a danger that a higher level of operating cost is built into an operation than could be achieved. An alternative to having a longer contract with a 3PL is for the client to procure the facility and fit it out and only tender the operation to a 3PL.

The challenge of assumptions

There will be a number of assumptions implicit in selecting the best solution. Some of these assumptions are applicable at the point of delivery or implementation – such as whether the floor and sub-structure are capable of supporting the loads applied by the preferred solution – and can be quantified and dealt with. Others are longer term and may have an asymmetric effect on the various potential options if they include different levels of technology and automation. A prime example of this is the cost and availability of labour. Higher labour costs and/or lack of supply in the labour market will have more impact on a conventional system, which typically has a higher manning level, than an automated system. These longer term assumptions are difficult to deal with, but should be considered given the typical life of an automated system is more than 15 years.

www.amhsa.co.uk

This article was originally published in ShD (Storage Handling Distribution) magazine in December 2011.

Buying An Automated System

admin — Mon, 01 Aug 2011 20:34:15 +0000

Buying An Automated System

Let’s start with the easy bit – you don’t have to know what systems you want…at the start! Though it is a good idea to know at the end of the process, when you sign a contract. However, you should be clear on your objectives. These should focus on your requirements, such as reducing labour, improving productivity, reducing costs and managing growth. If you have a vision of a brave new world in your warehouse rather than focusing on your objectives, you should probably go and lie down until it goes away!

Partnering versus tendering

There are two approaches to the successful procurement of an automated system. The first is to partner with a supplier, and the second is to tender your requirements. The essential difference is that with partnering you choose a supplier and then work together to arrive at the solution, while with tendering you determine a concept design or a solution and then tender it to select a company to deliver it.

This article aims to cover some of the points to consider and some of the pitfalls to avoid. But remember – the more you know, the better your position. If you don’t have experience of automation in house, you should consider bringing in some external support for the project, or elements of it. There needs to be a preferred solution, and this will be selected from a number of concept designs. The designs will depend on data – on sales/picking, storage and receipts/purchases for a peak and average period. A master data file containing details of each SKU including volumetrics (dimensions) will be essential, as well as projections on growth.

Arriving at the solution

If you have a chosen partner, they will analyse the data and produce a range of concepts that will be narrowed down to a preferred option that meets the business objectives and allows a business case to be made for the investment. There can be an issue with the partnering approach in that it can conflict with an organisation’s procurement policy if it requires multiple quotations before placing an order.

With tendering, the companies invited to tender will analyse the data and respond, each with their preferred solution. There is a potential issue – suppliers might interpret the tender differently and offer a variety of solutions that are difficult to compare. Asking suppliers to quote against a concept design, as well as offering their own solution, provides a benchmark to assess their responses.

Signing a contract

While there will always be a ‘debate’ about price and terms, it is important to remember that the contract will contain the testing procedures and criteria for acceptance, as well as warranties on availability and performance. The contract should be based on an appropriate format designed for mechanical and electrical installations such as MFI – do not go near a building contract such as JCT, as it will take much longer to negotiate and you will regret it. Remember the legal words are only there to support the schedules. They state what you are going to get, what it will do and the criteria for acceptance.

Acceptance, handover and run up

In the acceptance process, the supplier will demonstrate that the system specified in the contract has been delivered. He will produce a test procedure to demonstrate and prove the performance. The client will take control of the system after handover. It is important that you allocate staff to work alongside the supplier’s team in the later stages to achieve the knowledge transfer required to make the run up process smoother.

The future

Now you have a shiny new system, you have to keep it in working order, which means holding spares and maintaining it. Whether you intend to have your own in-house team with training provided by the supplier or to outsource it to them, discuss it with the supplier when you undertake the original contract negotiations for the system – it is at this point that your leverage is greatest.

www.amhsa.co.uk

This article was originally published in ShD (Storage Handling Distribution) magazine in July 2011.

Woolworths (PTY) South Africa – Midrand Distribution Centre

admin — Sat, 29 Jan 2011 22:38:25 +0000

Woolworths (PTY) South Africa – Midrand Distribution Centre

Retail giant Woolworths received a Platinum Award for distinction in Logistics for creating sustainable
supply chain excellence in centralised distribution.

The Woolworths supply chain faced significant challenges in 2004 due to aggressive store rollouts and the associated volume growth. The supply chain defragmented into five distribution centres in Gauteng, which did not support the business strategy of centralised distribution.

To read the rest of this article please download the PDFs from the links below.

Warehousing Futures Conference 2008

admin — Sat, 29 Jan 2011 22:34:51 +0000

Warehousing Futures Conference 2008

Robert Williams, founder of LPC International Limited, interviewed at Warehousing Futures 2008 event, Hilton Coventry on Wednesday 10th September 2008.

Click on the link below to view the video on YouTube.

Robert Williams Interview (This will open a new window on YouTube)

Optimising Your Business In A Recession

admin — Sat, 29 Jan 2011 22:21:32 +0000

Optimising Your Business In A Recession

LPC International has been assisting clients to put in place operational systems and procedures for 25
years. These systems and techniques have enabled logistics businesses to survive previous downturns, and also helped them emerge stronger and fitter when the upturn arrives. Though this recession will bite deeper, recovery will come, and those businesses that have managed best will have an advantage in the upturn.

What then can be done to address the problem?

If you have sufficient resources and are confident enough to invest capital then develop new facilities and infrastructure for the future, if not, then planning for recession is about driving down costs to become “leaner and meaner” while maintaining a healthy customer base.
Aside from the administrative processes there are three fundamental areas in a logistics business where appropriate, and relatively straightforward, initiatives can be introduced, namely

Inventory Management
Warehousing Operations
Transport Resource Planning

Inventory Management

The challenge of inventory reduction comes to the fore and has a dual benefit in that it not only saves on the “direct” costs of ownership, but can also lower warehousing costs, due to the need for less space…

Warehousing Initiatives

Centralisation of stock can combine and rationalise order processing, inventory control, administrative, security and managerial resources. It also creates the opportunity for the prudent investment in appropriate advanced storage and materials handling systems can much improve productivity levels and “sweat the property asset” which are the main costs bases. This backed by a suitable warehouse computer management system additionally improves productivity, order accuracy and, again the use of space…

Network Planning and Transport Initiatives

Reductions in the number of warehouses in a network or any move towards centralisation will affect transport costs. As a norm, the more warehouses there are in a network, the greater the warehousing and inventory costs will be, and the lower the transport costs will be. It is therefore important to balance these to find the optimal network solution…

To read the rest of this article please download the PDF from the link below.

Optimising Your Business in a Recession Article by Jason Tindley

Interview with Warehouse News and Logistics

admin — Thu, 27 Jan 2011 22:04:25 +0000

Interview with Warehouse News and Logistics

This interview was conducted with Ian Nicholls and Warehouse News and Logistics

The logistics planning consultancy LPC International has been helping logistics operations here and around the world put effective operating systems and procedures in place for 25 years. These systems have helped LPC’s clients steer their way successfully through various downturns and recessions since then. Over the years, LPC has developed a number of highly effective techniques to help logistics operations not only survive economic downturns but emerge stronger and fitter.

Warehouse & Logistics News – Where and when was LPC International set up, and who by? Are they still involved in the business? Who owns the business now?

Robert Williams, LPC’s founder and sole owner, started the business in 1984. He sold it in May 2007 to a management buyout team comprising David Hayward-Browne, Jason Tindley and Graeme Smith.

WLN – How big is LPC now in turnover and staff? How many offices do you have, in how many countries?

We don’t disclose our turnover but there are currently 20 in-house consultants and external associates. We have the one office in Cirencester, in Gloucestershire, and are a medium-sized consultancy by industry standards.

WLN – How much of your business is in the UK?

The proportion varies year to year but as a rule of thumb 40% is UK and 60% abroad, primarily North America, the Middle East and South Africa. Many of the leads come through our network of people we have worked for over the years.

Unilever Strengthens South African Distribution

admin — Mon, 24 Jan 2011 22:11:06 +0000

Unilever Strengthens South African Distribution

Unilever has opened the first of two modern logistics facilities in South Africa, according to local press reports. The 45,000 sqm distribution centre is located at Ndlovu Park in Pietermaritzburg, KwaZulu-Natal and will manage distribution of Unilever’s food, household and personal care products in KwaZulu-Natal and adjacent regions

Unilever have retained Logistics Experts, LPC International and will work with DHL managing the warehouse at an operational level and Barloworld Logistics running the transport planning platform.

Unilever Opens New DC PDF

Investors In People Award

admin — Mon, 24 Jan 2011 22:02:51 +0000

Investors in People Award

During recession LPC continues to strive towards new goals and have started off 2009
by receiving the accreditation for the Investors in People standard.

This award shows the genuine commitment of all management to develop people and
maintain quality in everything we do.

IIP Accreditation PDF

Growth at Atchison Topeka

admin — Sun, 23 Jan 2011 22:27:49 +0000

Growth at Atchison Topeka

The forthcoming move to new state of the art facilities looks set to provide the springboard for further growth for Atchison Topeka as the transport and storage specialist continues to capitalise on the rising trend of outsourcing non-core services to 3PLs.

Having been in business for nearly 20 years the Worcester-based company has a wealth of experience behind it operating as an ingredients mover and storer dedicated to the food industry. The move to the new premises will bring added benefits for both Atchison Topeka and its customers, as Mike Phillips, Managing Director, explains: “We’re bringing together our three existing sites into one facility to help build further growth and generate improved efficiencies. We have employed the services of leading industry experts, LPC International, with the design and specification of the facility and we worked closely with all parties so that we got exactly what we needed from the development and to ensure that it was future proof. With the high calibre of our customers it is essential that our facilities are of the highest standard and this is what the new site will provide us with.”

To read the rest of this article please download the PDF from the link below.

Further Growth at Atchison Topeka

10 Rules to Success in Warehouse Design

admin — Sun, 23 Jan 2011 19:09:18 +0000

10 Rules to Success in Warehouse Design

Warehouse design is not “rocket science”. It is often the case that there is a wide range of potential solutions to a warehouse requirement dependant on the preferences of the individual user (some organisations may prefer automated design solutions and others may prefer more “convential” and labour intensive solutions.

Whatever your preference it is essential – “if you are to generate a successful design” – to follow a number of important “rules” and fundamental stages in the design process, as summarised in the 10 stages set out below.

1. Analyse your Requirements – Dig for Gold

What do you want the warehouse to do? You must analyse your requirements…

2. Design from the Inside, Out

As the costs of buildings and related mechanical and electrical services often represent the largest part of any investment in a new warehouse…

3. Unitise and Standardise

The unit load concept is fundamental to good warehousing and stores practice for most organisations.

To read the rest of this article, please download the PDF from the link below.

10 Rules of Success for Warehouse Design Article