that vendors often do not have the opportunity to dig into
the details of individual operations—an exercise that is necessary if they are to accurately quantify the benefit for a
prospective customer. As a result, they use best-case examples, developed under ideal conditions, to promote their
products.
Before any company commits to a large capital invest-
ment, it should have a realistic view of the cost savings to
be gained from the new technology or equipment, as well
as the likely impact it will have on operations. Compared
with a best-case scenario, an “engineered” approach is a
more effective method for evaluating potential capital
investments. An engineered approach entails studying the
current-state operations at a “micro” or elemental level
Evaluating automation: one company’s experience
The management team of Company A’s distribution center (DC) attended a trade show where an
equipment vendor was showcasing a new electric
pallet jack that automatically advances to its next
location without the operator’s touching the controls. Company A’s DC uses pallet jacks during
order selection, which is the largest use of labor in
the facility. The equipment vendor claims that its
automatic pallet jack will improve productivity in
order selection by up to 30 percent by eliminating
the steps operators must take to return to the
equipment controls, thus allowing them to proceed directly to their next pick location.
When scaled to its facility, the 30-percent productivity improvement would represent a huge
financial savings for Company A; even achieving
one-third of that would be worth serious consideration. But before making a large capital expenditure,
the company opted to take an engineered approach to
evaluating the technology.
The company has engineered labor standards in place,
so it already had baseline numbers for the potentially
impacted areas:
Element
Steps to first case (seconds)
Steps with first case (seconds)
Steps to additional case (seconds)
Steps with additional case (seconds)
Return to drive for short travel (seconds)
Grab equipment controls for short travel (secs)
Pallet jack acceleration/deceleration (seconds)
System response time (seconds)
Congestion delay
EXHIBIT 1
Current and projected values for
order-picking elements
Baseline
3.00
2. 90
2. 50
2. 50
3.00
1.00
5.00
0.00
5%
Future State
2. 50
2. 25
2. 40
2. 40
0.00
0.00
6.00
1.00
>5% est
▪ The steps to and from the pallet jack to the pick
location
▪ The steps from the case-placement location back to
the equipment controls
▪ Grasping of the controls
▪ The acceleration constant for its fleet of equipment
EXHIBIT 2
Projected labor savings with automated pallet jacks
Element Baseline Future State
Steps to first case (seconds) 3.00 2. 50
Steps with first case (seconds) 2. 90 2. 25
Steps to additional case (seconds) 2. 50 2. 40
Steps with additional case (seconds) 2. 50 2. 40
Return to drive for short travel (seconds) 3.00 0.00
Grab equipment controls for short travel (seconds) 1.00 0.00
Pallet jack acceleration/deceleration (seconds) 5.00 6.00
System response time (seconds) 0.00 1.00
Difference
-0.50
-0.65
-0.10
-0.10
- 3.00
- 1.00
1.00
1.00
Frequency 1
100,000
100,000
125,000
125,000
100,000
100,000
100,000
100,000
