Highly-Automated DCs Need an Asset Performance Management Program

ARC recently published a strategic report called Asset Performance Management: An IT Perspective (available to ARC clients only). As I read through the report, I started thinking about a distribution center (DC) I recently visited. This 750,000 sq. ft. warehouse, which cost $250 million to build, made extensive use of conveyors and sorters directing jobs to people at computerized workstations or pick-to-light stations. The conveyors moved packages through box cutting machines and totes over weigh stations. There were two massive automatic storage and retrieval systems, and the DC also employed automatic guided vehicles, forklifts, and, of course, barcode scanners.

Most warehouse managers understand that asset maintenance has a role to play in their operations. But in manual warehouses, maintenance is often approached in ad-hoc fashion. When forklifts are purchased, a maintenance plan is often purchased too; the same is true with barcode scanners and other technologies. If a warehouse’s maintenance programs are less than optimal, no big deal. The warehouse ends up with one or two more forklifts than they really need (in case some break down) and extra barcode scanners.

But in a highly-automated warehouse, an ad-hoc approach to maintenance is not good enough. In these instances, a warehouse manager not only needs to understand operations, but also the factors associated with Return on Assets (ROA) and Overall Equipment Effectiveness (OEE = Availability x Performance x Quality).

These managers should have maintenance folks reporting to them that perform tasks critical to keeping the DC operating effectively. Maintenance planning and scheduling must be done in a way that optimizes the use of the maintenance staff with minimal disruptions to operations. If some of the equipment is serviced by outside personnel, a process to effectively manage external contractors must exist. And having programs in place to ensure that the optimal quantity of service parts inventory is on hand is also important.  

Managers need to know the difference between preventive maintenance (the most common type of maintenance, where service is performed on a prescribed schedule), condition-based monitoring, predictive maintenance (where machine sensors are monitored to predict when a machine is on the verge of failure), and reliability-centered maintenance (initiatives focused on asset reliability from a systems perspective rather than machine by machine). 

Although managers don’t need to be super users, it is particularly important for them to understand the high-level features of an Enterprise Asset Management system (e.g., spare parts inventory management, work order management, repair instructions, etc.). An EAM solution that is not kept up-to-date or used effectively will result in less than optimal maintenance performance.

In short, in a highly-automated warehouse, the manager’s job description comes to resemble that of a factory manager.

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