Strategies for Successful Automation Implementation

Welcome to on time in full. A podcast from Design conveyor Systems. Hello, everyone, and welcome to another podcast episode of on time in full. A podcast brought to you by DCS. I'm your host for today, Gabrielle. And right now, I'm thrilled to be joined by Fred Rudolph, who's senior account executive at Design conveyor Systems or DCS, He's here with us today to talk about the building blocks of a business case. So Fred, welcome. Thank you. It's good to be here. Alright, Fred. So let's go ahead and start off to by giving your audience a little bit of your bio, your background. So a little bit about yourself, your role as senior account executive, a DCS. So what led you there? What the story of how you came to be at DCS, what's been your experience thus far. Give us the whole spiel, the whole story. Okay. Sounds good. Well, first of all, I live in Nashville, and I've been here for, almost fourteen years. I'm married and I have two children. One in college and and one still in high school. As a senior account executive, my role is to, work with our clients and help them navigate the journey to implementing designing and implementing warehouse automation solutions. You know, that's our primary mission at DCS and and my role is really to be the the client's advocate in in designing and implementing a solution. I started my business career as a consultant at Accenture. I was in the supply chain management line of business there. I followed that with a series of P and L leadership positions in manufacturing and distribution, starting out as a plant manager and then, ending up running a couple of different commissions. And, as my career grew, I also took on commercial responsibilities. And I found over time that I really enjoyed the commercial responsibilities more than the operational responsibilities. And, and so after being a buyer of of, capital equipment and automation solutions for many years. I decided I'd rather sell them than continue to run operations. So you've had a lot of different experiences. I mean, you've been plant manager. You've worked in the commercial space, operations. So How did you get involved in the field of supply chain and automation solutions? You know, going from being a plan manager, I transitioned into, an operation, a business unit that had both manufacturing and distribution, and, and as part of that, we bought and implemented distribution automation equipment. And I, you know, I enjoyed the I enjoyed the process. I enjoyed the companies that I worked with. And so when I was looking to, you know, make a career change or the evolution of my career, I thought that selling systems like this would would, would be interesting and enjoyable, and it has been so far. Absolutely. Well, you know, the topic of this podcast is building a business case. So, to kick things off, could you explain what exactly a business case is but in the context of supply chain automation. Sure. Well, in general, a business case is you know, it's a story. It's a document. It's a tool that provides the justification for undertaking a a project programmer portfolio. And in the business case, you evaluate the benefit cost and risks of alternative options and, and provide a a rationale for the preferred solution. So there's really five elements of a business case. There's the strategic context, the economic analysis, the commercial approach, the financial case and the management approach. Now what I'm talking about today is primarily the building blocks of the economic analysis. Okay. So you kinda gave us a teaser there. So what are the primary objectives of creating a business case when justifying automation to clients? So take us through some of those primary objectives? Well, you, what you wanna do is, is map out the return on investment for the, appraisal of options you're gonna have different, you know, different potential options for a specific project, that you wanna evaluate. Then you also want to evaluate the sourcing strategy and the procurement strategy. So once you've decided the you know, what the the focus of the project is gonna be, then how are you going to, procure that equipment and procure the, the labor and the management to implement the project. From the organizational standpoint, looking at the the financial case both, of this project and potentially across other projects that the the organization is gonna be considering. And then lastly, you wanna map out how you're going to lead this project and how you're going to implement it successfully. So the roles the governance structure and, you know, other choices that the organization has to make for how you're going to manage a project. So reduction in direct labor is often a straightforward reason for automation with that context. Could you elaborate a little bit more on this and just share some examples of how automation can lead to labor cost savings that we're looking for. Sure. One typical scenario, can be in the picking in the pick engine within a distribution center. And, you know, a standard, a standard methodology for implementing picking in the past has been to pick orders manually out of a pick module, either into carts or to a conveyor. And let's say, you know, for example, a customer may currently have fifty people across two shifts picking those orders. There's dense storage, good to person systems such as shuttles or or auto stores, that type of equipment. They could reduce that number to, let's say, seven to ten people picking those orders as they're delivered to a pick station. So, again, that's the the kind of order of magnitude that you can gain from some of the modern automation systems. Another aspect of, of labor related cost reduction that automated that automation can allow you to achieve is, by reducing the churn of employees, direct employees that you need in the business. This in turn is gonna reduce your recruiting and your training cost and also should reduce the company's workman's comp costs. Well, when creating a business case, I mean, it's crucial to quantify the benefits. So what are some methods or methods tricks that businesses can use to measure those and and just project the impact of automation more accurately. Sure. Sure. That's a that's a That's a great thing to look at, and it's something every company should be looking at when they're looking at projects like this. A lot of our customers still use a simple payback period to decide which projects they will approve. And they'll have generally have a guideline. In the last Four five years, I've been involved with with multiple projects where the client was satisfied with a three to four year payback period. As long as the the project was fit with their and their strategic roadmap, you know, that was acceptable. But right now I'm working with a client who requires a fifteen to eighteen month payback period. So it it can vary widely, and it depends on, you know, a lot of other metrics within that company itself. Other companies will require the use of a, slightly more complex formula for investment evaluation some companies use the target internal rate of return, and some even use a net present value to decide, which which projects they will accept and which projects they'll maybe shelve for future periods. This is this is more common when a company generally with larger companies, when they have to compare a range of investments across different segments of the company. So if, for example, There's an opportunity for a distribution automation project. But on the other hand, a a different segment of the company may be looking at let's say buying, buying an operation that is currently licensed to a a third party. So, they're disparate, types of investments, and they're gonna wanna be able to compare them to a, a common denominator. So the present value can be what some companies use. Well, I'm sure you have some success stories or examples where your clients effectively quantified all these benefits we're talking about. For the automation project. Do you have any example cases that you could share with us? I do. I do. I had a a footwear client several years ago who had been using a third party logistics provider to process their e commerce orders. And as e commerce grew, you know, obviously, that became a bigger part of their business. So they ran their current they they were in their own distribution center where they were processing, wholesale and retail orders, but the e comm was outside. They looked at implementing a retrofit to their DC to be able to, manage the picking and packing of single unit orders using the existing equipment and retro fitting certain areas of the equipment. And, they successfully implemented that project, and it would allow them to get out of that three BL contract. And they ended up paying for the automation in eighteen months by the you know, by by making better use of their existing DC and not paying somebody else to process the work for them. So it was a a successful project and and a good investment for the client. Absolutely. Well, as technology continues to advance as we're seeing, what trends or innovations in supply chain automation, do you find particularly exciting from your own personal opinion or just promising for businesses in the future? You know, I mentioned earlier dense storage goods to person. These are systems that have been around for twenty years, but with with greater advances in in, in software and in, in different aspects of robotics these systems are really at the point where they're mature. And there's a lot of different use cases, and a lot of clients are now willing to take the risk and and implement solutions like this. They're asking about the it's it's really the standard of what they're asking for now, and they're willing to invest in them. Right around the corner, I think, in terms of, rapidly maturing our, mixed case robotic pallet building for, primarily, you know, companies that are shipping to retail. But in, you know, it's it's automation to build Seems skew palettes has been around for for years, and it's commonly used to manufacturing. But to be able to build a pallet of mixed cases, has been more challenging. And, there's a lot of, lot of solution providers now that are very close to having, they have good solutions. They're in the process of getting customers over that hurdle of of piloting and then implementing. And so that's really gonna become more and more common in the next several years. Well, I mean, I'm sure, you know, every business is unique. So what are some factors that clients should consider when deciding whether or not automation is even the right choice for their supply chain operations? There's two things that the clients don't always think about that they really need to. You know, they can go through all the investment decisions, and they can be confident in the in the technology and with the the partner who's going to implement the automation. But there's two other questions that I think they need to ask themselves. One is Are they willing to invest in the technical resources and the maintenance time necessary to keep automation performing at a high level Generally, there's, you know, there's a good, there's a good labor reduction inherent in almost all automation projects. But that doesn't mean that you can operate without maintenance resources. And and some companies that may have been running a manual solution twenty four seven need to learn that they're going to have to devote some time to to maintenance to keep the equipment operational. And then the second thing that that clients really need to think through and and really push their vendors to help on them understand is what changes do the clients anticipate in their market? And how is the automation solution going to allow them to keep pace with that change? And that's something that, you know, a company like DCS can certainly help a client understand. But that's a question that the client really needs to under needs to be thinking about, you know, what what changes do they see in the next five, ten, fifteen years? In their market, and how is the automation going to grow to support that? And also just align also with their overall strategic objectives. So What advice do you have for businesses in terms of aligning these automation goals we're talking about also with their strategic objectives? What's your advice there? There's three things that I think are that are important. And I always think about these going into a relationship with a client. First, The client really needs to commit to forming a a cross functional internal team. And at the very least, they need resource system operations, engineering, and IT. And ideally, they'll also have input from the sales organization. That internal team needs to develop a vision and framework for the project and work closely with any outside vendor that's chosen for the project. It it's It's not enough to to throw the idea over the wall to the vendor and then wait for them to bring back the solution. Successful projects have a lot of involvement from not just a client sponsor, but a client team. Second, I think the you know, and I'm biased here, obviously, but, working with a vendor agnostic partner like DCS to analyze the client's data, developer concept, and Ram for the optimal solution, and then implement that solution in line with what the client's business case is is really important. There are companies that are large enough to have their own full time project management teams, but for smaller companies that don't have they can't devote resources to that extent, it's essential to work with a partner that is gonna guide them through that journey. And then the third thing, along the lines, along the way for a company to go get good at implementing projects that are that are key to their strategy. Is to put metrics in place to measure the actual realized performance of the project. It's it's essential when you're trying to decide on a project to analyze it and to, you know, estimate labor savings estimate the cost of getting out of an outside building, etcetera. But not that many companies actually follow-up and and measure how the project actually did and learn lessons for the next projects that they intend to implement. So I think those are the three most important things in my mind. Well, thank you so much for sharing those, Fred. I'm that wraps up the conversation for today. So Any last thoughts to leave with our audience in terms of this topic? No. I think, you know, it's, this is really the fun part in my mind of our business. Once you've met a client and and gotten to meet them, gotten to understand their business problem. It's helping work through this to jointly arrive at, a project that the the customer is willing to pay for and that we can deliver. And that's the, really exciting part of our business. It's very exciting. Thank you so much, Fred. So thank you to everyone who joined in on this episode to learn about the building blocks of a business case. It was a pleasure to have you on the podcast. Thanks, Gabriella. Appreciate it. I enjoyed it very much. Of course. And as always, if you'd like to learn more, please visit designed conveyor dot com and look for this podcast wherever it is you get your podcasts at. I've been your host Gabrielle. Thanks for tuning in.