kardex Cost of Accuracy Calculation User Guide
- June 1, 2024
- Kardex
Table of Contents
kardex Cost of Accuracy Calculation
Order accuracy: What is a mispick?
Most order fulfillment operations manually selecting required products to fill a customer order have experienced picking errors. That’s because humans are prone to making mistakes.
Picking involves much more than grabbing an item off a static storage rack or
shelf. In the typical manual distribution center, picking means an operator
receives a paper list of instructions about what to pick and where, travels to
the correct storage location, locates the correct item within that storage
location, refers to the paper pick list to determine the number of items
required from that pick face, picks the items, confirms the pick by marking
the paper, then delivers the items for packing.
All of those steps are fraught with potential for error. Factor in increasing
fatigue as an operator walks through a warehouse again and again throughout a
shift, and the typically less-than-optimal lighting in most facilities, and
it’s easy to see why picking mistakes happen. These picking mistakes, or
mispicks, come in a variety of types. Among them:
So, while most operations understand mistakes will happen, very few have taken the time to calculate the true cost of those mispicks, and how they impact the bottom line. This white paper outlines a calculation for estimating the true cost of mispicks in order fulfillment to an operation. It also presents technology solutions to improve pick accuracy and shares a calculation for determining the savings they can deliver.
Doing the math: How much does a mispick cost?
- A survey of 250 supply chain and distribution managers across the United States, United Kingdom, France and Germany – conducted by research company Vanson Bourne, – found “distribution centers are losing an average of nearly € 360,000 per year due to mispicks.”2
- The cost of a picking mistake includes not only the cost of the item, but also the expenses to ship it back, processing the item, returning it to stock and potential loss of customer satisfaction. Further time is lost in correcting the mistake by picking, packing and shipping the correct item back to the customer.
- An estimated 35 percent of facilities experience ongoing mispick rates of 1 percent or more while another 19 percent of facilities don’t even measure mispicks.3 Although 1 percent sounds like a slim margin for improvement, it adds up quickly, as illustrated here:
- A facility picking 250 lines per hour, averaging three SKUs per order, and running one 8-hour shift per day picks 6,000 items daily. If 1 percent of those picks are incorrect, that translates to 60 mispicks. The cost of each mispick… can average as much as € 100 apiece, or more. Therefore, 60 mispicks equal € 6,000 in lost revenue a day.
Reducing mispicks: Light-directed solutions boost picking accuracy
Automated, goods-to-person storage and retrieval systems (ASRS) —such as
Horizontal Carousel Modules (HCMs), Vertical Carousel Modules (VCMs), Vertical
Lift Modules (VLMs) and Vertical Buffer Modules (VBMs) —deliver items directly
to an operator, eliminating walk and search time, as well as fatigue. In
addition to delivering the items directly to the operator, ASRS can be
equipped with light-directed picking features which reduce human error by
helping operators with four basic functions:
- Picking a specific or active item
- Putting an item in an active order or location
- Communicating a message such as a quantity or description of the item
- Completing the pick and moving on to the next pick
Light-directed picking technologies have evolved into complete message centers that communicate to the operator the precise area within the unit of the item to be picked, display the part number or description, pinpoint the exact location, direct either picking or storage and indicate the required quantity. Not only do these devices dramatically reduce picking mistakes, but they also lead to happier customers who are more likely to buy again.
Light-directed technologies
To increase picking accuracy up to 99.9%, the following light-directed
technologies can be added to automated storage and retrieval systems:
Display LED-Navigator
Integrated with VCMs and VLMs, this dynamic pick-to-light technology displays
informa-tion for the operator. It uses light as a communication tool to
provide part descriptions, quantities and other messages to help an operator
select the correct item and amount for order fulfillment.
Watch our video about the Display-LED Navigator
Light pointer
Used with VLMs or VBMs, this system deploys an LED or laser light mounted on a
slider that moves on a guiding system within the access opening of the unit.
Software-driven, the light pointer also swivels to project the light beam in
the depth direction of the machine to illuminate any position within the
storage tray or tote. The light identifies the precise loca-tion of the item
to be picked or replenished, eliminating search time.
Position Indicator Vario
The position indicator Vario is incorporated into the access opening of
Vertical Lift Modules. The indicator simultaneously shows the horizontal
retrieval position as well as the depth position where the required storage
goods are located.
Position Indicator LED
Incorporated into the access openings of both Vertical Lift Modules and
Vertical Carousel Modules, or next to the access opening of a Horizontal
Carousel Module, these LED lights illuminate in alignment with the position of
the required item where it is stored in the tray or on a shelf.
Put/Batch Lights
These light-directed picking modules direct an operator to put or store items
in a specific or active location when replenishing stock. They can also be
used for order consolidation, batch picking and sortation at workstations
located near the ASRS.
In addition to these light-directed technologies, automated storage and
retrieval systems can also incorporate radio-frequency (RF) scanners for
barcode verification of picked items, voice-directed picking modules that give
verbal commands to operators wearing a head-set or scales that verify the
correct number of small parts have been picked based on their weight.
Intuitive Picking Assistant
Kardex`s latest innovation, Intuitive Picking Assistant, follows the “Natural
User Interface” trend. This trend describes the interaction between human and
machine within a technically or naturally existing environment. This means
that operations at a picking station are performed without the need for an
additional display or keyboard. Workers are guided intuitively and receive
confirmation for each step. The Intuitive Picking Assistant offers fast,
error-free picking as well as ergonomics.
During the operation process, all relevant picking information, such as the
item to be picked, picking position in the bin and quantity, are displayed. A
3D camera recognizes the hand position of the operator. This enables the
virtual display to be operated, and the removal of an incorrect item is
detected and reported back to the operator.
Light-directed picking system add-ons that dramatically reduce mispicks
Savings from fewer mispicks
Increasing pick accuracy, even by less than a percent, will not only contribute to a dra- matic reduction in picking mistakes, but it will also result in tremendous cost savings. Further, customer satisfaction will improve, likely leading to an increase in repeat purchases. Just how much cost savings can result from using automated storage systems that incorporate light-directed picking technologies? The table below shares two examples of the cost savings that can be gained by reducing pick error from 1% to 0.1%. Reducing the mispick rate even slightly yields a 90% cost savings.
Calculate the savings from fewer mispicks
Integrate inventory control software
To achieve the highest degree of picking accuracy, integrating inventory
management software with an ASRS enables smart functionality such as inventory
monitoring. In addition to keeping track of the contents stored within the
machine, the software also interfaces with a facility’s warehouse management
system (WMS) and enterprise re- source planning (ERP) systems. This function
allows managers to closely monitor stock levels in real time – and potentially
eliminate physical counts – for better inventory control.
For example, in systems equipped with an RF barcode scanner, the operator can
be re- quired to scan each picked item. The data captured by the scanner is
relayed to the inven-tory control software, which verifies that the picked
part is the same one required by the order. This barcode recognition feature
can also be used when replenishing inventory in the system. During restocking,
the operator scans both the item and its destination to verify placement into
the correct storage location. Adding scanning to a storage and retrieval
system ensures additional accuracy in order picking and SKU replenishment,
significantly reducing mispicks.
Use barcode scanners
Likewise, for operations that stock a few high value items, or regulated
products requiring tighter control, the software can be configured to require
a barcode scan only when triggered by certain parameters. Qualifiers can be
limited to certain transactions, product types or item storage locations,
selectively boosting accuracy and control without sacrificing pick speed. For
facilities requiring an operator to match part numbers or pick items from a
specific batch, lot or serial number—visual verification can be tedious, time
consuming and error-prone. For these applications, barcode scanning can be
used to verify with the inventory management software the correct item has
been picked, saving time and ensuring accuracy. Finally, in highly regulated
industries such as medical device, healthcare and pharmaceuticals, the same
software functionality can be leveraged for its track-and-trace capabilities.
That’s because the software maintains a record of the item, the date it was
picked, the operator who picked it and the order it fulfilled. Should a defect
be identified, or a recall required, the software can quickly determine the
locations of both stocked and shipped products.
Increasing accuracy with ASRS
Jazz Aviation
The 641 m2 maintenance stockroom for Jazz Aviation, in Toronto, Ontario, is
responsible for around-the-clock repairs to the airline’s fleet of 125 planes.
That means the facility must keep close watch over the 20,000 SKUs in
inventory.
Safety is the top priority at Jazz. The protection of inventory is crucial to
keeping airplanes at peak performance. To secure parts and keep better track
of them, the company consolidated half of its total SKUs into two Vertical
Lift Module Kardex Shuttles. Integrating inventory management software ensures
all transactions are logged and traceable, keeping airplanes and passengers
safe. Every SKU received into inventory has a batch, or lot, number. The batch
number must be traceable throughout the distribution channel, because it is
crucial to know what part number and batch number was used in each airplane.
Upon picking, the operator must pick a specific part and a specific batch
number. This allows Jazz to trace what batch number is put into each order and
used on each plane. To verify the pick based on the batch number, the operator
scans the part before it goes into the order tote, ensuring they have picked
not only the right part number, but also the correct batch number. Due to the
batch picking and validation process, accuracy has increased to more than 99%.
GPV
As one of the largest electronics manufacturing services (EMS) providers in
the world, GPV helps industrial companies optimize their value chains and
improve their competitiveness. As a global company, Kardex has implemented
ASRS for GPV on several sites. Lately, GPV needed to modernize their facility
in Västerås, Sweden, and gradually replace their older storage units with new
fourteen VLM Kardex Shuttles to save additional space, improve stock accuracy,
and safely store customer-owned materials.
The VLMs are combined with the Kardex Power Pick System, including Kardex
Color Pick System. In addition, the machines are equipped with Display LED-
Navigators and laser pointers. The VLMs operate on the ‘goods-to-person’
principle, delivering a tray with the needed inventory directly to the
operator. The Display LED-Navigator indicates exactly how many items to pick,
and the laser pointer further helps to show the operator where the items are
located.
The implemented solution has resulted in an impressive 200% increase in
picking efficiency, higher picking precision and safer, more compact storage
of valuable items.
Christie
About Kardex
Kardex is a leading intralogistics solution provider of automated storage, retrieval, and material handling systems. With two entrepreneurially managed divisions, Kardex Remstar and Kardex Mlog, as well as Corporate Ventures (Rocket Solution, SumoBox, Kardex AutoStore Solutions) offering complimentary cutting-edge technology, Kardex developed into a global industry partner. Kardex Remstar is a global market leader for dynamic storage, retrieval, and material handling solutions. Kardex Mlog has a leading position in Central Europe for stacker cranes, conveyor systems, and automated material handling systems. The two divisions are unified under a strong group brand and are partners for their customers over the entire life cycle of a solution. This begins with the assessment of customer requirements and continues through planning, realization and maintenance of customer- specific systems.
Contact a specialist
Bibliographical references
- Tobias Rammelmeier, et al. “Active Prevention of Picking Errors by Employing Pick-by-Vision,” accessed, May 5, 2021, http://mediatum.ub.tum.de/doc/1188188/fml_20131230_379_export.pdf
- “Unlocking Hidden Cost in the Distribution Center,” accessed May 5, 2021 https://country.honeywellaidc.com/CatalogDocuments/unlocking-hidden-costs-distribution-center-research-paper-A4.pdf
- “The Cost of a Mispick: Improve the Bottom Line by Reducing Errors,” accessed May 5, 2021 https://www.erpsoftwareblog.com/2018/01/cost-mispick-improve-bottom-line-reducing-errors/
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