In modern logistics facility planning, constructing a competitive distribution center requires not only standard facilities but also the inevitable introduction of advanced material handling equipment such as automated warehouses and sorters.
When considering advanced automated facilities and equipment not incorporated into Tera Calculation 2, it is necessary to perform an operational aggregation by detailed workflow based on the EIQ matrix table from Tera Calculation 1, calculating the precise figures required for layout design.
This chapter will thoroughly explain the specific procedures for setting the optimal workflow categorizations for the site using the EIQ matrix table, performing the appropriate equipment setting for each operation, and ultimately deriving the Return on Investment (ROI).
In the design approach of logistics facility planning, Tera Calculation 1 (Plan 1) and Tera Calculation 2 (Plan 2) have clearly distinct roles. The major differences between the two plans can be summarized in the following four points.
| Study Item | Plan 1: Tera Calculation 1 (Focus on operation / For detailed design) | Plan 2: Tera Calculation 2 (Focus on storage / For overall rough estimation) |
|---|---|---|
| 1. Approach to Introduced Equipment & Area Calculation | There is no restriction on the introduced equipment that can be set. Based on the workflow aggregated values of the EIQ matrix, the designer freely arranges the optimal equipment and meticulously calculates the area manually (CAD, etc.). | Automatically calculates the area of standard equipment already built into the system (such as fixed racks and medium-duty racks). It cannot calculate the area of special equipment other than the built-in ones. |
| 2. Key Indicators for Rank Setting | The keys are "Case" for case shipping, and "Lines (picking frequency/workload)" for piece shipping. Emphasizes operational optimization regarding how efficiently the workflow flows. | The key is "PL (pallet) equivalent" for both cases and pieces. Emphasizes the early derivation of the rough scale of the entire building. |
| 3. Adopted Shipping Date (Target Data) | Adopts the "peak shipping date (e.g., 2022/05/09)" when the volume spikes the most throughout the year, calculating the peak processing capacity of automated equipment needed to overcome the maximum fluctuation. | Adopts the average of all shipping data. The premise is to comprehensively cover storage information for all items, assuming that peaks will be operationally covered by digesting safety stock, etc. |
| 4. Trend of Selected Introduced Equipment | Selection of introduced equipment strongly conscious of advanced automation and mechanization, such as sorters, case automated warehouses, shuttle racks, and GTP (Goods to Person) systems. | Selection centered around manual work and standard equipment (PL fixed racks, forklifts, hand trucks, etc.) that have a proven track record and lower costs. |
When drafting a logistics facility plan, first clearly define the workflow regarding which introduced equipment will be assigned to which process, depending on the characteristics of the handled products (case or piece) and their liquidity (high-liquidity/low-liquidity).
High-liquidity shipping destinations and items with extremely high shipping frequencies are processed in one go using conveyors and high-speed sorters (such as sliding shoe sorters or cross-belt sorters). On the other hand, low-liquidity items with low shipping frequencies are stored in a multi-level traveling cart case automated warehouse (mini-load AS/RS) and summoned to merge with the shipping line only when necessary.
High-liquidity items that are shipped every day are lined up at the front of flow racks (inclined flow shelves) equipped with digital picking indicators, minimizing the walking distance of workers for processing. On the other hand, low-liquidity piece items that rarely go out are stored in high density deep within the case automated warehouse.
For both case and piece shipping, low-liquidity items that would maximize the work burden if a person walked around a large warehouse to pick them are managed within the same case automated warehouse. The equipment setting establishes a retrieval station (GTP system) where "products (containers) automatically come to the person's hands" instead of "the person goes to get the products," executing sorting and picking with zero walking.
Accurately assign the workflows defined above (A, B1, B2, B3, etc.) to the corresponding cells of the 5x5 EIQ matrix table calculated in Tera Calculation 1. Next, for each workflow unit, cross-aggregate the "total number of retrievals," "number of pieces to be picked," "number of case equivalent boxes," "PL equivalent required for storage," and "weight equivalent for truck loading." Finally, strictly verify (cross-check) that the sum of the aggregated values from each operational flow matches the original shipping destination total and item total without a single error, preventing calculation omissions.
The aggregated operational data derived from the EIQ matrix is deciphered as follows and applied to calculate the processing capacity of each introduced equipment.
The overall picture is retrieving a total of 918 items and 6,449 cases from the storage area to 300 shipping destinations.
[Breakdown by Flow] Operation A (direct to sorter): 365 items, 4,893 cases / Operation B1: 365 items, 780 cases / Operation B2: 452 items, 643 cases
/ Operation B3 (automated warehouse GTP): 365 items, 133 cases.
The overall picture is retrieving piece goods for a total of 2,393 items and 3,174 cases from the storage area to 411 shipping destinations.
[Breakdown by Flow] Operation C (flow racks): 1,211 items, 2,400 cases / Operation B1: 1,211 items, 356 cases / Operation B2: 1,182 items, 319 cases
/ Operation B3 (automated warehouse GTP): 1,182 items, 99 cases.
* By executing this "precise aggregation by workflow (operation)," it becomes possible to fully extract the exact number of storage locations, the storage and retrieval capacity per hour (including replenishment cycles), and the number of Oricons (container vessels) required for shipping necessary for the introduction of automated equipment as theoretical values, rather than rough estimates.
Translate the aggregated numerical values into the requirements for the actual physical equipment setting.
A bulk retrieval of 1,200 items and 2,400 cases (equivalent to 56 PLs) by pallet from the storage area, transported to the replenishment area (151 retrievals). Thereafter, the setting is for workers to perform 3,843 picking operations guided by lamps at the front of the flow racks, accurately shipping to 411 destinations (generating about 9.35 picks per shipping destination).
Despite being a diverse array of 2,393 items, the volume is merely 774 cases (24 PL equivalent). Placing these one by one on shelves would consume an enormous area, so the setting entails storing them in standard container vessels for retrieval (approx. 550 containers, mixed loading of approx. 4.35 items per container), storing them in high density three-dimensionally in a case automated warehouse, and calling them out for processing using machine power.
After entering the calculated volumes into each process block (receiving, storage, picking, inspection/packing, shipping), arrange the introduced equipment at actual scale (create a layout drawing) in accordance with the operational traffic lines of the entire logistics facility plan (e.g., ensuring flows of goods and people do not cross) and the physical dimensions of the building (pillar pitch, effective ceiling height, etc.).
📌 Essential ROI Comparative Evaluation Items to Present to Management
Because introducing automated equipment requires massive capital, an objective evaluation from both of the following aspects is vital.
1. Cost Evaluation: Simulate how many years it will take for the total cost of the logistics equipment (such as automated warehouses and sorters)—comprising the "initial investment amount (hundreds of millions to billions of yen)" and the "annual maintenance and electricity running costs"—to be surpassed by the "drastic reduction in labor costs for picking personnel and forklift operators (including hiring and management costs)" achieved through automation, allowing the investment to be recovered.
2. Operational and Risk Evaluation: Conduct a comparative evaluation of qualitative benefits such as the backup system in the event of equipment trouble (the difficulty of system operation), the overwhelming assurance of safety through unmanned operations, and the ability to make the building more compact (rent reduction effect via decreased required installation area).
Ultimately, compare and evaluate over a span of several years the "manual labor-centered layout with cheap initial investment but high manpower" derived from Tera Calculation 2 against the "automated layout capable of reducing personnel to the limit despite high initial investment (Plan 1)" derived from Tera Calculation 1, constructing the optimal system with the highest superiority (ROI) for the company's management strategy.