Smart material handling enables companies to automate many manual processes – ROI could become significant

Daily routines in many factories consist of employees spending a lot of time searching for parts, ordering new ones and entering data in the systems. With the help of the industrial internet, operations such as stock replenishment and traditional inventories are no longer needed. “The core idea behind smart material handling is that instead of manual routine tasks, employees can focus on value-added work”, says Justus Dahlén, Head of Agilon Business at Konecranes.

In many Western countries, the cost of labor is high. Therefore, a lot of manual work has already been transferred to emerging markets. In order to stay competitive and keep jobs, an increase in productivity is needed. One of the most interesting current solutions to this challenge are smart material handling systems – automated material handling lets employees concentrate on refining, value-added work instead of manual routine tasks like picking items or manual data input.

Smart material handling systems are developing fast, but their usage is not yet very common. According to Dahlén, this is interesting, because the ROI and benefits of smart warehousing systems can be seen right away – by having a connected facility you can skip through many previously manual processes, such as stock replenishment and manual inventory.

The core idea of a smart material handling system is very simple. By directing the material flow with the help of the internet, employees can concentrate on value-added tasks and find materials and tools in the right place at the right time. They don’t need to run around looking for spare parts – the only thing the factory workers need to do is press a button and order the right part from the system to be placed in front of them. Furthermore, there is no need to feed information into the system or order spare parts. All of this can also be automated, pre-booked and remotely controlled. You don’t need to shut down your factory when taking inventory either. This leads to a reduced amount of unnecessary work, and the increases in productivity are huge.

“A factory that started utilizing a smart material handling solution system at one stage of their production increased factory output by three percent without any additional labor. Let’s say the factory produces 10 000 units a year and the price for one unit is approximately 10000 dollars – a three percent increase in productivity results in an additional annual output of 3 000 000 dollars. Even if the margin would be as low as 12 percent, this would result in a profit of 30 000 dollars per month. Not bad, as the cost of the system is 2500 dollars per month”, Dahlén says.

Customers see the value in smart material handling right away

The development of smart material management is intensifying all the time and it’s an interesting example of the benefits of the industrial internet. Developing these kinds of solutions is, thus, inevitable.

“Industrial internet is all about serving the needs of the manufacturing industry. Using more and more software is already a big trend in many machines, and new software is being developed constantly. Nowadays everything is developing at a very rapid pace. Modern machines introduced today might be producing twice as much in two years’ time, because new software is uploaded in them every few months. This is quite a dramatic change to the time when the lifecycle of an industrial machine was approximately 15–20 years. It is inevitable that advanced combinations of services and automation as well as internet and manufacturing solutions have naturally developed. I can assure you, that how materials are handled in state-of-the-art factories will have changed again in a couple of years.”