Technical Article

Driverless Vehicles Designed for Small Manufacturers

(c) 2017 Vecna Logistics

Today’s AGVs (automated guided vehicles) are more advanced than a decade ago. The machines are now faster, safer, easier to program, more precise and less expensive. Better throughput, productivity, and cost-effective technology are now available to even the smallest manufacturer or distributor who have been ignored for far too long.

With e-commerce exploding and customer expectations on the rise, distribution and fulfillment centers as well as third party logistics (3PLs) providers need an innovative way to reduce costs and increase throughput. Low-infrastructure solutions to automate material handling needs includes case picking, each picking, goods-to-person, person-to-goods, and robot-conveyor hybrid systems.

Globally manufacturing accounts for more than 12 percent of GDP in the economy. For every $1.00 spent in manufacturing, another $1.81 is added to the economy. That is the highest multiplier effect of any economic sector. In addition, for every worker in manufacturing, there is another four employees hired elsewhere. There is new research according to the National Association of Manufacturers (NAM), suggesting that manufacturing’s impacts on the economy are even larger when considering the entire manufacturing value chain plus manufacturing for other industries’ supply chains. That approach estimates that manufacturing could account for one-third of GDP and employment. It also estimated the total multiplier effect for manufacturing to be $3.60 for every $1.00 of value-added output, with one manufacturing employee generating another 3.4 workers elsewhere. During the stubborn recession, it was more difficult to cost-justify purchasing AGVs. Manufacturers could legitimately argue that despite the efficacy of automation, labor was inexpensive and widely available. All of that has changed. 

Adding to the complexity of the workforce is the aging-out of skilled labor. While the unemployment rate is low there are over six million unfulfilled manufacturing jobs. There is a mismatch of skills possessed versus skills needed. Robotics solutions are going to make up a larger and larger share of jobs that go unfulfilled.

The average manufacturing worker in the United States earned $81,289 annually, including pay and benefits. The average worker in all nonfarm industries earned $63,830. Looking specifically at wages, the average manufacturing worker earned nearly $26.00 per hour, according to the latest figures, not including benefits. (Source: Bureau of Economic Analysis and Bureau of Labor Statistics)

Manufacturers have one of the highest percentages of workers who are eligible for health benefits provided by their employer. Indeed, 92 percent of manufacturing employees were eligible for health insurance benefits, according to the Kaiser Family Foundation. This is significantly higher than the 79 percent average for all firms.

Manufacturers have experienced tremendous growth over the past couple decades, making them more “lean” and helping them become more competitive globally. Output per hour for all workers in the manufacturing sector has increased by more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, almost tripling its labor productivity over that time frame.

Over the next decade, nearly 3.5 million manufacturing jobs will likely be needed, and 2 million are expected to go unfilled due to the skills gap. Moreover, according to a recent report, 80 percent of manufacturers report a moderate or serious shortage of qualified applicants for skilled and highly-skilled production positions. (Source: Deloitte and the Manufacturing Institute)

Exports support higher-paying jobs for an increasingly educated and diverse workforce. Jobs supported by exports pay, on average, 18 percent more than other jobs. Employees in the “most trade-intensive industries” earn an average compensation of nearly $94,000, or more than 56 percent more than those in manufacturing companies that were less engaged in trade. (Source: MAPI Foundation, using data from the Bureau of Economic Analysis)

Over the past 25 years, U.S. manufactured goods exports have quadrupled. In 1990, for example, U.S. manufacturers exported $329.5 billion in goods. By 2000, that number had more than doubled to $708.0 billion. In 2014, it reached an all-time high, for the fifth consecutive year, of $1.403 trillion, despite slowing global growth. With that said, several economic headwinds have dampened export demand since then, with U.S. manufactured goods exports down 6.1 percent in 2015 to $1.317 trillion.    

World trade in manufactured goods has more than doubled between 2000 and 2014—from $4.8 trillion to $12.2 trillion. World trade in manufactured goods greatly exceeds that of the U.S. market for those same goods. U.S. consumption of manufactured goods (domestic shipments and imports) equaled $4.1 trillion in 2014, equaling about 34 percent of global trade in manufactured goods. (Source: World Trade Organization)

Taken alone, manufacturing in the United States would be the ninth-largest economy in the world. With $2.1 trillion in value added from manufacturing in 2014, only eight other nations (including the U.S.) would rank higher in terms of their gross domestic product. (Source: Bureau of Economic Analysis, International Monetary Fund)

Foreign direct investment in manufacturing exceeded $1.2 trillion for the first time ever in 2015. Across the past decade, foreign direct investment has more than doubled, up from $499.9 billion in 2005 to $1,222.9 billion in 2015. Moreover, that figure is likely to continue growing, especially when we consider the number of announced ventures that have yet to come online. (Source: Bureau of Economic Analysis)

Even the Smallest Manufacturers Now have an AGV Option

Manufacturers are investing in AGVs to improve plant-floor efficiency and reduce operating cost. Due to the high cost of entry, automated guided vehicles were only found in warehouses, automotive assembly plants, and other operations with large amounts of floor space. Low unemployment combined with recent advancements have made the machines more appealing to small- and mid-sized manufacturers in a wide variety of industries. 

As the flexible technology is now more affordable and easier to use on assembly lines, many smaller manufacturers and single location distribution centers are deploying driverless carts, robotic parts bins, and autonomous tuggers. Manufacturing engineers have best-practice lean manufacturing solutions which are driving prices down making these solutions available to everyone.

Article Courtesy:

Author Profile

John Hayes, Vice-President, Sales & Logistics, Vecna Logistics

John Hayes, Vice-President of Sales and Logistics for Vecna Logistics, is a widely-respected thought leader for the manufacturing, distribution, and materials handling industries. For more than twenty years he has been evaluating, designing, developing, and implementing innovative software and hardware solutions, with a particular focus in the AGV (automated guided vehicle) space. Hayes is a Supply & Demand Chain Executive "Pros to Know" recipient.  Contact Hayes at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow on Twitter @VecnaLogistics

Automated Conveyor Solutions Enter the World of ETO

Conveyors are a core component of all material handling or automation systems. Conveyors are used to transport, accumulate, and sort packages, boxes, or products. From receiving to order picking and fulfillment; from transportation of product to packing or shipping areas, conveyors are the freeway leading to final sorting and shipping. Rather than off-the-shelf automated conveyor solutions, an engineer-to-order approach allows customers to select conveyors based on products to be conveyed, ease of maintenance, reliability, uptime, price, speed, and design flexibility. Some of the design elements in distribution centers also include conveyor systems selection based on low energy/power consumption, low noise emission, roller technologies, and individually powered zones.

Combined with the B-to-C (business to consumer) e-commerce model where the volume of packages extends beyond FMCG (fast-moving consumer goods) and customer expectation for next day delivery, automated conveyor systems are essential in any distribution center. Often entirely mechanized and automated for high-volume traffic, conveyors can move cases and boxes, plastic totes, pallets, poly-bagged items, beverage cartons, mixed SKU pallets, and individually packaged merchandise.

The landscape for automated conveyor systems is changing as distribution changes. Distribution centers are handling more individual items than ever these days. Grocery store chains and big box retailers are receiving mixed-SKU pallets that are designed for specific aisles in a store. Retailers that once received full pallets of product once a week or month are now receiving a few cartons every day. Production lines, goods-to-person automation, picking and packing stations, and direct-to-consumer fulfillment are just some of the applications used for automated conveyor systems.

Engineer-to-Order (ETO) Conveyors Require Quality and Precision

With the average new distribution center exceeding 500,000 square feet, automated conveyor systems must cover large distances or if adopting a cellular production model, capable of fitting in tight spaces. A best practice lean manufacturing approach to designing and choosing automated conveyor systems, requires expertise and experience, not merely ordering a conveyor SKU on-line.

In repetitive manufacturing, it is possible to apply statistical process control (SPC) techniques to purchased components and manufacturing quality as well as scrap and yield. Statistical analysis is acceptable if a company mass-purchases or mass-manufactures the same product to the same standards every time. The essence of engineer-to-order (ETO) is building a unique complex product every time. There may be components that are common from one machine to another, but not in the same quantity as a repetitive manufacturer. In the ETO world, the cost of poor quality can be very high. The cost of rework to replace an item in a complex assembly and the warranty costs resulting from equipment failure can have a serious negative effect on profit margins. In an ETO environment, quality must be part of the entire process, and not just part of purchasing and manufacturing—the typical focus of a repetitive manufacturer.

Few conveyor companies consider themselves ETO manufacturers. Because ETO conveyors are never the same twice, quality problems tend to be hidden unless working with experienced custom-build manufacturers. The capital expense of conveyor automation means it has to be specified, tested, and precise every time. When that happens a rapid return on investment (ROI) is realized.

Author Profile

John Murdoch, CEO, Alfacon Solutions Ltd

John Murdoch is CEO of Alfacon Solutions Ltd., based in Canada. Murdoch is a thought-leader in both the manufacturing and materials handling sectors. Leveraging more than a quarter century of experience, Murdoch brings a unique perspective to engineered material handling solutions and the role of automation. Murdoch can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

HARTING ix Industrial – the new Standard for Ethernet Interfaces

HARTING ix Industrial® Really Big Miniaturisation. An overview of the advantages. 

Compact, Robust, Powerful.

Ethernet is the undisputed dominant communication standard and is penetrating ever more areas of our lives globally. The classic, globally popular RJ45 connector is synonymous with Ethernet connections. The RJ45 is low-priced and is familiar to everyone. But advances in the area of miniaturisation mean it has now become simply too large for many applications. A logical step would be a smaller yet more robust solution. The HARTING ix Industrial®   represents a clear recognition of the miniaturisation trend and sets a new standard for IP20 Ethernet connections.

The first steps into Industry 4.0


In generic terms, Industry 4.0 embraces a collection of technologies and concepts to create ‘smart factories’, where machines in the production process are able to communicate with each other, both internally and externally via the cloud. Put simply, connected devices in factories, offices and on the person will become smart networked nodes, interconnected via a standardised network without any hierarchy.

Better process optimisation, increased productivity, safety, reliability and flexibility, will all be highly valued outcomes from successful implementations of Industry 4.0. The revolution will result in a change in the required skill sets for shop floor workers and maintenance staff and it will increase the amounts of important predictive maintenance carried out and its accuracy. This in-turn will yield a significant payback in the form of minimised costly downtime as processes and systems become more predictable and reliable.

Information Management and IoT: The Future of Lean Manufacturing

Lean manufacturing in today’s industrial world surrounds the continual investment in technologies that create added value, while reducing waste. As an increasing number of facilities move toward this approach, the processes involved in connecting all these various, disparate systems becomes increasingly complex. This is especially true for operations running under the Industrial Internet of Things (IIoT) umbrella.

However, as a broad spectrum technological movement seeking to connect as many inanimate objects as possible for the sake of extrapolating value, it is extremely challenging to uncover the most efficient and equitable methods for moving immense amounts of data and connecting all the necessary dots. Depending on the sector, the potential benefits of automating these systems even vary greatly throughout the world. Although, the industrial arena still holds the most potential for reaping immediate IoT cost benefits.

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December'15/January 2016