whitepaper
Service + Support
A No-Surprises Operations
Budget For The Retail DC?
Is it possible to remove the TCO mystery from your automated material handling investment?
The modern era of omnichannel retailing
delivered the death knell to your father’s
retail distribution center. Too complex for
the lift-truck-and-box-shuffle of yesteryear,
today’s omnichannel retail environment
demands sophisticated automation to
meet the customer’s speed- and accuracyof-fulfillment expectations.
to recruit internal technical support, but
the maintenance required for these highly
mechanical storage and retrieval systems,
carousels, shuttles, conveyers, sortation
devices, robots, and software that drive the
modern DC requires a high degree of hardto-find skills, which come at a premium if
they can be found at all.
The automated material handling systems
that facilitate the intricacies of today’s
DCs and fulfillment centers are complex
infrastructures, comprised of roboticallyaided, software-driven, efficiency-enabling
technology that simply didn’t exist a
decade ago.
According a new survey conducted
by Peerless Research Group for Modern
Material Handling (MMH), warehouse and
distribution center operations professionals
are keenly aware of the MRO (maintenance,
repair, and operations) challenges they
face.
Though their necessity is obvious and
their payback significant, the price tag
hanging on modern automated material
handling systems is often hefty, and their
ongoing cost of operation very difficult
to predict. A handyman with a toolbox,
after all, can’t maintain the integration of
sophisticated software and cutting-edge
robotic technology.
In its first annual Maintenance Study, MMH
found that 44% of the DC operations pros
it surveyed said growing e-commerce
business is driving increased automation,
and thus upping the ante on their
MRO investments. A full 86.1% of the
professionals surveyed by MMH admitted
difficulty finding technicians who are
qualified to maintain complex, automated
Modular automated material handling systems like
*
Perfect Pick from OPEX promise increased DC throughput material handling systems.
Thus, the costs associated with the service
and efficiency, but at what cost to maintain?
and support of automated material handling
What’s more, to meet sales spikes and
systems has become something of a wild card. Traditional methods throughput demands of modern omnichannel retailing, merchants
of calculating ROI and payback—the simple division of the cost of need quick access to additional infrastructure—the spare parts
the project by the annual cost savings that the project provides— and additional modules, for instance, that ensure rapid scalability.
no longer apply.
These, too, come with complexity and at a cost. To obtain spare
parts, DC and warehouse operations professionals are often forced
In recent years, retailers have learned this lesson the hard way. to procure from multiple sources, according to the MMH Report:
Many were quick to implement progressive automated material
handling systems, lured by promises of decreased labor spend • Distributors (67.4%)
and increased throughput. But that cost-savings analysis all too • Systems Suppliers (56.8%)
often fails to anticipate the cost of keeping these systems running, • OEMs (56.8%)
often requiring years of trial and error at best. Some opted • Other Providers (11.6%)
*MMH Maintenance Study, March 2015, http://www.mmh.com/article/reader_survey_maintaining_the_automated_warehouse
OPEX Corporation l 305 Commerce Drive, Moorestown, NJ 08057 l 856-727-1100 l www.opex.com
whitepaper
The combination of unanticipated maintenance requirements,
difficult to procure and costly spare parts, and all too often
unpredictable omnichannel sales volume make budgeting for
the ongoing costs of automated material handling maintenance
a challenging endeavor, one to which standard payback and ROI
equations don’t apply.
The De-Facto Materials Handling Vendor Response:
A Business Opportunity
Because their modern material handling systems require such a
degree of highly skilled and hard to find expertise to maintain, many
retailers are moving away from onboarding internal engineering
and maintenance staff. Instead, they’re choosing to contract with
outside support services, often offered by the vendor from whom
they purchased their material handling equipment, to keep their
systems up and running. But there’s a catch to that. A few catches,
actually.
Modern robotic material handling equipment, such as the OPEX iBOT
pictured here, requires specialized technical maintenance.
A New Take On Automated Material Handling TCO
Recognizing an opportunity to beef up their line cards at the expense
of their ill-equipped customers, many automated material handling
equipment vendors have sprung into action. Their proposition? To
capitalize on standard annual maintenance agreements—with a
twist. The service contract model du jour typically includes:
Determining an annual operating budget and the long-term Total
Cost of Ownership associated with an automated material handling
systems investment shouldn’t constitute a guessing game. As such,
OPEX has orchestrated a new, no-surprises, no additional cost
approach to after-the-sale service and support.
•
While the OPEX model is new to the automated material handling
space in retail, it’s far from unprecedented. The OPEX support
model for Perfect Pick, its unique robotic goods-to-person order
fulfillment system, is rooted in the company’s 40-year history of
providing mission-critical remittance processing and document
imaging technology to government agencies, the insurance
industry, financial institutions, and others. Recognizing that today’s
omnichannel retail fulfillment operations are equally missioncritical to the businesses that run them, OPEX has applied the same
fast, zero-hidden-cost approach to contracted service and support
of Perfect Pick users. Here’s what that means to the company’s
customers:
•
•
•
A predetermined number of on-site service hours. But
additional on-site service, up to the allocation of a full-time
on-site vendor representative, is available at an extra cost.
A predetermined number of telephone support hours. But
additional telephone support is available at an extra cost.
Spare and replacement parts, typically offered at a discounted
cost.
Software upgrades, typically at an additional cost.
And therein lies the mystery in determining an annual budget for
the ongoing maintenance and operation of automated material
handling systems. In addition to the hidden cost of non-contracted
on-site service and telephone support calls, retailers are subject to
incalculable hardware maintenance, replacement, and upgrade
costs when something goes awry and when business spikes
require the allocation of additional hardware to meet fulfillment
demands. In an age of 24/7 DC operations criticality and incredibly
competitive margins, retailers are demanding, and deserving,
predictability in the cost of fulfillment operations.
•
2 hour on-site response. As part of an all-inclusive contract,
Perfect Pick customers receive 24-hour per day, 7-days per
week telephone support service from the OPEX call center
in Moorestown, NJ. Additionally, they have access to on-call
certified technicians during their primary coverage shift, which
the customer elects in 8-hour increments.
OPEX Corporation l 305 Commerce Drive, Moorestown, NJ 08057 l 856-727-1100 l www.opex.com
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When on-site service is required, the OPEX call center logs the
call then immediately deploys one of its more than 300 highly
skilled nationwide company technicians. These technicians
have full access to on-site spare parts inventories in an effort
to minimize potential downtime for the customer. On the rare
occasion when the service issue is not resolved at the two
hour mark, which starts when the service call is logged, the call
automatically escalates to the technical support office at OPEX
headquarters. The premise of its two hour response guarantee
is beneficial to both OPEX and its customers. The sooner the
response, the quicker the resolution for the customer and the
less cost incurred by OPEX.
•
100% parts replacement. While OPEX’s proprietary iBOT
delivery vehicles are the only mechanical element in the
Perfect Pick storage aisle, the company’s all-inclusive service
contract has every element of the solution covered, regardless
of cause. There are no discounts and no deductibles, because
every part in the system is replaceable at absolutely no
additional cost to the customer.
•
Site-specific spare parts inventories. OPEX owns and
maintains nationwide warehousing locations with parts
on-hand to support customers. In some cases, that equipment
is stored at the customer site to ensure the quickest possible
resolution. By keeping spare parts in the field, the time between
diagnosis and repair is minimized, as are transportation costs.
These well-stocked spare parts inventories are maintained by
an industry-leading Oracle inventory management system
and replenished by OPEX’s own Perfect Pick installation
in Moorestown, NJ, ensuring low single digit inventory
discrepancy.
•
Preventive maintenance. The OPEX all-inclusive support
contract includes preventive iBOT maintenance, which is
scheduled based on machine performance data along with
service history. iBOT maintenance is tracked by time, from
the last service activity, and by mileage the iBOT has traveled
and/or the number of deliveries it has made. This allows
OPEX to choose the appropriate metric for a given preventive
maintenance task. This approach also allows OPEX to identify
which iBOTs or aisles need attention based on current
performance metrics. OPEX field service technicians are
incentivized with weekly bonuses for on-time performance of
preventive maintenance calls, which results in assurance of the
integrity of the customer installation and long-term reduction
in OPEX’s cost of unscheduled service calls. Additionally,
because OPEX captures and tracks iBOT and workstation
operating performance in real time, the company is able to
refine mean time to failure (MTTF) and mean time to repair
predictions at a customer-specific level, ensuring proactive
maintenance whenever it’s required.
•
Lifetime support and software upgrades. When OPEX owner
and Chairman of the Board, Al Stevens, purchased the company
in 1975, he committed to a promise that’s virtually unheard of
in the industry: No OPEX customer would ever face a vendorforced “end-of-life” of their product. The company stands by
that promise today. While the company might discontinue
the manufacture of outdated equipment, its customers will be
given an opportunity to upgrade to new technology. If they
choose not to upgrade, their installation will continue to be
supported by OPEX technicians. Service contracts also include
software version upgrades.
While the OPEX service and support model is
rooted in heritage, its all-inclusive approach is
at the same time ahead of its time. Due to the
difficulty in finding and retaining qualified
internal support for modern automated
material handling systems, comprehensive
external support is in high demand. But,
the quickly mounting, often hidden costs
associated with that support have taken
their toll on DC and fulfillment operations
budgets. By offering no-strings-attached, no
extra charge service and support for its 100%
U.S. designed, engineered, manufactured,
and tested automated material handling
systems, OPEX is setting the new standard
in fulfillment center operations budget and
TCO expectations today.
Perfect Pick’s modular design—coupled with all-inclusive
service and support from OPEX—ensures seamless scalability and
uninterrupted operation even when maintenance is required.
OPEX Corporation l 305 Commerce Drive, Moorestown, NJ 08057 l 856-727-1100 l www.opex.com
whitepaper
About OPEX Corporation
OPEX Corporation is a recognized global technology leader in highspeed mailroom automation, document imaging, and material
handling. Since 1973, OPEX systems have provided performance
enhancing workflow solutions and cost-effective results to
thousands of organizations around the world.
From its humble beginnings in a leased warehouse in southern
New Jersey, OPEX’s global workforce now numbers hundreds of
employees. OPEX’s Moorestown, New Jersey World Headquarters
features more than 250,000 square feet of engineering,
manufacturing, warehouse, product assembly and office space.
OPEX offices are also located in the U.K., France and Germany.
Recently, OPEX brought a 45,000 square-foot facility online to
manufacture its Perfect Pick racking modules. By controlling all
aspects of product design, OPEX is able to deliver high-quality
innovative workflow solutions to customers in a wide variety
of industries including financial services, insurance, healthcare,
government, retail, non-profits, utilities, telecommunication,
service bureaus, educational institutions and fulfillment operations.
OPEX’s commitment to meeting the needs of its customers does
not stop with a product sale. The OPEX Service Organization boasts
unrivaled technical support on a worldwide basis utilizing its vast
network of locally based, factory-trained, direct-employee field
technicians.
For more information about Perfect Pick and the unprecedented
OPEX service and support model, visit www.opex.com.
OPEX Corporation l 305 Commerce Drive, Moorestown, NJ 08057 l 856-727-1100 l www.opex.com