How to balance efficiency and cost becomes the focus of attention

On the whole, with the ever-increasing single volume and faster and faster delivery time requirements, the automation and intelligence of e-commerce logistics center has become an inevitable trend. E - commerce enterprises represented by Jingdong, Suning, Cainiao Network and Proview Club are actively laying out and have achieved initial results. At this stage, more and more intelligent logistics equipment such as stackers, shuttle cars, handling robots AGV, high-speed conveying and sorting systems, sorting robots, Kiva - like robots, intelligent warehouse robots, distribution robots, unmanned vehicles, unmanned aerial vehicles, etc. are beginning to be used in e-commerce warehouses. However, automation systems usually cost a lot of money. How to choose the right equipment and technology for different formats and how to balance the relationship between efficiency and cost have become the focus of attention of e-commerce enterprises.


1.       Recognize the relationship between logistics efficiency and cost


Liu Ming, founder of Suzhou muxing intelligent technology co., ltd, said that with the development of e-commerce industry and the gradual increase of human cost in China, logistics automation solutions are hot. how to balance efficiency and cost has become a focus that enterprises cannot ignore when choosing automation solutions. In this regard, he analyzed it from a theoretical point of view, hoping to provide a reference for e-commerce enterprises planning to launch warehousing automation solutions.


( 1 ) Cost


The warehousing industry usually uses a cost per unit to represent the cost of each piece of goods, that is, the cost of each piece of goods delivered. Financially, CPU = FCPU + VCPU. Among them:


FCPU ( Fix Cost Per Unit ) refers to the fixed single-piece cost, and the fixed single-piece cost in each cycle is equal to the fixed cost / shipment volume in that cycle.


The simplest way to judge the periodic fixed expenses is that if the warehouse stops running for one week, it still needs to be paid and amortized, usually including investment in automation equipment and expenses incurred by the warehouse, such as warehouse rent and property expenses that need to be amortized or paid monthly. For the former, if the shipping volume is certain, the more investment in automation equipment, the higher the FCPU. The latter divided by the monthly shipment is the fixed unit cost for that month. It can be seen that the change of FCPU is greatly affected by the quantity of shipments.


VCPU ( Variable Cost Per Unit ) refers to the variable unit cost, which is equal to the variable cost / shipment volume for the period. Theoretically, all the expenses except the fixed expenses are variable expenses, which are obviously proportional to the volume of goods. For the manual warehouse, the change cost is mainly the salary of personnel. The larger the shipment volume, the more man-hours will be spent and the more salary will be paid. For highly automated warehouses, electricity is also an important part of the cost.


( 2 ) Efficiency


The measures of warehouse efficiency are usually UPH ( units per work hour ) and TPH ( throughput per work hour ). These two measures reflect the warehouse's delivery capacity and throughput capacity per unit of work invested. The calculation formula is:


UPH = warehouse daily shipment / warehouse daily input total work


TPH = Warehouse Daily Throughput / Warehouse Daily Work


Among them, since VCPU is mostly the salary of employees, the higher the efficiency, that is, the higher the UPH, the lower the VCPU, and there is an obvious negative correlation between UPH and VCPU.


Therefore, in the case of fixed shipments, the fixed asset investment of the warehouse is positively correlated with FCPU, while the operational efficiency UPH of the warehouse is negatively correlated with VCPU. When an e-commerce company plans to build an automated warehouse, usually the more investment in fixed assets, the higher the degree of automation, and the less labor used in the warehouse. Therefore, in theory, fixed assets have a negative correlation with efficiency, that is, FCPU has a negative correlation with VCPU.


If the CPU = FCPU + VCPU is simplified as a continuous function, it is very easy to get the minimum value through mathematical methods and calculate the optimal investment amount of fixed assets. However, this is not the case in practice, so it is only necessary to import the design parameters of each automation scheme into the CPU calculation formula to calculate the CPU after the project is put into operation, which is also the cost analysis and return on investment analysis of all logistics automation projects in the design phase. Based on the different CPU and investment return years under different automation schemes, which automation warehouse design scheme to use is determined.