Warehouses are the beating heart of the modern supply chain, yet over 80% still operate completely manually, leading to inefficiency, higher costs, and errors. However, innovations in robotics, sensors, software, and more are enabling a revolution in warehouse automation.
In this 2600+ word definitive guide, we‘ll explore the what, why and how behind automating key warehouse functions like inventory management, picking and transport, reporting, and more. Read on to learn:
- The top reasons to implement warehouse automation
- The main categories of warehouse automation solutions
- Real world examples and case studies demonstrating dramatic improvements from automation
- Step-by-step guidance on how to assemble the right automation technologies for your operations
- Common challenges faced during implementation and how leading companies have overcome them
Whether you manage a small distribution center or a million-square-foot fulfillment warehouse, leveraging the latest automation technologies promises improved productivity, accuracy, and flexibility impossible with manual processes. The insights below aim to help demystify warehouse automation and provide actionable next steps tailored to warehouses large and small.
Why Warehouse Automation is Taking Over
Pressure has been mounting on warehouse managers and supply chain leaders in recent years:
- Consumer expectations for faster, cheaper shipping have risen dramatically, requiring operations to handle more orders at higher speed and lower cost
- Labor shortages make hiring sufficient warehouse staff more difficult, requiring those workers to do more with less
- Competitive pressures demand companies ship products in 1-2 days versus weeks to remain viable
- Slim margins limit budgets, requiring technology investments demonstrate hard cost savings
While adding more staff may seem the obvious solution to meet rising volumes, finding available workers is increasingly untenable. Even a fully staffed warehouse struggles with the expectations for accuracy and speed in modern commerce.
Fortunately, recent breakthroughs in warehouse automation enable the same or better outcomes with less labor. Some solutions even provide capabilities impossible in manual processes, delivering executives the best of all worlds – better, faster, cheaper operations.
The 7 Major Benefits Driving Adoption
Warehouse managers today can choose from a menu of integrated automation solutions offering dramatic improvements. The chart below summarizes the major areas for benefit:
While boosting throughput and cutting costs represent two of the clearest use cases, executives look to warehouse automation for additional gains:
- Enhanced customer experiences – automated systems enable faster order processing and shipping critical for customer satisfaction
- Greater scalability – solutions flex to handle large variations in order volume without labor changes
- Increased safety – removing workers from heavy machinery or hazardous areas improves working conditions
- Company sustainability goals – technology investments demonstrate commitment and progress
- Labor redeployment – allowing the re-assignment of staff to more value-add roles
The combined improvements propel a rapid return on investment while future-proofing the business.
The 5 Functional Areas to Automate
While executives understand the benefits above, many remain unclear on what exactly constitutes “warehouse automation’. In simple terms, it means leveraging technology to optimize or entirely handle specific warehouse tasks previously done manually.
The major functional areas ripe for modernization include:
1. Inventory Management
Tracking inventory quantities, locations, and transactions represents a prime task to upgrade with automation. Typical solutions include:
- RFID and barcode scanning – workers utilize mobile devices to scan merchandise rather than manually record items and locations
- Cycle counting – regular inventory spot checks conducted by robots
- Warehouse management systems – act as centralized inventory database with automation to reconcile variances
Such technologies boost count accuracy from 80% manually to 95%+ to ensure optimization of stock levels.
2. Storage and Retrieval
Solutions here aim to automate the labor-intensive tasks of putting stock away and picking it for orders. Key technologies include:
- ASRS systems – computer-controlled cranes and shuttles put away and retrieve inventory from dense storage locations
- Goods-to-person picking – conveyance systems deliver stored items to pickers for efficient batch picking
- Pick-to-light and put-to-light – rack-integrated LED displays direct workers to locations requiring action
Such technologies can double or triple the productivity of human order pickers.
3. Transport and Handling
Moving inventory efficiently around the warehouse represents another opportunity for optimization via automation. Options include:
- Conveyors and sorters – ensure accurate routing of different products to different packing stations
- AGVs – driverless vehicles follow mapped routes to transport loads without human involvement
- Exoskeletons – worn robotic devices prevent worker fatigue and injury during lifting
Automating transport not only reduces labor requirements but improves precision and speed.
4. Pack and Ship
Custom-packaging ecommerce orders with varied items frustrates attempts to streamline manually. Intelligent automation provides promise through innovations like:
- Autobagging and sealing – right-sized bags or boxes are automatically selected based on items and dimensions then secured for transit without worker involvement
- Smart labeling – systems accurately apply shipping and compliance labels without human oversight
- Loading optimization – software sequences how packed orders are loaded onto pallets and trucks based on destination
Such solutions minimize wasted materials and create efficient loads to optimize downstream transportation.
5. Monitoring and Reporting
Lack of visibility into operations represents a final area where automation delivers advantage through:
- Dashboards providing real-time visibility into orders, inventory, equipment effectiveness, worker productivity and more
- Notifications and alerts on defined conditions requiring attention like low inventory items, overdue orders, or idled equipment
- Automated reporting to extract key warehouse performance indicators (KPIs) to uncover opportunities
Together these capabilities create a autonomous nervous system for the warehouse to highlight needs and opportunities.
Real World Examples and Results
The technologies above represent guideposts to build a integrated automation system customized to your operations. To make the concepts more concrete, we will now review two short case studies demonstrating the solutions in action and their impressive benefits:
Electrical Supplies Distributor MPS Chicago
As a small regional distributor, MPS struggled with old warehouse processes ill-suited for the rising customer expectations in the ecommerce era. Inventory accuracy lingered around 85% while staff raced to pick and pack orders accurately.
Their updated automation system included:
- Warehouse management system (WMS) to replace paper-based records with a cloud database for tracking inventory transactions and spots in real time
- Barcode scanners enabling cycle counters quickly validate quantities on-hand
- “Pick to light” racks guiding pickers to exact items needed for orders via LED displays and confirmations
- Tablet-directed packing ensuring proper boxes and documentation
Just months after rollout, MPS measured incredible improvements including:
- 98% inventory accuracy removing previous out of stock issues
- 400% productivity per employee with fewer workers fulfilling more orders
- 83% increase in orders shipped on time boosting customer satisfaction
And with tighter inventory and shipping precision, MPS could keep less excess stock, saving roughly $2 million in working capital.
Retail Giant Hasbro
With nearly a million square feet across two fulfillment centers, global toy maker Hasbro faced ever greater expectations for speed and accuracy from big box retailers like Walmart and Target.
Seeking to cost-effectively scale, Hasbro developed an integrated automation system including:
- ASRS cranes to store and retrieve over 50K pallets without human maneuvering
- Pick-to-light racks guiding order pickers to proper items
- Smart conveyors routing picked items to packing stations
- AGVs transporting pallets within facility
The technologies transformed warehouse productivity such that Hasbro could handle a 75% jump in third party logistics orders without expanding staff. And with such throughput improvements, Hasbro optimized outbound transportation with 35% more orders per truck.
How To Select Your Own Automation Solutions
The solutions showcased about illustrate the art of the possible with thoughtful automation. While such capabilities appear almost futuristic compared to manual processes, the underlying technologies are readily available today.
But with so many options now on the market, building the right system can feel overwhelming. Based on leading examples, we recommend a four step process:
Step 1: Audit Workflows and Bottlenecks
The first step represents understanding your current operations, particularly:
- Where does inventory lack accuracy or visibility?
- Which processes prove slow, error-prone, or expensive?
- What tasks incur fatigue or risk of injury?
Identify 3-5 priority trouble areas to address. Bottlenecks like shortage-prone products, overloaded pickers, or repetitive packing motions offer good targets.
Auditing through observation, data analysis, and worker interviews illuminates the possibilities. If lacking expertise, engaging a consultant can help baseline your workflows.
Step 2: Map Process Redesign Opportunities
Next, research automation tools that could eliminate the constraints called out above. How could technology handle certain tasks outright or optimize part of an process to alleviate pressure downstream?
While tempting to dream of a “fully automated warehouse”, even small changes to workflow friction points can create outsized benefits. Start pragmatic.
Step 3: Calculate the ROI
With one or more process redesign proposals, build basic cost models to estimate potential ROI. Consider:
- How much labor and activity gets reduced?
- What manned equipment gets retired and uninsured?
- How will inventory visibility and shipping accuracy reduce logistics expense downstream?
Compare those operational savings against solution implementation and ongoing costs. Leading options offer payback within months given high labor offsets.
Step 4: Create Implementation Roadmap
Given cash flow and operational considerations, map out a phased rollout combining software, equipment, and integrations into existing infrastructure.
Warehouses need not rip and replace everything at once. Prioritizing problem areas and proving value fosters organization buy-in for broader initiatives. Partnering with experienced solution vendors ensures smooth integration and change management.
Overcoming Common Concerns
Despite compelling benefits, adopting warehouse automation confronts several common qualms:
1. High Upfront Cost
Automation requires significant upfront capital which may be hard to secure.
Truth – With potential labor savings of 50% or more, most automation investments offer payback within 2 years or less, far faster than nearly any other capital project. Leasing options or investors increasingly fund projects given the stable returns.
2. Disruption During Implementation
Our warehouse can’t take a productivity hit during roll-out.
Truth – Smart project management will minimize downtime via staged rollouts. And even with learning curves, automated processes often immediately meet or exceed manual production.
3. Lack of Flexibility
Warehouses handling many products or order profiles struggle to automate.
Truth – Modern solutions build in more adaptability to handle variation in box sizes, order options, inventory profiles. Plus post go-live reconfiguration proves easier than re-architecting manual zones and processes.
4. Worker Pushback
Our seasoned staff will oppose reducing headcount.
Truth – Labor shortages leave warehouses understaffed even today. Automating should reassign, not replace, workers into quality roles. Proper change management and training eases transitions.
Invest Intelligently to Outpace Disruption
Warehouse labor shortages show no signs of easing. Marketplace leaders like Amazon constantly raise consumer expectations for selection, speed, and convenience. Ongoing margin pressure tests distributors and manufacturers at every turn.
Rather than struggle reactively against such forces, forward-looking companies proactively realign operations via warehouse automation to delight customers while driving productivity and growth.
The transforming economics and availability of solutions invite even small to mid-sized organizations to adopt tools once restricted to industry giants. As the cases and recommendations above illustrate, automating key workflows delivers outsized operational and financial benefit unmatched by status quo methods.
The choice ahead proves stark:
- Continue an uphill battle manually and risk fading relevance
- Or leverage proven technologies facilitating the warehouse of the future where improved performance unlocks newfound possibilities
When framed against intensifying market constraints, automation may prove not just advantageous but essential to prosper in the years ahead. The time to investigate solutions waits on no one – the future of the warehouse takes shape today.