Warehouses are indispensable links in the global supply chain. They store, organize and distribute goods to meet consumer demand. However, running warehouses efficiently has become increasingly complex.
More SKUs, smaller order volumes, faster deliveries, and rising consumer expectations create challenges. Pressure to minimize costs while maximizing accuracy and speed continues mounting.
Unfortunately, most warehouses worldwide still rely heavily on manual processes. According to LogisticsIQ, over 80% of warehouses have little to no automation. However, the tide is turning.
Leading companies realize they must automate to stay competitive. Manual processes simply cannot achieve the accuracy, speed or scalability required in today‘s marketplace.
Warehousing tasks are often repetitive and mundane, leading to boredom, stress and high turnover among workers. Automating these repetitive tasks improves job satisfaction by allowing workers to focus on more stimulating elements of warehouse operations.
Automation also enables warehouses to cost-effectively scale up or down to match fluctuating order volumes. This scalability is impossible with manual labor alone.
In addition, automated warehouses can operate around the clock without relying on increasing headcount or overtime to meet demand spikes. The machines never get tired.
Automation technologies have advanced by leaps in recent years while costs have declined. Solutions like mobile robots, wearables, automated storage and retrieval systems (ASRS), goods-to-person systems, automated guided vehicles (AGVs), AI, machine learning and more are transforming warehouse capabilities.
Leading retailers, manufacturers, distributors and third-party logistics firms (3PLs) are rapidly adopting these innovations. Laggards risk falling behind.
Let‘s explore the top 7 reasons companies are embracing warehouse automation:
1. Faster Order Fulfillment
Speed is one of the biggest benefits of warehouse automation. Automated systems dramatically accelerate order fulfillment and delivery times.
For example, AGVs can swiftly transport picked items from workstations to packing areas, then to shipping docks. ASRS instantaneously locate stored pallets and deliver them to pickers. Automated conveyors quickly route orders for processing.
According to research by McKinsey, automated warehousing solutions can reduce order processing times by 25-50% compared to manual approaches. This allows companies to keep pace with consumer demands for rapid delivery.
One apparel retailer cut order processing time from 8 hours to just 90 minutes by implementing picking robots in its warehouse. The faster fulfillment helped them ship 85% of orders within 24 hours.
Automation enables warehouses to get orders into customers‘ hands faster. This delights consumers, drives loyalty and improves customer lifetime value.
2. Maximized Order Accuracy
Order accuracy is crucial for customer satisfaction and loyalty. However, manual processes result in too many errors. The average warehouse picking accuracy rate is only 98%.
But automated technologies like pick-to-light, put-to-light, barcode scanners and goods-to-person workstations guide pickers through fulfillment processes. This results in 99.9% accuracy or better.
For example, a major 3PL reduced picking errors by 60% after deploying pick-to-light systems in their warehouses. Automated quality checks along conveyors also identify issues before shipping.
Higher accuracy reduces costly returns, replacements and customer complaints. Automation minimizes the number of orders shipped with wrong or missing items. This saves substantial time and money while supporting customer retention and satisfaction.
3. Optimized Warehouse Space
With land and construction costs rising, space optimization is imperative. Traditional warehouses often waste up to 30% of their space due to poor storage density and layouts.
However, ASRS optimize warehouse cube utilization by storing inventory in narrow aisles with items stacked vertically in columns. This lets companies store 2-3x more SKUs in the same footprint.
For example, a leading e-commerce company realized 220% storage density gains after implementing ASRS technology, improving inventory capacity from 48,000 to 150,000 SKUs in the same warehouse.
By maximizing storage density, companies can accommodate inventory growth in existing facilities instead of expanding or leasing off-site storage. Better cube utilization also lowers material handling costs since products are stored closer together.
4. Lower Operational Costs
Warehouse labor accounts for over 50% of a typical facility‘s operating budget. Automating repetitive, low-value tasks allows companies to significantly reduce labor expenses.
For instance, robots and AGVs can transport inventory instead of manually-operated forklifts and carts. Automated picking systems also minimize costly pickers walking to locate items.
Intelligent warehouse management software optimizes staffing based on expected order volumes. This prevents overstaffing during slower periods. Automation provides scalability to easily ramp operations up or down as volumes fluctuate.
According to DHL, automated warehouses reduce operating costs by 20-40% compared to traditional facilities. These major cost savings directly enhance profitability and support a faster ROI on automation investments.
5. Real-Time Inventory Visibility
Limited inventory visibility leads to frequent out-of-stocks, missed sales, and poor customer experiences. However, manual cycle counting is tedious, disruptive and prone to significant error rates.
Automated solutions like RFID, computer vision and robots enable continuous inventory tracking in real-time. For example, robots can autonomously perform cycle counts across the warehouse every day.
This allows workers to instantly locate inventory when fulfilling orders. It also ensures inventory records remain perpetually accurate rather than relying on sporadic manual counts.
According to Zebra Technologies, real-time inventory visibility increases out-of-stock reduction by 60-80%. Better visibility helps warehouses enhance service levels and drive more revenue.
| Metric | Manual Process | Automated Process |
|---|---|---|
| Cycle count frequency | Quarterly or annually | Daily or weekly |
| Cycle count accuracy | 80-85% | 99%+ |
| Out-of-stock reduction | 10-15% | 60-80% |
6. Safer Working Conditions
Warehouses pose many risks ranging from falls to injuries from vehicle collisions and repetitive strain. Automation eliminates some of the most dangerous tasks.
For example, AGV and robots navigate autonomously to avoid striking workers. Automated picking systems reduce heavy lifting and climbing. Sensors and wearables help prevent accidents.
Ergonomic robotic arms safely lift and maneuver heavy loads instead of injury-prone manual material handling. Collaborative robots also work alongside people to assist with physically demanding warehouse tasks.
By removing workers from hazardous environments, companies create healthier and safer workplaces. This lowers insurance costs and boosts employee satisfaction, engagement and retention.
7. Greater Sustainability
Sustainability is becoming essential across supply chains. Automated warehouses can significantly reduce environmental footprints.
Intelligent warehouse layouts, storage systems, picking operations and material transport optimize energy efficiency. Automated climate and lighting systems also conserve electricity.
In addition, automated warehouses enable companies to establish smaller but more numerous facilities closer to urban centers. This reduces trucking distances resulting in lower emissions.
Efficient automated material handling minimizes wasted energy, movement and products. Many automated technologies are also designed for durability, reusability, reconfigurability and recycling.
According to MHI, automated warehouses can reduce carbon emissions by 20-40% compared to traditional facilities. This supports corporate ESG initiatives.
The shift towards warehouse automation is accelerating with spending projected to exceed $30 billion by 2026 according to Interact Analysis.
New innovations will expand automation possibilities. For instance, flexible mobile robots enable easy reconfiguration as needs change. Exoskeletons assist workers with lifting and movements to prevent injuries. Drones optimize inventory counting and monitoring. Voice, vision and AI expand capabilities.
Nimble startups will continue disrupting warehouse automation while large technology firms increasingly move into the sector. The technology landscape will remain dynamic.
Early adopters who pilot new solutions before competitors gain sustained advantages. Companies delaying automation investments risk falling further behind.
Many warehouses will eventually evolve into nearly fully-automated facilities with limited human involvement. Companies must prepare for this inevitable transition.
Automating warehouse operations delivers measurable benefits across critical metrics like cost, accuracy, speed, safety and sustainability.
Technologies like automated storage and retrieval systems, mobile robots, automated guided vehicles, wearables, voice/vision software, AI, machine learning and more are driving a revolution.
Leading retailers, manufacturers and third-party logistics firms are rapidly adopting these transformative technologies. Automation reduces complexities while providing competitive advantages as consumer expectations escalate.
Companies that embrace automation position themselves to thrive in the future. The machines allow people to focus on more gratifying, higher-value aspects of warehouse operations.
The benefits of warehouse automation extend throughout entire supply chains leading to faster deliveries, improved customer experiences, higher revenue and profitability along with reduced environmental impact.