Everything You Need to know About Warehouse Automation

The global warehouse automation market is estimated to go over 30 billion U.S. dollars by 2025. This is not surprising. With the rise of e-commerce and just-in-time delivery models, warehousing operations must be fast, precise, and adapt to fluctuating demands. Automating specific tasks can substantially affect how well a warehouse meets these challenges.

As a warehouse and/or logistics manager, automating your warehouse can transform operational challenges into opportunities by reducing errors, speeding up processes, or enabling your existing workforce to focus on more value-added activities.

This guide aims to provide a solid understanding of the types of automation technologies available, how your supply chain operations could benefit from them, and practical steps for implementation.

What is warehouse automation?

Warehouse automation is the application of technology to streamline and optimize various processes within a warehouse. Think of it like this: it's a way to get repetitive, time-consuming, or complex tasks done more efficiently and accurately without relying solely on human intervention.

It combines everything from robotic systems picking items off shelves to software that schedules tasks and tracks inventory levels.

Types of warehouse automation technologies

Different types of warehouses have varying needs, and luckily, there's a wide range of automation technologies designed to meet those specific requirements. Below, we break down the critical types of warehouse automation technologies that you should know about.

Robotic systems

Robotic systems in a warehouse setting are essentially advanced machines designed to handle various tasks that would otherwise require human effort. Warehouse robots range from robotic arms that sort or assemble products to drones that do inventory checks and automated forklifts that move bulk items from point A to point B without a human operator.

Here is how to use these systems in your warehouse:

1. Robotic arms: You can deploy these in areas where items must be sorted into different categories or assembled into kits. The idea is to free up human workers from monotonous tasks and let them focus on more complex activities.
2. Drones: If you have tall storage racks and need frequent inventory counts, drones can be programmed to fly up and scan barcodes or QR codes, providing a quicker and safer way to conduct inventory checks.
3. Automated forklifts: If your operation involves moving many of heavy items, automated forklifts can handle these tasks efficiently. They can be programmed to follow specific routes within the warehouse, making transporting goods more streamlined.

Conveyor systems

Conveyor systems are one of the oldest forms of warehouse automation systems, and they've come a long way, from simple belts to complex roller mechanisms. They are a reliable way to automate the movement of goods within the warehouse, and they can play a significant role in increasing efficiency and reducing manual labor costs.

They come in various forms, like belt conveyors, roller conveyors, and chain conveyors. The choice depends on the nature of the items you're moving—be it boxes, bags, or pallets.

1. Belt conveyors are best for moving small to medium-sized items in a straight line. They're commonly used when products must go from the assembly line to the packing station.
2. Roller conveyors are versatile and can be used for heavier, more substantial items. They can also curve, making them suitable for more complex warehouse layouts.
3. Chain conveyors: Ideal for weighty items like pallets or large containers. They're durable and can handle significant weight without issues.

Automated Storage and Retrieval Systems (AS/RS)

Automated Storage and Retrieval Systems, often abbreviated as AS/RS, are specialized systems that place and retrieve items from specific storage locations automatically. These are your go-tos for high-throughput environments where speed and accuracy in item retrieval are critical.

The objective is to speed up the picking process dramatically. A worker might have to walk several aisles to fetch an item in a manual setting. With AS/RS, the system brings the item to the worker. It’s about making each action more efficient and reducing the 'travel time' within the warehouse.

AS/RS come in a variety of forms, but these are the most common:

1. Vertical Lift Modules: These are essentially giant vending machines for your inventory. Items are stored on trays in a column, and the system retrieves the right tray when an item is needed. They are useful for storing various small to medium-sized items in a compact space.
2. Horizontal Carousels: These are rotating shelves that move horizontally. They are suitable for picking smaller items and are often used in batch-picking operations where multiple orders are processed simultaneously.
3. Vertical Carousels: Similar to horizontal carousels, but they rotate vertically. These are ideal for taller items and can be a good fit for warehouses with high ceilings.

Warehouse Management System (WMS) software

WMS software is a specialized platform that manages and optimizes warehouse operations. This goes beyond basic inventory tracking; modern warehouse management solutions offer a range of benefits and features like order routing, real-time analytics, and labor management.

Deploying WMS software isn't just about flipping a switch. It involves some initial setup where you configure the system according to your warehouse's unique layout and processes. Additionally, staff often have a learning curve, so plan for some training time.

With a WMS, you have a complete picture of your operations at any given moment, which allows you to make quick, data-driven decisions. Here are some core functionalities of a WMS:

1. Inventory Tracking: This is one of the most basic yet crucial functionalities. A good WMS will give you real-time data on what items are in stock, where they are located, and when you might need to reorder.
2. Order Fulfillment: WMS software can guide employees through the picking process in the most efficient manner. It can sequence the pick list to minimize travel time within the warehouse.
3. Labor Management: Some platforms come with tools to manage employee performance, allowing you to identify bottlenecks or areas for improvement.
4. Data Analysis: Use the analytics feature to identify trends or potential issues. This could be seasonal fluctuations in order volume or recurring inefficiencies in how items are stored.
   

Automated picking systems

These systems streamline the process of retrieving items from storage areas to fulfill orders. Since picking is often one of the most time-consuming manual tasks in a warehouse, automating this process can result in significant gains in efficiency.

Automated picking systems range from robotic pickers that can navigate warehouse aisles to more advanced goods-to-person technologies, where items are automatically brought to a picking station. These systems are often integrated with a Warehouse Management System (WMS) for seamless operation.

There are also light and voice-picking systems. These are less automated but still technologically advanced methods of picking. Warehouse workers follow light indicators or wear headsets to locate and pick the correct items quickly.

1. Robotic Pickers: These autonomous robots can navigate aisles, reach for items, and then bring them back to a packing station. They usually work with a WMS that tells them which items to pick and in what sequence.
2. Goods-to-Person Technology: In this setup, storage bins or racks are moved automatically to the picker, who stays in one place. The system retrieves the necessary items based on the orders that must be filled.
3. Pick-to-Light Systems: Light indicators are placed on warehouse shelves in a pick-to-light setup. The system lights up the bin location of the item that needs to be picked, guiding the picker to the correct location quickly.
4. Put-to-Light Systems: Like pick-to-light systems, this uses light indicators to show workers where to place items after picking them. This is particularly useful in environments where multiple orders are being consolidated.

How to automate your warehouse operations efficiently

Determining the right time to automate your warehouse isn't a decision to take lightly. Jumping in too soon or without a clear understanding of your needs can do more harm than good.

Conduct a needs assessment

The first step in deciding whether to automate is understanding what you need. A needs assessment is the foundation of your warehouse automation strategy. It is a systematic evaluation of your warehouse operations to identify gaps, inefficiencies, or areas where automation could bring about significant improvements.

Here is how to conduct a needs assessment:

1. Map current processes: Document your existing supply chain workflows. This includes everything from inventory management to order fulfillment and shipping. Understanding how things currently operate is crucial to identify areas that need automation.
2. Identify bottlenecks: Look for slowdowns or inefficiencies in your existing process. Are there areas where manual labor is causing delays? Is inventory mismanagement causing stockouts or overstock situations?
3. Employee feedback: Don’t underestimate the value of on-the-ground insights. Your employees can often point out inefficiencies in the system that might not be immediately obvious.
4. Quantitative data: Make use of any existing data you have. This could be key performance indicators (KPIs) like order fulfillment times, shipping accuracy, or labor costs per order. The data will help you establish a baseline to measure the impact of potential automation.
5. Cost-benefit analysis: Finally, evaluate the cost of implementing automation versus the benefits you expect to gain. This should include immediate costs like the price of equipment and software and long-term costs such as maintenance and upgrades.

By the end of the needs assessment, you should have a clearer picture of whether automation is the right move for you and, if so, which areas would benefit the most.

Formulate an effective automation strategy

The next step is crafting a well-thought-out strategy. Even the most advanced automation technologies can fail to deliver on their promises without a solid plan.

1. Define objectives and scope: Clearly outline what you aim to achieve with automation. Are you looking to improve inventory control or reduce human error? Your objectives will guide the type of automation technologies you'll consider and how you'll measure success.
2. Allocate resources: Automation often involves significant upfront costs, so make sure you know how much you can invest. It's not just about the money; consider the time required for implementation, testing, and staff training.
3. Select technology: Choose the appropriate automation technologies based on your objectives and resources. Ensure the chosen technology aligns well with your needs and existing operations. Don’t get autonomous mobile robots (AMRs) if you only need a warehouse management system.
4. Evaluate vendors:  Look for vendors with experience in your industry and can offer pre- and post-implementation support. Consider aspects like scalability, reliability, and integration capabilities with your existing systems.
5. Set timelines: Develop a realistic timeline for deploying the automation solution. Include milestones for initial setup, testing phases, and full-scale implementation. Be mindful of peak business periods where adding new systems could be disruptive.
6. Assess risks: Before pulling the trigger, assess potential risks like system failures, set-up delays, or budget overruns. Have contingency plans in place to mitigate these risks.
7. Employee training: Plan for comprehensive training and perhaps even consider hiring specialists if the technology requires specific expertise.

Calculate your ROI

Return on Investment (ROI) calculations help you quantify the value you expect to gain from the automation technologies you're considering.

To calculate ROI, you need to consider the initial costs of purchasing and installing your automation technology and the operational costs like maintenance, software updates, staff training, etc.

Here are some practical methods to determine if your warehouse automation is profitable:

1. Simple payback period: Calculate how long it will take to recover the initial investment from the projected savings or added revenue. A shorter payback period is generally favorable.
2. Net Present Value (NPV): This method considers the time value of money, discounting future cash flows to present value terms. A positive NPV indicates that the projected earnings exceed the anticipated costs, making the investment worthwhile.
3. Internal Rate of Return (IRR): This is the discount rate that makes the NPV of all cash flows from the project equal to zero. A higher IRR usually suggests a more profitable investment.
4. Benchmarking: Compare the projected ROI against industry averages or similar projects within your organization. This provides an additional layer of validation for your calculations.

Benefits of warehouse automation

There are multiple benefits of warehouse automation, but they all come down to three main points: operational efficiency, safety, and cost savings.

Operational efficiency

Automation technologies like sortation systems can significantly speed up the order-picking process. For instance, robotic picking systems can operate around the clock, eliminating delays caused by shift changes and breaks. This allows you to handle a greater volume of orders in less time.

With automation handling the more repetitive and labor-intensive tasks, your employees can focus on activities that add more value, such as quality checks, customer service, and strategic planning.

Warehouse Management Systems can integrate with your ERPs and other software applications so you can keep tabs on your inventory. This eliminates much of the guesswork involved in stock levels, helping to ensure you have no shortages or surplus.

You can also program your systems to prioritize tasks based on various parameters like order urgency, shipping method, or inventory location. This ensures that your supply chain processes are always optimized for the most efficient use of time and resources.

The benefits of operational efficiency are numerous and often interconnected. Faster order fulfillment can lead to higher customer satisfaction, which in turn can result in more orders, further highlighting the need for efficient inventory control.

All of these benefits create a positive feedback loop that can lead to sustained growth and profitability for your supply chain.

Safety

Warehouse automation solutions take on many of the heavy lifting and repetitive tasks that can cause physical strain over time.

Some systems follow predetermined paths and speeds, reducing the risk of collisions or erratic movements. This predictability makes it easier to maintain safe distances and control traffic patterns within the warehouse.

One of the biggest contributors to workplace accidents is human fatigue. When workers are tired, they're more prone to make mistakes that can lead to accidents. Warehouse automated solutions don't suffer from fatigue and can operate around the clock without a drop in performance or safety levels.

By automating certain processes, you reduce the necessity for humans to interact directly with heavy machinery. This significantly decreases the chances of accidents related to machine operation, like being caught in or struck by moving parts.

Certain tasks in a warehouse might involve handling hazardous materials or operating in challenging conditions. Automated systems designed for such specific tasks can perform them without exposing human workers to the associated risks.

Modern automation systems have various safety features, including emergency stop functions and alarms. Some even include fire suppression systems. These features can quickly halt operations in case of an emergency, reducing the potential for harm.

Cost Savings

While the upfront costs of warehouse automation can be substantial, it's essential to consider the long-term cost-saving potential. Many of the advantages of automation, from operational efficiency to error reduction, directly translate into financial benefits.

Warehouse automation systems are often designed with energy efficiency in mind. For example, modern conveyor systems and AS/RS units can operate with minimal energy consumption, translating into lower utility bills.

Automated Storage and Retrieval Systems (AS/RS) and similar technologies make optimal use of warehouse space, reducing the need for a larger footprint. This can result in lower facility costs, be it lease, heating, cooling, or even property taxes.

As previously discussed, automation dramatically reduces the likelihood of errors. The cost savings from avoiding erroneous orders, returns, and associated customer service efforts can add up quickly.

Increased operational efficiency means you can handle more orders in less time. This improvement in throughput can lead to increased revenue without a proportional increase in operational costs, improving your overall profit margins.

Warehouse automation challenges and solutions

Here's a breakdown of some common challenges and practical ways to navigate them.

High upfront costs

Consider phased implementation, where you automate one process at a time to spread out the costs. Search for vendors that offer leasing options or pricing models that scale with usage.

Resistance from employees

Involve your workforce in the planning. Clearly communicate that automation will eliminate mundane tasks, rather than jobs, to gain employee buy-in.

Technology integration

Work closely with vendors to ensure the new systems are compatible with your existing tech stack. Conduct pilot tests to identify any glitches or integration issues that need addressing.

Downtime during transition

Plan the transition during your off-peak season or hours to minimize disruption. Make sure to have contingency plans in place to handle any unforeseen issues that may prolong downtime.

Data security and compliance

Opt for software solutions with robust security measures and compliance certifications. Regularly update security protocols and conduct audits to ensure ongoing compliance.

Skill gaps

Invest in training programs or consider hiring specialists for specific roles that your current team cannot fill.

Warehouse processes to automate and which to avoid

When considering automation, it's tempting to go all-in and automate everything you can. However, it's essential to be selective about which processes you choose to automate and which you don't. Here's a detailed look at what works well with automation and what might not:

To automate:

1. Repetitive tasks like sorting, order picking, and packing that happen over and over are prime candidates for automation.

2. Heavy lifting operations should be automated with automated guided vehicles (AGVs) to prevent physical strain on workers.  

3. Inventory management is complex and time-consuming. Automated systems can track items in real time.

4. Quality control should be automated. Vision systems can scan products for defects at a faster pace.

5. With large sets of data to be crunched for insights, automated analytics software can process this information far more quickly and accurately than a manual review could.

To not automate

1. Complex decision-making that requires nuanced human judgment is usually best left to people.

2. Customer interactions on complex or sensitive issues are better managed by a human, while chatbots and automated customer service can handle basic queries.

3. If a process has too many variables or requires frequent adjustments, automation might make it more complicated rather than simplifying it.

4. For operations that don't occur frequently or in large volumes, the ROI on automating them may not justify the costs.

5. Jobs that require creativity, like content creation or strategy formulation, aren't suitable for automation. These tasks rely on human ingenuity and experience.

Key indicators that signal a need for automation

There are certain signs or indicators that can tell you it's time to consider automation seriously. Paying attention to these indicators can save you from making premature or misguided investment decisions.

• If you find that your staff is frequently grappling with issues like misplaced items, incorrect stock levels, or orders being shipped with missing or wrong items, that's a sign to discard the manual processes.  
• If you notice that your labor costs are climbing, but productivity isn't proportionally increasing, it's worth evaluating automation options.
• If your distribution centers struggle to cope with fluctuating demand, forecasting with automation can help you prepare them well.
• If you’re losing workers faster than you can replace them, and you notice that the work is physically taxing or monotonous, automation might be the answer.
• If your warehouse struggles to meet expectations of fast deliveries because of slow picking processes or errors, automation could help you keep up.
• If your warehouse space is cluttered, you need automation to manage storage.

By watching for these key indicators, you can avoid challenges before they escalate into significant issues. Each of these signs is a cue to assess your operations critically and consider whether automation technologies could offer a solution.

Optimize your warehouse automation process

The key to successful warehouse automation lies in a well-rounded approach. From various types of technologies like robotic systems and advanced software with machine learning and artificial intelligence, automation technologies are not easy to deploy.

By understanding the technologies, best practices, and potential pitfalls, you're well on your way to making an informed and effective decision for your warehouse operations.

If you are considering automating your supply chain and you need a warehouse dock scheduling software solution to help you keep track of the entire process, book a call with our expert to see how we can help.