What are the benefits of investing in warehouse automation?

What are the benefits of investing in warehouse automation?

Warehouse automation is a very broad term and means different things to different organisations. For some, it’s having a ‘lights out’ warehouse run by robots. We’ve got some customers using Indigo WMS with fully automated warehouses that run continuously without the need for human intervention. For the vast majority however, their use of automation is much more varied. Some customers have introduced robots and autonomous vehicles for picking while others use conveyors and “goods to person” picking to maximise efficiency. In some cases, simply migrating from a paper based operation to having a WMS in place is a big step towards automating the warehouse. It’s all relative, as there’s no “one size fits all” approach.

Overall, the main benefits of automation in the warehouse are consistent to all types of implementation – lower labour costs in the long term and fewer issues due to human errors. Managing growing labour costs is an increasingly troublesome issue for manufacturers, due to the diminishing access to low cost labour, in part brought about by the threat of Brexit and general wage inflation. Many manufacturers are already struggling to find suitable employees and automation resolves this dependency.

In addition to reducing labour costs, companies that introduce automation can also see a reduction to their overall energy consumption costs. Although this might seem contradictory – automated operations will after all consume energy – operatives tend to become more efficient and their time is no longer wasted on unnecessary tasks. They can also have more of their time freed up, which can then be diverted onto offering other value adding tasks. This is a softer benefit and in addition to reducing labour costs, can mean that companies will effectively achieve more with less and also improve customer satisfaction levels. For example, warehouses that are servicing external clients, 3PLs for instance, can introduce additional services and differentiate as a service provider without it really costing them. The same principle applies for internal stakeholders – warehouses can start to offer additional services to other departments within the company.

Many areas of the warehouse benefit from the introduction of automation but given that picking is one of the most expensive operations, it is the obvious one to start with and the main reason why goods to person picking is increasingly common. There are advantages for other operations too. For instance, inbound receipting of stock and automated goods receipting avoids having operatives manually checking incoming items. Inventory checking is another good example and stock records can be updated automatically, reducing the need for perpetual inventory (PI) checks. Although PI is better than having to do a periodic stocktake, it still requires an operative to make manual checks.

What’s the trigger point for discussions about automating? At what point should a business look to invest? Our advice to customers is ‘all the time’ – they should always be looking for ways to operate more efficiently and ‘do more with less’.

A common investment trigger point is when companies are expanding and looking to move to a larger warehouse or perhaps they are introducing more e-commerce. Rather than moving, they consider automation, which will allow them to better utilise their existing space instead of incurring the extra expense of opening a larger or additional warehouse. For example, automated environments can have narrower aisles or multi-layer conveyor systems running in the same space, allowing utilisation levels to be maximised vs a traditional operation. Given that property prices are currently very high, companies are seeing a better payback from automating and staying put, rather than moving or opening an additional DC. From our experience working in a lot of non-automated warehouses, there tends to be a lot of space doing nothing, whereas introducing automated conveyor systems and vertical picking systems could mean making the best use of all available space.

When it comes to automation every situation is unique, there’s never going to be a ‘one size for all’ model. As part of the automation review process, it’s essential to understand a) how a new system will support the company’s current logistics processes; and b) whether current software systems will work seamlessly with an automated system. Ensure that any new automated technology will be able to communicate with a legacy ERP or WMS for instance, because they need to be able to share data in real-time. If there is any gap in communication, problems will occur.

No two companies are identical and to a degree, no two divisions within the same company are identical either. 70 or 80% of processes might be the same, but the last 20 or 30% is where companies will differ and where issues will arise. Identifying how to optimise processes when automation is introduced is a key part of the pre-sales process and something that Indigo invests in at the start of each project. For instance, our customer with operations in the UK, France and US all use the same ERP system, but each division works totally differently, so it’s not possible to automate the UK and then transfer the same methodology across to France and the US operation. They have different processes within their own companies and our role is to make these as consistent as possible to allow the company to standardise on a WMS, ERP and automation system that suits the business as a whole.

Author: Eric Carter is Solutions Architect at Indigo and specialises in helping manufacturers to understand how they can benefit from warehouse automation with a WMS solution