Automation is directly impacting logistics in many ways. According to ‘The future of global logistics real estate’, a paper published by JLL, 54% of global respondents said automation was impacting how we design and run our businesses. Today, there is open curiosity about the positive impact of automation. It is estimated that by 2025, 50,000 warehouses across the globe will utilise a form of automation.
Due to its increasing popularity, many are looking at the challenges and advantages of this new trend. In this blog, we explore these topics in more detail.
- The challenges of automation.
- The cost of automation.
- The core benefits of automation.
- The benefits of automation for third parties.
The challenges of automation.
The impact of automation represents change, and with any change, there are challenges. Automated warehouse logistics takes time and effort to get up and running, requiring expertise and a firm hand to guide and maintain the system when implemented. When considering automation, you may experience roadblocks, such as:
- A lack of insight on how to automate your warehouse, distribution centre or manufacturing facility.
- The potential downtime during the switch.
- A lack of in-house expertise needed to maintain such systems.
- The capital needed to invest.
However, if implemented correctly, these obstacles do not need to come to fruition. For example, when working with a dedicated automation solutions provider, you will gain the advantage and security of experts in the field of automation — individuals who know how to assess a site, maintain systems and advise on best practices.
Additionally, it is evident that the upfront cost of equipment and software pays for itself over time through increased throughput and efficiency gains. With the correct planning and foresight, you can adequately address the challenges of warehouse automation. For example, your business could implement:
- Maintenance schedules to ensure automation machinery is working at full capacity.
- Third-party partnerships for servicing.
- Regular audits of inventory and internal processes to prove the accuracy of automation
Each automation challenge has an appropriate solution, meaning you should never dismiss automation without proper consideration. One automation challenge many people confront first is cost. How much does automating your warehouse cost?
The cost of automation.
The costs associated with automated warehouse logistics can vary greatly depending on what a business chooses to implement. Investing in one automated guided vehicle (AGV) will always bear a price tag but will not be as expensive as overhauling the entire warehouse process. Plus, as AGVs are the fastest-growing type of automation, prices will only get increasingly affordable.
Studies have shown that labour costs can account for up to 65% of fulfilment costs. There are also the storage costs, energy, packaging, recruitment, benefits, administration and countless other key processes — all of which add up.
So what about the costs of automation?
Physical applications and process-based solutions will come with different price tags. Any associated costs will directly relate to the complexity of the task. If you are looking at end-to-end automated warehouse logistics, one that requires both software and hardware, then you are looking at a price tag you would associate with quality and efficiency.
We understand the costs of automation can be intimidating. However, they are easily mitigated by the strategic benefits gained through automation itself.
Like many other types of onboarded tech, automated solutions should not be looked at as one lump-sum investment but rather an investment that comes with guaranteed ROI. AGVs and related technologies are highly sought after by eCommerce businesses and warehouse management due to their immediate tangible benefits once onboarded. Let us explore these benefits in more detail.
The core benefits of automation.
There are numerous benefits you will gain when implementing automation in warehouses, distribution centres or manufacturing facilities. It addresses insufficient or poorly-managed warehouse space, shortages of labour and poor delivery times.
The most commonly lauded benefits are:
Productivity improvements.
The most common mistakes within a warehouse are ones produced by human error. They are simply made but end up costing both time and money. Automation mitigates these issues through tracking and visibility — the kind of clear visibility that illuminates the internal chain of custody.
Automated warehouse logistics ensures the flow of goods and materials is tracked throughout the warehouse, meaning less product is lost, wasted or sent to the wrong location. With that immediate visibility, answers to queries are found more easily and assessments are undertaken more accurately.
Automation also saves in terms of labour. Automation that can be applied across any warehouse size helps to reduce the need for manual labour, meaning human operators can focus on more high-value tasks and fulfilment can essentially continue throughout the night.
Tedious, laborious jobs are undertaken by machines such as AGVs which work with more accuracy. This means key processes such as product retrieval and inventory management can be undertaken in small time scales. But these are not the only processes that see productivity improvements.
For example, take putaway. In conventional warehouse settings, human operators would do putaway, running the risk of human error. However, by automating this process, putaway becomes more efficient. It also helps facilitate cross-docking, meaning goods can be processed and placed on distribution trucks rather than stored in the warehouse.
Similarly, take replenishment. Automation enables more visibility over inventory tracking, so when an inventory item reaches a designated par level, the automation software will carry out an order request which is flagged for approval.
Not only does this mean a warehouse will rarely run out of a certain product or material, but there is also no chance of overordering. This is a good example of what we call ‘lean production’.
Reduced costs.
The initial benefit is the rapid reduction in tedious manual labour. When human operators can realign their efforts onto higher-value activities, businesses will see a greater amount of immediately profitable work being done.
The onboarding of automated processes saves money by supporting the workforce during peak periods of high demand, where employees may have had to work overtime in the past. There are also the associated benefits of decreased overheads, more valuable square footage, optimised handling and storage — plus the undeniable advantage of potentially eliminated error costs.
There are also reduced costs due to:
- Reduced injuries and claims.
- Reduced damage to products.
- Reduced energy use due to optimised material management.
- Reduced handling and storage costs.
- Better resource allocation.
- Improved data accuracy.
- Reduced inventory loss.
- Improved delivery efficiency.
For more benefits of warehouse automation, explore this blog.
The benefits of automation for third parties.
When automated warehouse logistics are implemented, it is not only the warehouse itself that will benefit.
Improved supply chain relations.
Warehouses, distribution centres, manufacturing facilities — they all rely on a steady stream of goods and raw materials. When they have a better view of their inventory levels, they can be proactive when ordering new products.
Partners in the supply chain will not be left in the lurch when saddled with a huge order that needs delivering as soon as possible. Supply chains can be better scaled to fit the demand in the market, whether by day or by season.
Increased customer satisfaction.
When orders are fulfilled accurately and go out on time and operational efficiency is ensured by a robust warehouse automation system, businesses can better address customer demands and keep them satisfied.
With better warehouse management, companies can guarantee much-loved services such as next-day delivery and item tracking.
Sustainability.
This is a word on the mind of many business leaders today. Facilities management has always been an area of concern when it comes to being kinder to the environment. Fortunately, businesses enable greener practices because warehouse automation brings facilities managers closer together with warehouse conditions and energy use by optimising where materials are placed, their flow, and how many goods are needed.
Similarly, with such improved visibility over material use, other processes, such as recycling or reusing, can be onboarded.
With this wide range of benefits for both the core business and third parties, you may be considering implementing automation. To determine whether automation is right for you, download our checklist.