Factors to consider when moving to an automated warehouse

26 warehouse pros reveal the most important factors to consider when moving to an automated warehouse

Will Allen Last Updated: July 2nd, 2019

The world of logistics is increasingly driven by technology, with artificial intelligence, big data, the Internet of Things (IoT) and automation among the biggest logistics trends today. As warehouses embrace technology to optimize the supply chain and reduce fulfillment costs, many companies are considering making the move to an automated warehouse.

That said, there are many factors to consider when moving to an automated warehouse. Not only do you need to select the right equipment, such as collaborative mobile robots, but you also need to evaluate factors like costs, transitioning employees through a period of change, the time it takes to implement and train workers on new warehouse systems and other considerations. To help you prepare for the transition, we reached out to a panel of warehouse pros and asked them to answer this question:

“What’s the #1 factor to consider when moving to an automated warehouse?”

Meet Our Panel of Warehouse Pros:

Read on to learn what our experts had to say about the most important considerations you should weigh when moving to an automated warehouse.


Alexandra ZelenkoAlexandra Zelenko

@DevGuildDDI

Alexandra Zelenko is a Marketing and Technical Writer at DDI Development company that delivers web and mobile digital solutions for a wide range of business expertise, such as recruitment, fintech, CRM, e-learning, logistics, etc.

“Identify the technical and cultural readiness of your company…”

You should evaluate your company’s readiness honestly before making the investment into an automated system. Look specifically at team’s aptitude, in-house skill sets and familiarity with the technology to identify where the gaps are and what actions to take to fill them. Once you have completed this self-assessment of your technical and cultural readiness, you will have a much better idea of how to move to an automated warehouse solution.


Robert DeStefanoRobert DeStefano

@GoIvanti

Robert DeStefano is the Senior Product Marketing Manager for Ivanti. Robert has more than 18 years of experience helping businesses understand the value of mobile technology solutions when it comes to boosting worker productivity and enforcing mobile security.

“The #1 factor to consider when moving to an automated warehouse is that…”

This move can significantly improve order picking accuracy and cost efficiency. In the warehouse, human error is inevitable. By introducing solutions that add automation, errors can be eliminated from task workflows. For instance, implementing warehouse automation technologies enables pick verification to occur at the time an item is picked – notifying the warehouse worker immediately if the wrong item is picked. This also enables the warehouse organization to eliminate manually performed quality inspections. Together, firms can raise their perfect order rate, while ensuring labor is (re)assigned to other, higher value tasks.


Rupy Sawhney

@UTK_IISE

Rupy Sawhney is the Heath Fellow in Business and Engineering at the University of Tennessee, combining both fields through his knowledge of lean manufacturing, the optimization of production without a drop off in quality or worker health.

“The number one factor is…”

The reliability of the existing warehousing processes and the reliability of supporting software/hardware that subsequently automate these processes.

Automating a warehouse when the core processes that define warehousing are not fundamentally stable will only result in failure. Warehousing consists of multiple processes including receiving/documenting incoming products, storing products based on specific warehouse design criteria, picking orders, documenting parts picked, packaging, shipping and documenting damaged/returned parts. Warehousing effectiveness depends upon the accuracy of the physical inventory in the warehouse with the respect to the inventory indicated in the computer system. For example, an automated system may try to pick a physically nonexistent part in the warehouse if the computer indicates that the part is in the warehouse. This discrepancy between the physical and electronic inventories is dependent on the reliability of the warehouse processes.

The reliability of the automated warehouse system (software/hardware) is critical once the fundamental warehouse processes are stabilized. Disruptions are the key determinant to the operational effectiveness of any automated system.


Katie Martinelli

@hst

Katie Martinelli is a Health & Safety Expert for High Speed Training,  one of the UK’s leading online training providers.

“The most important thing to consider when moving to an automated warehouse is the expense…”

Automated warehouses are an investment. They have many benefits, including increased efficiency and safety mechanisms, but they cost a lot. Therefore, you should carefully consider if installing an automated warehouse is worth the money — especially if you might want to sell your business a few years down the line.

However, it’s not just the installation expense. Before you commit to an automated warehouse, you need to consider the maintenance costs — both routine and unexpected. For example, any unintentional movements, such as an automatic guided vehicle moving off before a load is complete, can lead to dangerous collapses, displacements and jammed conveyor belts. In situations like this, you not only lose damaged stock, but you’ll also have to repair damaged machinery and stop your process, all of which will cost you money.


Tom Wilkerson

@CertifyMe

Tom Wilkerson is the CEO of CertifyMe.net, a national leader in online, OSHA-compliant forklift certification. Tom and his employees have helped thousands of companies discover the easy way to self-certify their forklift operators in-house.

“The types of workplaces that use…”

The lights-out method (a.k.a. automated warehouses) the most are cold storage facilities and freezer warehouses, typically in the food and beverage and pharmaceuticals sectors. People cannot work in such harsh conditions like below-zero temperatures. Replacing humans with automation eliminates the need for their presence. While automation technology continues to improve, employers must make sure that their order picking employees are well trained and certified. Doing so will improve productivity and reduce the number of accidents and mistakes that take place every day.


Paul Trudgian

@paul_trudgian

Paul Trudgian owns and manages Paul Trudgian Ltd, a leading supply chain and logistics consultancy based in the UK. Paul is a highly experienced supply chain leader, with a 20-year background in supply chain management including the delivery of more than 60 consulting projects in the retail, defense, automotive, food, utilities and mining sectors.

“The primary factor to consider is the…”

Flexibility of the automated solution to cope with potential future changes in your company’s demand profile.

The relatively high capital cost of automated warehousing solutions often means that there is very rarely a quick return on investment. Consequently, the automated equipment needs to be future-proof and adaptable.

Before moving to an automated warehouse solution, it must be stress-tested for future demand profile compatibility. What happens if sales demand for particularly large or heavy items increases? What happens if customer demand moves to a higher frequency with a lower order volume?

The latter question is especially pertinent for B2B environments. B2B supply chains are increasingly demanding material to be delivered more frequently at lower volumes in order to better manage the costs of inventory. This creates a higher velocity supply chain, which means that there needs to be an increased focus on retrieval speed in the warehouse. This could be a real problem if a company has selected an automated retrieval system focused only on storage density.

Automated warehousing is not a short-term investment. Before moving to an automated solution, a company must fully assess the solution’s ability to perform, not just against the business’s current demand profile, but against all reasonable future scenarios.


Reuben Yonatan

@getvoipreviews

Reuben Yonatan is the Founder and CEO of GetVOIP.

“Everyone thinks about the warehouse floor — order fulfillment, assembly line arms, etc…”

What about customer experience? Your budget will balloon pretty quickly if you haven’t automated at least part of the customer experience: inquiries. We always advocate installing call center software as your front-line defense. Couple interactive voice response (re-directing to the appropriate department) with automatic call distributors (reduce or eliminate wait times) and you’ve already eliminated the front desk. Train your department lead to utilize real-time analytics dashboards and your staff can identify supply chain kinks before they derail into company-wide snafus. Those are just a few ways customer experience can be automated — there are many more ways to reduce the office space square footage (and office staff budget) in your future automated warehouse.


Sandy Vosk

@sandyvosk

Sandy Vosk is the President of Advantage Technology Solutions, Inc. ATS works with supply chain executives who want to leverage technology to improve profitability, operational efficiency and keep up with changing customer demands.

“My suggestion to supply chain executives is to…”

Focus on the outcome you desire and how will it impact your employees. It’s no surprise to anyone who works in the warehousing industry that warehouses are filled with repeatable, process-oriented and error-prone operations. Robotics and automation certainly will continue to take over the repetitious tasks, such as picking, receiving and putting away inventory from humans. Without a doubt, companies are already achieving tremendous value, leveraging robotics to improve quality, efficiency and profitability. Many people are resistant, however, fearing that robots will replace jobs. I truly believe that this technology could not arise at a better time, when there is a shortage of skilled labor in the warehousing industry, which is getting worse. When implemented strategically and with proper planning, robotics can improve employee engagement and retention rates, relieving employees from the dullest and most repetitive tasks and enabling them to expand into other roles such as customer service, maintenance and operational improvement.


Carl Hillier

@tech_evangelism

Carl Hillier is the Head of Product Marketing at Ephesoft Inc. responsible for Esphesoft’s portfolio of intelligent document and data capture solutions. Carl has held senior technical and marketing positions at FileNet (now IBM), Fujitsu and Kofax and ABBYY.

“When considering a new automated warehouse, there are some keys factors to consider…”

The first step is to  consider how it works in regards to the entire supply chain and logistical operations. Ask yourself: what are our goals with this project and how does this align with the end results in regards to logistics? Then you can factor that information into planning your automated materials handling system needs.


Amy GuAmy Gu

@dynamsoft

Amy Gu is the CEO and co-founder of Dynamsoft, a software company focusing on image processing. Amy holds a Ph.D. in computer science. She was an associate professor at the Artificial Intelligence Institute at Zhejiang University. She was also a visiting scholar at the University of British Columbia and an exchange professor at Simon Fraser University.

“The way to tackle this question is to look at the why…”

Why go to an automated warehouse? From a company’s perspective, the answer is likely to be a combination of factors. Ultimately, all these factors boil down to one thing: cost.

Traditionally, automated warehouse management, as employed by Amazon and others, uses computer vision technology to track goods with proven-reliable barcode labels. They leverage a fleet of automated guided vehicles, better known as AGVs, equipped with cameras to track inventory in real time. These mobile robots are equipped with sensors that auto-detect an environment. They use markers, wires, magnets and lasers to find appropriate paths on their own and keep on track of where they are needed. It’s similar to self-driving cars.

Indeed, this solution is more efficient and cost-effective compared to manual tracking by a human. However, AGVs are costly and demand immense time investment to design the tracks for movement and to establish corresponding infrastructures. Enter the unmanned aerial vehicle, commonly known as a UAV or drone. A drone equipped with the right barcode reading software can hover over inventory, capturing multiple barcodes simultaneously. It is literally a flying barcode scanner, capturing barcode labels quicker and more reliably than a human eye.

These solutions make it so most of the heavy work is done by machines, allowing employees to spend their time leveraging inventory reports instead of manual inventory tracking.


Dary Merckens

@gunnertech

Dary Merckens is the CTO of Gunner Technology, an AWS Partner specializing in JavaScript development for government and business.

“The most important factor, by far, when moving to an automated warehouse is…”

What effect it has on your competitive advantage. If you’re more effective with human workers, go with that. If you’re more effective with an automated warehouse, that’s the choice. At the end of the day — and this is based off extensive experience automating numerous businesses — all you can do is crunch the numbers and determine which option has the most positive effect on the bottom line.


Kevin Lawton

@kevin_lawton

Kevin Lawton is the founder of the brand new distribution and logistics blog called TheNewWarehouse.com which focuses on warehouse startups, transitions and change. He has been in distribution operations for six years and has been part of starting four new distribution centers for three different companies as well as on teams for multiple automation and system transitions.

“The #1 factor to consider when moving to an automated warehouse is the people in the warehouse…”

It is important to involve them in the process and assess their current feelings and understanding about automation. Getting the people to align and work with the automation can often be the most difficult task. For long time employees, automation can be difficult for them to grasp and see the benefit as they have done their job the same with little change for many years and now they will be undergoing a large change. Without increasing their comfort level with change prior to implementation you will have discouraged employees who will lose confidence in the change as soon as something goes wrong with the automation after implementation and trust me something will hiccup at some point. Keeping employees in the loop and informed of all details of the automation will have them on your side.

From personal experience, I have seen where a distribution center went from technology that had not been upgraded since the 1980s to a fully automated robotic shuttle system as well as a goods-to-person picking system and voice picking system in one move but did not fully explain everything that was happening to the veteran employees. The led to employees feeling discouraged when there were bugs to be worked out and also to instances where employees were trying to circumvent the new processes and the automation to do things the way they are accustomed to, causing further issues down the line.


Ronald M. Leibman

@mccarterenglish

Ronald M. Leibman is a partner at the law firm McCarter & English, where he focuses on the supply chain management, transportation and logistical needs of manufacturers, wholesalers, retailers, distributors, carriers and third-party logistics providers. Earlier, Ron was a senior logistics executive at a supermarket chain and a prestigious retailer.

“Once you determine that automation is cost effective…”

The number one factor to consider when moving to an automated warehouse is system capability. That should always be the starting point. System productivity and efficiency can be greatly devalued by that known killer of warehouse productivity, unscheduled downtime. It is imperative that when choosing automated solutions companies perform significant due diligence to develop historical data on system downtime — looking at similar users with similar product lines — as well as system redundancy to help avoid breakdowns and supplier-workaround plans in the event of whole or partial system failure. But in the end, assuming cost effectiveness — it’s largely about system capability.


Aaron Pfeifer

Aaron is a Business Engineer at Obsidian Solutions where he specializes in business re-engineering for business from one to 100 million dollars.

“When evaluating a new automated warehousing system…”

It is critically important to make sure you have buy-in from your front line employees using the system every day. Too often business leaders decide on what system to move forward with without engaging the people who will use the system every day. That’s like buying a new car because of the paint job without first consulting the driver. They won’t be happy to receive a sports car when they really need an SUV to work effectively.

As a result, employees feel demoralized from the start. Be sure to include them in the shopping process as much as possible. Even if there is no great option, they will go through that experience with you and have buy-in on the best available options for software and implementation. Without your people behind the change, you will compound the stress and increase the failure likelihood (defined as implementing on time and on budget).

The best way to ensure employees feel involved is to bring in a third-party change manager who can facilitate employee emotions as well as company requirements. It is easier for employees to share ideas and feelings with a third party they view as an ally as opposed to a boss who could fire them at any time. Further, working with employees to analyze their workflows in the beginning and can offer insights on how the new system can improve their process will solidify buy-in for a successful implementation.


Kraig Martin

@storagevault

Kraig Martin is the Commercial Director at Storage Vault, one of Scotland’s largest self-storage companies.

“The most important factor to consider when moving to an automated warehouse is…”

Can I afford to pay unexpected costs? It goes without saying that moving to automated warehouse is likely to cost your business a lot of money initially, but the returns could be spectacular for your overall productivity if you get the move right.

In my opinion, the major factor you should consider when moving to an automated warehouse is can you actually, comfortably afford it?

Hidden costs are the ones that you have to be careful of, and there can be a few when it comes to automated warehouses. A lot of businesses can find their budgets quite stretched when they first move into an automated warehouse, and this obviously places them at greater risk of not being able to cope with the financial shock of an unexpected cost — like machinery breakdowns, damage or late supplier shipments.

The total cost of your ground rent/lease, monthly maintenance, bills and taxes associated with the warehouse are obviously a major factor in determining if your business can afford moving to it.


Charlie Wilgus

@Lucas_Group

Charlie Wilgus is the General Manager of the Manufacturing & Supply Chain Executive Search Division at Lucas Group, North America’s premier executive search firm.

“I’d want to know how it would impact…” 

  • Labor: Would efficiencies create a reduction of general labor force? Would it require more specialized labor force to manage/troubleshoot the automation?
  • Order management: How would the automation tie into order management (think about interaction with SAP or something similar)? Existing technology? New technology?
  • Supply chain: How would this flow down through transportation? Would it give increased visibility? What potential challenges would automation create? How would this impact the dock (unloading/loading challenges)?

I would also add that automation needs to be flexible to allow for the flow of product in an efficient manner throughout the warehouse without bogging down the process, thus adding inefficiencies and undue operating costs. Implementing a warehouse management system to manage the flow of goods is critical as well. Having the right plan and people in place in case your new automation system goes down is essential as well. Downtime without a plan and the right people can be extremely costly.


Sean Si

@SEO_Hacker

Sean Si is the CEO and Founder of SEO Hacker, Qeryz, Sigil and Workplays. He’s a start-up, data analysis and urgency junkie who spends his time inspiring young entrepreneurs through talks and seminars.

“The introduction of automated warehouses allowed more efficient and faster distribution channels in business…”

However, automated warehouses are not fit for all businesses. Aside from the cost of availing an automated warehouse — the cost being so high that not all businesses can afford it — there’s another important factor that businesses should consider before they move to an automated warehouse: modification. Your business’ products should be open to packaging modifications since automated warehouses are more inflexible when it comes to the capability to store products. Your products should be modified and packaged differently if you want them to be stored at an automated warehouse. So, make sure that you have considered this factor when you are going to switch to an automated warehouse.


Chris Wiegand

@Jibestream

Chris is the CEO and Co-Founder of Jibestream. He started the company with a vision to change the way people engage with indoor spaces by fusing business data with maps. Chris has led Jibestream’s incredible growth from an idea to a globally recognized leader in the indoor mapping world.

“The most important thing for organizations to consider when moving to an automated warehouse is…”

The accuracy, interoperability and extensibility of your indoor mapping platform. The Internet of Things (IoT) use cases that provide immense value for manufacturing and warehousing, such as asset tracking and geofencing, are dependent on not only having geospatially accurate indoor maps of your facility, but also having a platform with an open architecture. If manufacturing facilities select point solution vendors for their warehouse automation software stack, they will encounter difficulties in scalability and encounter roadblocks in deploying more advanced use cases over time.


Amber Fullerton

@AmberFullerton3

Amber Fullerton is the Chief Customer Officer of One World Direct, an e-fulfillment and call center company with warehouses in California, Ohio and South Dakota.

“Do a worst-case analysis of your break even point — that tells you a lot…” 

Moving to an automated warehouse is a big investment. While it can offer huge savings over time and free up capital for growth, you need to plan for the transition period you’ll go through as you pay off the costs of the move. It’s important to forecast for a worst-case scenario, losing a large client, an economic downturn, etc. so you know whatever happens you’ll be able to ride it out long enough to see the benefits automation can bring to your business.


Rob Miller

@BalluffSensors

Rob Miller works for the UK arm of Balluff, one of the leading manufacturers and suppliers for factory automation.

“The number one factor to consider is the data…”

The subject can then be split into two sections, the first being how will you transfer all the data around the warehouse. One of the main data transfer methods is through IO-Link.

Once you know how you will transfer the data, you must work out what data you want to transfer. Do you want to monitor the status of the warehouse or maybe track where equipment is located? After you have worked out those considerations, the rest should then fall into place.


Mialana Desoleil

Mialana Desoleil is the CEO at NEStylemaze, a luxury fashion customization application that virtually enables luxury complex fashion made to specification and measurements.

“The most important factors to consider when moving to an automated warehouse are…”

1. Deep learning: It is important to know if your autonomous warehouse machines have smart learning capacity. This will be huge in not only collecting quantifiable data analytics but can also qualify the information collected and make connections that will add value to your supply chain and get more efficient over time.

2. Robotics: Robotics are becoming cheaper every year and are being implemented across autonomous manufacturing systems. It is important to figure out early on if robotics will be implemented along your supply chain at some point in mixed use and/or human collaboration like Amazon, Ebay and many others are using.

3. Maintenance costs: What are the projected maintenance costs? Have you created a trifecta of three options for each crucial maintenance point so that a continuous operational flow of production is optimal for the foreseeable future? This will have a positive effect that will propel itself positively into your balance sheet, autonomous ROI and quota delivery, thus supporting increased labor demands as your business scales and grows. Consider replacement parts, efficiencies and staffing.

4. Budget for adequate staffing: Who is going to handle this new division? Are they experienced or do they have the intellectual curiosity to cope with an expanding technical manufacturing process and quickly adapt to the nurturing and specific set of operational challenges inherent in autonomous manufacturing?

5. Public relations strategy: Becoming autonomous shows your company may be positively affecting sustainability; however, it can also mean jobs may be lost. Using a social responsibility model for implementation of smart manufacturing ensures your organization has a strategic assessment of how autonomy can promote and manipulate, not hinder, company focus, objectives, internal and external perspectives and perceptions.

6. Energy use analysis: How will autonomy boost operational energy costs, and does your supply chain reduce your organization’s carbon footprint? Ultimately and ideally, the goal of an autonomous manufacturer is to positively increase the balance sheet and sustainability for long-term victories and winning cycles.


Michael Ryan

@Isolvprblms

Michael Ryan works with privately held manufacturing businesses to unlock cash and improve EBITDA by optimizing inventory. Businesses bring in The M. Ryan Group when their customers are spitting mad because they don’t have enough of the right inventory in place, or they have cash tied up in too much of the wrong inventory.

“The #1 factor to consider when considering moving to an automated warehouse is VOLUME…”

How much product needs moved in and out on a daily basis determines the level of staffing. The cost of staffing is the underlying factor when calculating the cost of implementing (and maintaining) an automated warehouse. If material is put away without any formal location system, then additional work will be required to make a warehouse automation-ready. Most likely, there are steps that can be taken to improve inventory velocity that does not require automation. Locating high-frequency materials closest to the ends of an aisle, having a formal location system in place to make putaway and retrieval faster and maintaining inventory turns at a level equal to or above benchmarks for your industry are a few examples.

It comes down to: what’s the problem you’re trying to solve? If it’s decreasing staffing cost in a high volume warehouse, then automation may be one path to examine. If it’s improving velocity through the warehouse, there are other interim steps to take before looking to automation as a be all, end all, solution.


MegaventoryFilimon Trastelis

@megaventory

Filimon Trastelis works as a Marketing Assistant for Megaventory, the online inventory management system that can help businesses synchronize stock and manage purchases and sales over multiple stores.

“Some companies that decide to move to an automated warehouse believe that…”

The use of robotics means the replacement of workers from robots or that immediately your cost and errors will be decreased. Administration, while accomplishing this business move, has to consider many factors that may affect the success of this project. The main factor to consider, however, is the progress of other people who have gone through it. It’s very helpful to search for advice and useful information from them and learn from their mistakes so you can move carefully step by step and make the right decisions.

It is commonly accepted that factors like cost-effectiveness, duration of the equipment or compatibility with your ERP system are major variables that determine the success of an automated warehouse. Having an integrated view of a warehouse that has been automated and discussions with people that manage this system will give the administration the chance to have a closer look and evaluate any possible threats associated with the factors above.


Ryan Chan

@OnUpKeep

Ryan Chan is CEO and Founder at UpKeep Maintenance Management. He is a Chemical Engineer from UC Berkeley and was named one of Forbes 30 Under 30 for Manufacturing in 2018.

“When moving to an automated warehouse…”

It is crucial that the warehouse be well maintained. With robots moving around the warehouse floor, things out of place, falling off the shelf or scattered on the ground are problematic and will hinder the robots’ ability to smoothly do their jobs. Similarly, the warehouse needs the people setting it up to do so in an organized and logical way in order to maximize the robots’ efficiency.


Jason KayJason Kay

@helloretreaver

Jason Kay is the CEO of Retreaver and has been working with telephony systems and performance marketing since 1998 to solve complex problems involved with large scale market attribution.

“One of the most important factors to consider when moving to an automated warehouse is…”

What employees will be involved in the process. It is important to decide which employees will be involved with the automation process before it is implemented. This way whoever is involved will be able to follow the process from start to finish and have unique knowledge of all aspects of the process.


Henrique Senra

@SlicingDice

Henrique Senra is an MBA and entrepreneur. He has successfully developed two companies from the ground up in very different verticals. In 2018, he joined SlicingDice as a VP of Product Development to assist in positioning and growing the company.

“The number one factor to consider when moving to an automated warehouse is…”

Cost reduction to organizations. When automating operations are implemented in warehouses, companies’ operations become faster and more accurate. Having real-time data streaming through the Internet of Things (IoT) or different devices and machines that can help teams detect any anomalies in processes instantly means a significant reduction in costs, as the faster a problem is identified, the faster it can be fixed.

The return on investment (ROI) that an automated warehouse can bring to companies is relevant, since more tasks can be completed in less time. Automating a warehouse implies working “smarter,” which subsequently increases the workflow done in shorter time-periods, resulting in profits to organizations.


If you’re thinking about moving to an automated warehouse, selecting the right automation technology is crucial. Download our white paper, 7 Reasons Why Warehouse Robots Beat Traditional Automation, to find out why warehouse robots are a better bet than traditional automation.