Understanding Acceptance of Warehouse Automation

Warehouse automation is met with both excitement and trepidation to people in the third party warehousing industry. Currently, the prospect of utilizing robotics, automated storage and retrieval systems (ASRS) to automate the put-away and return of inventory to the dock area could eliminate 35-45 percent of the total material handling hours in a conventional warehouse application. While the benefits sound overwhelming, few companies have made the leap into this application. Indeed, with any new application of technology or material handling systems, there are questions to answer and challenges to overcome. Let us take a look at some of these challenges as well as some of the ways these challenges may be addressed.

A Look at the Perceived Risks of Warehouse Automation

What makes warehousing operations squeamish about automating their processes? Some of the most common concerns are:

• Concerns about cost. The technology and components for warehouse automation are expensive — not to mention the cost of redesigning an existing warehouse to accommodate new material handling systems.
• Concerns about dependability. In the early days of warehouse automation, warehousing companies naturally worried about what happens if the software or mechanical systems malfunction. Production could be halted. Orders could not ship. Inventory could be damaged or expire (if perishable).
• Concerns about customer retention versus configuration. Frequently, warehouse automation technology and automated material handling systems do not relocate easily, if at all since many buildings have been or are constructed around or using automated material handling systems or ASRSs. This issue is of particular concern to third-party logistics providers(3PL) who may cater to the needs of different clients at different times within the same building.

Meeting the Challenges of Warehouse Automation

Despite these legitimate concerns and challenges, the warehousing industry has reason to be optimistic as automation technology continues to evolve. In other words, there is a “flip side” to all these concerns. Let us look at these issues from a different angle:

• Addressing cost concerns. The cost of hiring labor is already expensive and is likely to continue growing in the years to come. Meanwhile, technology tends to be cheaper, and once installed, automated systems reduce labor costs. Taken together, warehouse automation is poised to provide a reasonable return after the capital cost and maintenance is matched against the labor savings.
• Addressing dependability concerns. Many simple, cost-effective applications already exist and are not only proven but very dependable. It does not take much imagination to see the advantages of automated systems running 24/7 without hiring and training costs, overtime, breaks, benefits, or vacation.
• Addressing customer retention and configuration issues. As the technology changes and the costs and scarcity of labor increase, client attitudes are also beginning to change. There is a growing expectation among 3PL clients that their warehouse partners will begin adopting automated technologies and they are actively looking for forward-thinking 3PLs with which to do business.

It is clear that automation is a cost-effective the path of the future for many warehousing and fulfillment applications. The concerns are being addressed and issues resolved as we see significant numbers of warehousing companies become partially or fully automated.

To learn more about ABW’s warehouse services, contact us today.