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The 'why,' 'when,' and 'how' of smart warehousing

26 May 2020
E-commerce is booming: sales volumes continue to grow. Extreme demand peaks and rising trends – such as same-day delivery – result in new e-fulfillment requirements and challenges. In the past, warehouse operations mainly consisted of bulk orders in the form of boxes and pallets containing the same products. Now, orders are comprised of different combinations of items. The product range stored in warehouses is wider, which is why the inventory consists of more slow-moving products. At the same time, an efficient, productive warehouse remains crucial, as it contributes to employees' motivation, process lead times, and (ultimately) customer satisfaction.

A term that's increasingly mentioned in the context of warehouse efficiency is 'smart warehousing.' But to what extent is its implementation profitable, and which developments are relevant to consider?

Current warehousing challenges

A major challenge in modern-day warehouses is the human factor, including employee shortages, high labor costs, and human errors (like avoidable damages and picking errors). Other reasons why optimization is required include fluctuating supply and demand, such as last-minute orders and high order volumes.

The solution: smart warehousing

Those who want to tackle these challenges and embrace automation can consider smart warehousing technologies.

Smart warehousing is a process in which internal logistics processes – from inbound to outbound – are interconnected and carried out by smart systems and techniques. In other words, processes that used to be performed by humans are largely automated. Several applications contribute to the ultimate smart warehouse. When virtually the entire process is performed automatically – from supplier to customer – with negligible errors, we're dealing with a perfect smart warehouse.

Which solution fits your organization?

Before you decide to implement a smart warehouse, it's paramount that you find a solution that fits your organization. Define what you aim to achieve, which challenges you should tackle, and how willing and able you are to invest in profitability. Don't forget to consider the required level of flexibility – you don't want your investment to turn into 'sunk costs.'

Keep in mind that (partially) automating your warehouse usually won't allow for a plug-and-play implementation. It requires some scale – that is, if you want it to be a profitable endeavor.

As e-commerce constantly evolves, it's best to improve your setup and processes step by step. If you opt for an agile implementation, it will be easy for you to adapt to changes as they occur – you will have the knowledge and expertise required to make adjustments where needed.

Smart warehousing applications and techniques

If you want to transform a (semi-)traditional warehouse into a smart warehouse, you can use several applications and techniques, such as transportation, AutoStore, and auto-sorting machines.

An effective way to increase productivity and reduce labor costs is using a goods-to-person machine to realize automation. Goods-to-person solutions involve machines that transport items to workers so they can further handle the item in the process. If order picking time largely consists of walking, this technique contributes to the efficiency of the warehouse process. An example of a goods-to-person solution includes AutoStore: products are stored in boxes, which are automatically transported to a picking station where the order-picker only needs to pick the right amount of items without having to walk anywhere. This allows warehouse workers to achieve a higher level of productivity.

Smaller, low-investment examples include regular re-slotting, actively allocating fast movers to the best picking locations, and batching orders in a variety of ways. If you decide to automate, you will also capture more data on good flows, which allows you to perform more in-depth analyses and identify any improvements.

So, smart warehousing offers interesting possibilities to optimize your processes. Which option fits your needs?

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