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Automation has gained increasing traction over the last few years as a way of unlocking productivity in warehouses. A recent study by PRG shows that over 10% of warehouses in the U.S. were using sophisticated automation technologies in 2016: a trend that is likely to accelerate in the next five years.
In this research, we examine in detail the various proponents driving this automation trend, the different forms of automation, and the ways managers can prepare for this phenomenon.
An important contribution of this research is to identify the core reasons for automation: the rising costs resulting from operational challenges caused by higher consumer expectations from the e-commerce trend. As U.S. e-commerce sales continue to grow at over 15% annually, suppliers feel the pressure to satisfy e-commerce customers by delivering more varieties of goods in smaller sizes faster. This translates into complex operational challenges that are costly to tackle, especially when labor and land costs continue to rise.
After studying different automation technologies, we categorized automation using a 2-dimensional framework (decision-making automation and goods-movement automation). Within the framework, we identified 4 levels of warehouse automation (Low, system, mechanized, and sophisticated). Each type of automation utilizes a mixture of different technologies, and requires a different level of capital expenditure.
In addition, this white paper offers insight on how to pick the level of automation depending on your operational challenges and budget constraints, as well as how to plan for your potential automation initiatives by considering scalability issues and organization changes ahead of time.
What you will take out of this.
- Why has there been a recent surge in warehouse automation? Will this impact our company?
- What types of automation are there?
- What would be the best fit for my organization?
- How much will a warehouse automation initiative cost?
