Warehouse Automation: The Ultimate Guide to Maximum Gains

Warehousing is not new to automation. Companies are going all-in on their logistics and fulfillment, with more than a third of capital spending expected to be poured into it.

However, as of today, the majority of warehouses are still run with either low levels of automation or none at all. Only a tiny fraction, about 5%, can boast sophisticated warehouse automation equipment and software.

And even those that do are facing challenges. For example, some experienced players struggle to repurpose automated facilities for omnichannel fulfillment. 

This guide will cut through the confusion, analyzing real-world warehouse automation examples to help you chart your path toward efficient operations.

4 signs your warehouse requires automation

From labor costs spiraling out of control to inventory nightmares, the pressure is on to rethink warehouse operations. Here’re some glaring signs that your warehouse is no longer keeping pace with your business growth and needs a technological makeover.

1. Overworked and understaffed

Coupled with a high risk of human errors and accidents, the intensity of manual labor has a far-reaching crippling effect on operating costs and efficiency. When there’s a sudden spike in demand, staffing enough human workers, especially considering tight labor markets in advanced economies, becomes a big problem, causing delays or racking up costs on overtime.

2. Inventory chaos instead of inventory control

The symptoms are loud and clear: delayed orders, reduced order fulfillment capacity, inaccurate inventory counts, siloed inventory data, etc. Many damaged products or incorrect orders are shipped due to human error and carelessness.

3. Outdated systems impeding your progress

Handling increased order volumes with outdated, frequently breaking software is as dreadful as it sounds. When it’s always a quest to fix or maintain the existing functionality, let alone add advanced features, then you can hardly propel your business to new heights. The data is so siloed that manual handling causes you a nervous tick.

4. Gut-feeling guidance, rather than fact-based decision-making

It’s not just that spreadsheets are old school — they’re holding you back. They miss the boat on real-time, unbiased insights without which you can’t quickly respond to customers’ needs. Not to mention data silos that become one of the major drags on analytics efficiency. Demand forecasting, labor allocation, and other critical processes shouldn’t be shots in the dark. Automation brings much-coveted data consistency and reliability to the table.

Evident and beyond-the-surface ROI of warehouse automation projects

High-performing supply chain leaders never limit their vision of automation success to only immediate, direct benefits.

Instead, they view smart technologies as an investment in overall business health and longevity.

To accurately calculate the ROI of warehouse automation solutions, it’s not enough to look only at upfront gains they deliver. There’s more to automation’s rewards than meets the eye. Our table shows both immediate warehouse automation benefits and bigger-picture advantages, revealing how this lasting impact can transform your business into a leaner, more scalable, and resilient one.

The software-hardware synergy for warehouse automation excellence

Different physical assets are instrumental in optimizing the storage, handling, and movement of goods. Today, businesses have a wealth of options as to reliable, advanced automated warehouse equipment, including:

• Pick-to-Light Systems
• Autonomous Mobile Robots 
• Goods-to-Person Robots
• Automated Storage and Retrieval Systems 
• Voice Picking Systems
• Automated Sortation Systems
• Palletizing robots 
• Automatic Guided Vehicles
• Automated Guided Carts
• Warehouse drones 
• Collaborative robots 

Physical automation allows to cut labor costs and human errors, streamline manual data entry, and improve the reliability and scalability of warehouse operations.

But if hardware is the heart of your automated warehouse, then software is its brain. Software components send impulses to hardware, which, in its turn, provides the physical muscle to execute the task.

When this symbiotic relationship is misaligned, fancy hardware makes little sense.

Our client struggled to navigate forklift robots using overly complex software, which was designed for tech-savvy users and couldn’t efficiently navigate robots within small facilities. By developing a custom web app for SMB with user-friendly and fully remote robot control, they empowered warehouse operators to complete tasks efficiently.

Another *instinctools’ client replaced a costly SaaS inventory system with a custom, feature-rich IMS. This transition unlocked the full potential of their barcode scanners, doubling RFID scanning speed and tripling tag verification efficiency.

Which warehouse operations can be automated?

Working as a well-coordinated ecosystem of sensors, robots, and advanced software, automation solutions can perform a bunch of tasks throughout the inventory movement into, within, and out of warehouses.

Into a warehouse

By executing tasks with exceptional accuracy and speed, your automated systems can handle erstwhile manual processes in goods receiving, for example:

• AGVs unload inbound trucks
• Receiving robots inspect incoming packages for damage and verify that the actual quantity matches the order 
• Barcode scanners capture item information and update inventory management systems
• Automated sortation systems categorize incoming packages based on size, destination, or priority
• Conveyor systems transport goods from staging to storage areas

Within a warehouse

Here are examples of how different equipment and software track inventory within storage facilities and provide real-time visibility into storing, retrieving, picking, and packing goods:

• Self-guided vehicles transport goods to designated storage locations
• Autonomous mobile robots equipped with pick-to-light systems help to sort orders and take them to the right packing stations
• Automated packaging systems carry out product handling, adapting to different sizes, shapes, and packaging requirements
• Drones perform regular inventory checks (cycle counting)
• Sortation scanners help identify each item’s loading dock destination

Out of a warehouse

Automated processes ensure consistent performance in moving items out of a warehouse:

• Palletizing robots stack items for further shipment
• Conveyor systems transport boxes, containers, or pallets to loading areas
• Automated sortation systems sort outgoing packages by destination and direct them to the corresponding shipping lanes 
• AGVs or AMRs scan barcodes or RFID tags after bringing a package to the outbound area to confirm the delivery

These lists are far from exhaustive. From the seamless flow of goods to the efficient dispatch out, automation offers sizable gains in the way tasks are done. However, businesses face a number of roadblocks on their way to streamline logistics operations. 

Not all roses: warehouse automation challenges

What does it take to implement warehouse automation? Be aware of the most significant challenges standing in the way of operational excellence.

High upfront investment

All those conveyors, automated guided vehicles, and AMRs, come with a formidable price tag, which goes only up for complex operations or tricky storage requirements. 

In many cases, retrofitting is not an option, so companies are compelled to consider new construction, which is financially risky and time-consuming.

Warehouse management software is far from cheap too. Much off-the-shelf software is often “overspec’d” and, ultimately, more expensive than it might have been. 

Tricky integration

Another major hurdle for warehouse automation solutions is their integration into the existing infrastructure. 

Incompatibility obstructs the smooth flow of information between equipment and warehouse management systems. Additionally, integrating automation systems with company’s  enterprise resource planning software or other systems often demands extensive customization and ongoing maintenance.

When one of our clients decided to switch from an overpriced and feature-limited SaaS inventory management system to a tailor-made IMS, it was challenging to adapt the existing hardware infrastructure functionality to the new solution. 

Some of the client’s inventory processes relied on tabletop RFID scanners which were quite old, and the only artifact left for them was a single configuration program.

Our engineers put their best foot forward in decompiling the program and investigating the code to figure out how to establish clear communication between the new system and existing scanners.

Scalability issues

Most enterprise-grade products are catered to large-scale operations, leaving SMBs with either too complex or not scalable enough systems. Given that, smaller players are often forced to turn to custom solutions development. That’s exactly the challenge Bleichert, the client we’ve already mentioned above, solved for their customers: 

The market is flooded by over-complicated control systems with limited scalability to adapt to small-scale operations. To cover this gap, Bleichert decided to develop an innovative model of their robots that move loads autonomously by following a pre-configured circuit. However, they required a dependable technology partner to develop a user-friendly web application for warehouse staff. After only seven weeks of our collaboration, the client presented an interactive MVP at LogiMAT — the international trade show for intralogistics solutions. 

True scalability doesn’t mean having an abundance of features or a cluttered interface. It empowers companies to adapt their ecosystems seamlessly as their requirements or market needs evolve. However, achieving it without profound tech expertise can be a significant barrier for many organizations.

Regulatory compliance

Automated warehouse systems generate vast amounts of data, including inventory location, movement patterns, and employment information. Depending on jurisdiction, warehouses may be subject to robust data security regulations like GDPR to manage these information flows appropriately. This process is rigorous, as it requires regular audits and expert legal support.

Robotics also pose potential collision hazards with human workers, so proper training and a commitment to safety best practices, such as implementing physical barriers, designated walkways, and clear communication protocols within an automated environment, are essential.

Space constraints

With narrow aisles, low ceilings, and tight spaces in smaller warehouses, traditional forklift systems are too bulky, conveyors with impressive lifting heights are pointless, and large machinery eats up warehouse floor capacity. 

Overcoming the complex interplay of space limitations in warehouse automation demands a tailor-made solution for each unique facility.

Why do warehouse automation projects fail?

Automation sometimes falls short of its potential. The reasons why automation fails to deliver on its promise are diverse, ranging from underinvestment, overlooking the competition, and talent gaps to employee pushback against innovation.

But it all starts with bad planning. Take a consumer goods company, which invested $150 million into building a fully automated warehouse to handle both online orders and brick-and-mortar store deliveries under one roof. However, they totally misjudged their tiny online orders versus wholesale fulfillment ratio. So the place ended up being primarily a storage place for big bulk orders that don’t need sophisticated automation systems for case and part picking.

Interestingly enough, an oversight in sales and operations planning can make the whole automated warehouse ecosystem pointless. 

By studying automation failures of others, we’ve distilled some insights to make sure you’ll avoid the fate of those who slipped. Grab our expert-proven practices to ward off potential pitfalls.

The what and how of warehouse automation: best practices

Calculating ROI based on quick wins only, opting for one-size-fits-alls, and ignoring how your systems work together are things you should ban while planning warehouse automation technology integration. That’s how to build a strategy doomed to success:

Develop a cohesive vision

First things first: think about your warehouse needs in a holistic way. 

Does your niche require smaller, localized distribution centers for faster deliveries or a mega-fulfillment setup? Should you move your warehouse to a closer-to-customer location, or is it already strategically located? What’s the right balance between a one-off process automation endeavor (for instance, automated order picking using pick-to-light systems) and full-scale automation?

Also, before diving headfirst into automation, take a step back and assess your current warehouse processes. If they are overcomplicated and detrimental to overall efficiency, iron out the kinks first and then move to the fancy tech part.

Consider customization: one size is not likely to fit you

Despite the diversity of ready-made automation products, finding the one that fits your budget and completely meets your needs is still an uphill battle. Universal solutions just don’t exist.

The SaaS software our client used to manage inventory was costly and feature-limited, failing to fully cover the company’s operational needs. As their unmet requirements for their inventory management system functionality kept snowballing, the client faced a dilemma, whether to pour money into adding new features to their current system or invest in a custom solution. They decided to involve external expertise to develop a budget-friendly and flexible app tailored to their workflows. Eventually, automation facilitated full transparency and traceability of inventory-related processes.

Tech nuances, vendor comparisons, and battles between ‘owning the technology’ or ‘going for a service model’ should all be viewed through the lens of “what tasks will benefit from automation and how.” Whether you opt for specialized solutions or highly flexible general-purpose hardware-software systems, their functionality must mesh perfectly with your warehouse processes.

Craft a connected ecosystem

Every product tells a story. From the moment it steps into your warehouse to its final departure (or unexpected return), it leaves a trail of data that can be used to improve processes.

That’s why, you need to build a strong data foundation that boils down to three main steps:

• Collecting comprehensive data on inventory, labor, equipment, and operations
• Centralizing data storage in the cloud for accessibility and scalability
• Leveraging advanced analytics to extract timely insights

But to make your warehouse truly smart, data is not enough. You need a powerful platform that will bring together all your warehouse tech — from robots to software. It typically includes the following components:

• Warehouse Management System (WMS): the backbone of warehouse operations, managing inventory, order fulfillment, and labor.
• Warehouse Control System (WCS): orchestrates the movement of materials and equipment within the warehouse, often interfacing directly with automation hardware.
• Warehouse Execution System (WES): acts as a bridge between the WMS and WCS, optimizing workflows and resource allocation.

By implementing these systems and enabling them to work in lockstep, you’ll gain greater visibility and connectivity for warehouse operations, ultimately reducing labor costs as well as saving time.

AI in warehouse automation: next-level consciousness to operations

Hype aside, it’s artificial intelligence that transforms warehouses from static spaces into dynamic, intelligent facilities. When it comes to making most of data, AI literally has a ‘golden touch’, turning every information nugget into a money-saving opportunity, be it bringing down energy bills or predicting equipment failures.

• Energy consumption management: real-time energy meter monitoring and optimization
• Intelligent video analytics: SKU recognition, defect detection, equipment monitoring, and alerts on potential hazards
• Voice picking and tasking: pick-by-voice systems use speech recognition to direct warehouse pickers to the correct picking location
• Robotics route optimization: robots are equipped with decision-making capabilities to plan and adjust routes autonomously
• Demand pattern recognition: advanced algorithms predict future demand, enabling optimization of inventory levels and responsiveness to market changes
• Warehouse simulation and digital twins: discovering how even small adjustments impact operations before making substantive investments

Warehouse automation is no longer a ‘nice-to-have’ but a ‘must-have’

Both B2B and B2C consumers are hungrier than ever for lightning-fast deliveries and endless choices, transforming automation from a ‘nice-to-have’ into a ‘must-have’ for slashing operational costs and streamlining warehouse operations.

Armed with insights into opportunities, challenges, and time-tested best practices, you’re now prepared to make informed decisions regarding your warehouse automation initiatives.

For further guidance on your projects, feel free to reach out to your go-to contact for warehouse automation solutions.