After several decades in the warehouse operations sector, I now work with warehouse businesses as customers and spend 90% of my time listening to their challenges. I’ve talked with more than 30 different warehouse businesses in the past year and their most pressing challenge is the need to develop smarter strategies around optimization and automation. The other critical need for many operators is achieving a return on investment (ROI) of 24 months or less.
To that essential end, many warehouse operations can be significantly improved with upgrades to barcode scanning and better data collection. Despite rapid technological advances, warehouse operations have not yet widely embraced automation and optimization technologies.
I’ve seen warehouse firms with billions in revenues that are still picking with paper records. Many businesses have yet to implement automation deep enough to offset potential labor shortfalls, economic uncertainty or shocks to global supply chains.
Of course cutting-edge technologies like AI, IoT and robotics will drive the future of warehouse optimization and automation over time. Zebra’s Warehouse Vision study shows 63% of warehouse leaders intend to deploy AI software and 64% plan to ramp up spending for modernizing warehouse operations over the next five years.
The warehouse sector must also contend with changing market dynamics, from the continuing growth of e-commerce and online shopping to retail businesses carrying less inventory on shelves and relying on faster, more agile order refills and online fulfillment. Manufacturers also need more adaptive warehousing capabilities to respond with greater agility to fluctuating demand and customer preferences.
In 2020, there were 150,000 warehouses around the world with 25 billion square feet of space. By the end of 2025, that number will increase to 180,000. Half of that capacity resides in China, the United States, Japan, India and Germany. The gaps and differences between small, medium and large warehouses are also likely to increase.
Meanwhile, for warehouse executives wrestling with strategic planning, it is easy to mistake technology implementation for intelligent planning. The right strategy for improving operations with a speedy ROI starts with some fundamental determinations. First, what immediate operational changes would have the largest and fastest benefit – and how should they be prioritized? Moreover, what choices are the best match for the challenges unique to your business?
This customized approach is the cornerstone of most successful plans. The kind of rapid ROI desired can often be achieved by developing a modular, phased or scalable project plan that can be measured as it is deployed and adjusted on the fly.
In my experience, the real key to optimization is finding the right partner for everything from warehouse management system (WMS) software to all the capabilities that can be integrated with it.
The other critical need most warehouse operations have is for better data: more effective ways to capture it, store it, analyze it and extract value from it. Like the supply chains, shipping and logistic systems they are interconnected with, warehouses live in a world where physical and digital assets are entwined. But they are not always managed for maximum benefit to the business.
Not every warehouse leader needs to or should pursue all the latest new technology such as augmented reality or pick-to-light and voice-directed picking systems. Again, choosing the right partner to help navigate automation choices is important along with considering the growing need for people and robotic systems to productively work together.
To this last point, I see workforce attitudes toward innovation significantly changing. One of the biggest shifts in the last several years is that workers are increasingly embracing innovations that help them be more productive, as well as boost safety and morale.
According to Zebra’s latest Warehouse Vision Study, 93% of associates agree the increased availability of automation and mobile technologies would help attract and retain more warehouse associates and 89% said they feel more valued by their employers when provided with technology tools and automation designed to help them.
All of us live with technologies that improve our personal lives, so it is natural that we will both want and expect to leverage technology in the workplace that does the same.
Your optimization plan should also aim to balance innovation with practicality while aligning with customers’ needs and interests. Too often, strategic planning for warehouse operations is considered an internal business function or process. But as supply chains become more deeply integrated, complex and data-driven, warehouses are becoming more integral to that flow of information, goods and capital. All these economic partners expect connectivity to deliver greater accuracy for inventory control, delivery speed and overall responsiveness.
ROI is invariably driven by managing cost, improving efficiencies and finding ways to refine processes. In warehouse operations, those opportunities can span a wide range of categories. In core WMS, that functionality can include inventory control and visibility, labor management and task optimization, order processing and fulfillment and fuller integration with broader enterprise systems.
On the data capture front, warehouse firms that have not yet developed an automation plan will need to create a roadmap to new capabilities such as:
- Computer vision systems that can verify items and enhance quality assurance.
- Sensors that can monitor environmental conditions, energy usage and support waste reduction.
- Real-TIme Location Systems (RTLS) that enable equipment and people and other assets to be tracked throughout a facility.
With so many choices and options, the key principle to remember is to start simple. The automation and optimization challenge is a marathon, and many companies need to run their first 5K. Assess and implement a direction that offers the biggest bang and the fastest, most measurable return. Learn and build on a pilot project.
Making that first determination is the initial due diligence and most important exploratory investment you can make. The beachhead you find will likely vary depending on your particular business, industry and customer base. But it will greatly inform the deeper work to develop a roadmap that will be your guide.
Don’t forget to bring your customers into the conversation and along for the ride. Warehouse leaders that develop key performance indicators (KPIs) as internal metrics forget that in the final analysis, real success will not be judged by how you are doing within your own walls, but by how good your customers think you are doing.
Wes Coleman, Industry Principal, Warehouse, Zebra TechnologiesZebra Technologies
