Answer these Questions to Determine When Warehouse Fulfillment Automation Makes Sense

Contributed by Amware Fulfillment, a Gold SUBTA Resource Partner

Other than inventory, labor is your biggest warehouse expense. So it makes sense to constantly look for ways to reduce those labor costs through automation.  However, automated solutions aren’t always the smart answer.  It will depend on your situation.  Answers to the following six questions may help you determine if and when automation makes sense for your fulfillment warehouse.

Do your current sales patterns reflect a real trend or are they a flash in the pan?

When orders spike due to a special promotion or black swan event, make sure the increased demand is sustainable before you sink a lot of capital into fulfillment automation.

Would adding more people be counterproductive?

Adding manpower in the warehouse is perhaps the simplest and cheapest way to address increasing order volumes.  But if your DC and pick lines are already so packed that receivers, pickers, and packers are getting in each other’s way, the time could be right to balance things out with more technology or mechanization.

What will be the payback timeframe?

For warehouse automation, Etailers should probably view major purchases as three-year solutions, because that’s how long it generally takes for processes and technologies to advance so significantly that another change will probably be merited.  That said, it’s also important not to be penny wise and dollar foolish.  If automating a process promises to pay for itself in a matter of months, skip the committee meetings and just hit the buy button.

Have you considered ALL the costs?

As you calculate your ROI, make sure you factor in the cost to install and implement your new piece of equipment, including integrating it with your existing WMS or other systems and getting the personnel who will operate it up to speed.  This all-inclusive approach may change your ROI calculation.

Are you challenged finding – and keeping – good people?

With the unemployment rate at historic lows, it’s hard to find qualified labor in certain markets.  In contrast, there’s anything BUT a warehouse automation shortage.  If your fulfillment center is located in a tight labor market or has experienced high turnover, investing to automate manual processes may make more strategic sense for you than it might for someone else.

Can you take a modular approach?

Automating fulfillment operations is not an all-or-nothing proposition.  The best strategy may be a modular approach, where you add technology gradually as your business expands. While your products are gaining traction, that may mean a predominantly manual picking supported by a Warehouse Management System (WMS). As order volumes increase, it may make sense to incorporate other basic forms of automation like box erectors, auto tape machines, or poly-bagging with print-on-bag technology.  Finally, as your business matures and requires high-volume, high-velocity picking and shipping, a move to automated/smart conveyors and advanced options like voice picking may make sense. A modular approach allows your company to deploy systems and automation when (and only when) your volume dictates.   As a result, your costs parallel your revenue stream.  You spend available capital when you need to based on sales trends and forecasts.