F. Curtis Barry & Company Blog

Most distribution center operations have seen significant increases in warehouse labor costs, as well as all time high lease costs for a new facility. These factors have driven more companies to consider warehouse automation to remain in the current facility longer and reduce the labor costs. These two cost components can radically increase your cost per order. However, this does not mean that companies should simply employ automation without achieving a cost-effective warehouse automation ROI.

One of the first aspects in determining the warehouse automation ROI is to ensure that the automated solutions being considered are realistic for your business. Many companies begin their process with some “YouTube shopping”, becoming enamored with a certain automation system. That skips over any detail consideration of current process, systems and costs.

With the ongoing labor constraints and companies continually seeking various ways to implement automation to reduce their demand for labor, warehouse automation and technology has become more prevalent. 

One of the first areas that companies typically automate is their shipping department.  Shipping automation eliminates manual functions beginning in packing, all the way until packages are sorted down to the correct outbound lane, pallet, or truck. 

Shipping automation is also one of the first areas to be looked at since it can be justified from a cost standpoint by a wide range of companies – even those shipping as few as 1,500 to 2,000 shipments per day. 

As you consider evaluating and deploying automation and robotics to your warehousing and distribution processes, there are five factors you must consider to be able to implement it in an efficient and cost-effective manner.  This article identifies the analyses that should be done, before making decisions on deploying automation. 

To say 2020 was a curveball most businesses would be a gross understatement. While Americans suffered and many small businesses closed permanently, multichannel businesses as a whole saw significantly higher volumes, largely from direct-to-customer orders. The difficulty was in trying to keep workers safe and have enough labor to ship customer orders without falling more than a few days behind. For some clients, the goal was to merely not fall more than 10-14 days behind.

Prior to COVID-19, companies were struggling to hire enough skilled workers to meet customer demands.  Now businesses are needing to fundamentally change to continue operating and stay in business, but now labor has become a different type of constraint.  This new constraint comes in the form of business struggling to be able to find enough labor to come in and fulfill order demand, while at the same time providing health checks throughout the day and limiting employee interactions.

Once viewed as a cost center and a necessary evil, warehousing and fulfillment are now being seen as a potential competitive advantage. The enhanced overall view of the supply chain is placing increased emphasis on the importance on the warehouse and operations.

A well thought out material handling solutions plan can improve the bottom line of many businesses, but a poorly thought out or implemented project can put the entire business at risk. We see many cases where warehouses are misapplying the available technology to their specific problems or issues.

Consideration has to be given to the reason for considering the technology or material handling solutions to determine what desired results or objectives are needed. This information will help determine if the proposed solution is appropriate and will deliver the results needed.

Most small to moderate operations have what we call conventional warehouse operations. They have applied limited material handling solutions and rely heavily on manual processes and manual labor to get product in and through the center and the customer orders out the door. So, it’s not uncommon for the owner or senior management to seek out how automation can be employed in their distribution center to improve efficiency, cut labor costs and reduce errors.  But there isn’t a silver bullet.  There isn’t a one size fits all solution to improving your distribution center with automation. Material handling solutions are a means to the end. Because of the capital expense you have to find the practical application that has a return on investment (ROI).

This article discusses a successful methodology for identifying where automation can be practically applied.  Then, we give examples of how other multichannel companies we have worked with in our operations & fulfillment consulting practice gained an ROI through automation.