Smart Warehouse: Best Techniques, Practices for your Operations

For much of the last number of years, the Retail industry has found itself pressured by labor shortages for operators filling e-commerce, omni-channel, and store orders. This shortage has been driven by a convergence of different factors, including a tight national labor market, a low unemployment rate, and an aging workforce with many senior warehouse workers retiring.

The industry saw another shock in the COVID-19 pandemic, which at first shut down international supply chains, and then hastened the migration of consumer shopping habits from brick-and-mortar shopping to e-commerce.

We are still dealing with the challenges and repercussions of these changes today. In order to attract qualified workers, many warehouse operations managers have been forced to offer much higher wages than was required just a few years ago.

According to some studies, an estimated 72% of businesses in the industry have stated that pay increases are their top tactic for recruiting and retaining workers. These higher wages have put pressure on the bottom line of many businesses, reducing profitability and causing many to wonder how they can turn the tide and transform their warehouses from cost centers to profit centers.

If you’re looking to reduce labor costs associated with fulfilling orders, the good news is that there are a number of paths that you can take to improve the cost efficiency of your facilities. Implementing a smart warehouse strategy is one potentially powerful option that you should consider—especially if it has been a number of years since your last warehouse review and upgrade.

Here we define what a smart warehouse is and explore what, exactly, makes it “smart.” We also take a look at the different types of automation you can leverage in your transition to a smart warehouse, and provide recommendations for getting from where you are today to where you want to be.

What is a smart warehouse?

When many people think of a smart warehouse, they imagine a facility in which virtually every action is automated by technology and software. But while automation does play an important role in building a smart warehouse system, full automation is not a requirement.

Designing a smart warehouse simply means you are leveraging the amount of automation that makes the most sense for your business—whether that is full or partial automation. Even a warehouse where tasks are completed 100% manually can be considered smart, so long as the workers are supported by the right kinds of technologies (warehouse software, pick/put-to-light, autonomous mobile robots [AMRs], etc.).

How much automation your business needs will depend on a number of factors. The most important considerations include:

• Industry you operate in
• Characteristics (size, weight, shape, etc.) of your orders
• Size and footprint of your facility
• Amount of unused vertical space in your facility
• Order volume (both average and peak)
• Required return on investment (ROI)
• Labor requirements and availability
• Largest pain points
• Biggest opportunities

With this in mind, a smart warehouse, distribution center, or order fulfillment operation is simply a facility that leverages the proper level of automation and technology necessary to reach its business objectives in the most efficient, competitive, and profitable way.

5 Ways to Use Robots to Improve Warehouse Efficiency

With the many ways that automation improves warehouse efficiency, it’s clear that any warehouse manager should invest in this groundbreaking technology. Like any investment, however, the use of automation needs to be approached carefully. To make sure your systems are maximizing warehouse efficiency, consider these five methods.

Designing a smart warehouse simply means you are leveraging the amount of automation that makes the most sense for your business—whether that is full or partial automation. Even a warehouse where tasks are completed fully manually can be considered smart, so long as the workers are supported by the right kinds of technologies (pick/put-to-light, augmented vision, etc.).

How much automation your business needs will depend on a number of factors. The most important considerations include:

• Industry you operate within
• Characteristics (size, weight, shape, etc.) of your orders
• Size and footprint of your facility
• Amount of unused vertical space in your facility
• Order volume (both average and peak)
• Required return on investment (ROI)
• Labor requirements
• Biggest pain points
• Biggest opportunities

With this in mind, a smart warehouse, distribution center, or order fulfillment operation is simply a facility that leverages the proper level of automation and technology necessary to reach its business objectives in the most efficient, competitive, and profitable way.

What makes a smart warehouse “smart”?

It’s important to note that there is no one factor or requirement that makes a smart warehouse “smart.” Myriad technologies—from hardware to software—can all be utilized in the design of a smart warehouse.

Instead of thinking of a smart warehouse as being one that implements certain technologies, consider it a facility in which every step of the order fulfillment process has been carefully considered and optimized—with the aid of various technologies.

Technology Considerations for a Smart Warehouse

The processes you choose to automate your warehouse will depend on the factors discussed above. That being said, there are a few key processes where it often makes sense to leverage technology: Transportation, storage, picking, and software.

1. Software

Depending on the complexity of your operations, your throughput requirements, and the types of automation technology you ultimately leverage, it’s important to consider the capabilities and limitations of the software that powers your facility. Perhaps most importantly, you should ask yourself: Do your various softwares (ERP, WMS, WES/WCS, Controls) communicate effectively?

If not, all the automation in the world may not be able to fix your problems. When systems and departments can’t communicate with one another, it creates “islands of automation” within your facility—which can cause even more headaches, logjams, and inefficiencies.

You can’t solve a software problem with hardware. With this in mind, before you get too excited about any particular hardware, it’s critical that you ensure you have the right software in place.

2. Transportation

How you transport inventory, orders, and materials within your facility can have a big impact on your labor requirements. Automating some, or all, of this transportation can empower you to redeploy labor to tasks which provide much more value to your business.

When it comes to automating transportation within your facility, there are a number of potential options you might consider, including:

• Conveyors
• Carts
• Robotic forklifts
• Autonomous mobile vehicles (AMRs)
• Automated guided vehicles (AGVs)
• Sortation systems
• Automated storage and retrieval systems (AS/RS)
• And more

Which technology is right for your operation will depend on a number of factors, including the physical characteristics of your inventory and warehouse, your throughput requirements, and your labor requirements.

3. Storage

Once you have established your preferred mode of transportation within the facility, it’s important to review your storage solutions. Are they compatible with your transportation options? Even if they are, do opportunities exist to optimize your storage solutions?

Questions to ask include:

• How much floor space is available in your facility to dedicate to storage?
• How much vertical space is currently going unused in your facility?
• Do you have plans for expansion that need to be taken under consideration?

Depending on the answers to these questions, you may decide that you only need boring old racks for storage. But you may also realize that a shuttle system would work better, or that a high bay VNA (very narrow aisle) would be ideal. It’s impossible to know without first conducting the analysis.

4. Picking

Picking, like transportation, can be an incredibly labor intensive process. By some estimates, manually picking orders can account for more than 50% of the time associated with order fulfillment. With this in mind, automating pieces of the picking process, or otherwise supporting pickers with technology, can significantly improve the labor efficiency of your business.

Some technologies that can potentially improve your picking systems include:

• Pick-to-light (PTL)
• Pick-to-Voice (PTV)
• Radio frequency picking (RF picking)
• Augmented vision
• Robotic picking
• Put-to-light
• Putwalls
• Carousels (vertical, horizontal)
• Vertical lift modules (VLMs)
• Goods-to-Person

As with the other processes discussed above, the technologies that’ll make sense for your operation will depend on your warehouse layout, labor requirements, velocity levels, and other factors.

Implementing a Smart Warehouse Strategy for Your Operation

There’s no one-size-fits-all approach to designing a smart warehouse that will work for all businesses. That’s why we leverage our RightFIT methodology to design and implement the strategy that makes sense for your unique needs.

Conveyco’s RightFIT methodology helps create an aligned and holistic vision for the best solution for your operations. For implementing smart warehouse solutions, Conveyco’s RightFIT provides a step-by-step approach to ensure project success. This includes:

1. Data Analysis: Data doesn’t lie. We start with a deep dive into the numbers to understand exactly what is going on within your operation from an objective and technology-agnostic point of view.
2. Design objectives: Once the data has been collected and analyzed, we review your organization’s strategic goals. Where are you today, and where do you want to be 1 year, 5 years, and 10 years down the road? To answer this question, we identify the most important KPIs for your business, which will ultimately be used to design a data-driven system for your operation.
3. Alternative Analysis: Next, we begin to evaluate the technologies, processes, and configurations that may address your business challenges. Our goal is to determine the processes and zones within your operation with the greatest potential for optimization.
4. Business case: With data, objectives, and alternate analysis in place, we take a look through the lens of the business case to determine what generates the financial decision. What will the return on investment be? Ultimately, this is what justifies what level of automation is required and helps in creating a smart warehouse—the return on investment that makes sense for your business.
5. Set a Clear Path to Success: With the business case in mind, a path is created with a holistic vision that aligns the scope of work and operational resources required for a successful execution.
6. Execution Roadmap: Before executing on the plan, we develop a comprehensive roadmap outlining the timing and sequencing of key steps. The execution roadmap allows Conveyco to understand what needs to be done and when it needs to be done to ensure success.
7. Lifecycle Nexus: The final stage in the RightFIT methodology involves the lifecycle nexus, where Conveyco helps to ensure the day one performance of the system aligns with the 90-day performance, one-year performance, etc. This is where Conveyco provides insight into how the system continues to perform as an organization’s operation changes.

There’s no limit to how “smart” you can ultimately make your warehouse. The only limit involves the practicality from a business and operational perspective. Understanding these limits is critical to establishing a smart warehouse strategy that is right for your unique situation.

With the RightFIT methodology, the most effective smart warehouse solutions can be implemented for your operations.

Interested in learning more? Schedule a free consultation with one of our solutions experts to learn more about applying smart warehousing solutions using the RightFIT methodology.