Building smarter warehouses

The technologies used in today’s modern warehouses have come a long way, from automation and inventory management to robotics, data analysis and artificial intelligence (AI). However, navigating the myriad of available options can be daunting for both small businesses and large corporations.

Omer Rashid, vice-president of operations development, automation, innovation and analytics for DHL, explains that when considering warehouse technology, businesses must focus on three main categories: systems, physical automation and data and analytical tools.

One system DHL uses is advanced shipping notices (ASNs), which streamline, track, plan and manage inventory before products even arrive at the warehouse.

“The ASNs give us visibility, which helps streamline delivery, driver check-ins and move products to the optimal dock,” says Rashid. “Once in the warehouse, the most common technology is a warehouse management system (WMS).”

WMS serves as the system of record for all inventory in the warehouse, helping manage receiving, replenishment, scanning technologies and several other facets of warehouse operations.

“Technology tracks a product through every step of material handling,” Rashid says. “With WMS, we maintain visibility and drive efficient storage, slotting, replenishment and shipping activities.”

Adding automation to a solution further enhances productivity by integrating with the WMS, Rashid adds.

“The most common way we improve inventory management is through automated cycle counting,” he says. “This brings inventory out of storage, eliminates unnecessary walking and improves accuracy by making it easier to count.”

Physical automation and robotics

Physical automation, including mechanical solutions and robotics, supports materials management, such as offloading cases or pallets from inbound trailers, all integrated with the WMS.

“This technology can enhance or mechanize most processes in the warehouse,” Rashid says.

Automated systems such as AI-driven robotics and radio frequency identification (RFID) tagging are also transforming inventory control. Robert Khachatryan, founder and CEO of Freight Right Global Logistics, notes that these technologies are boosting accuracy while reducing manual labour.

“RFID technology for inventory management has shown improvements in accuracy by up to 13 per cent, compared to conventional tracking methods and manual assessments in some cases,” says Khachatryan. “This is especially beneficial in the retail sector, where maintaining precise inventory levels is a persistent challenge.”

Harnessing data for efficiency

Another advantage of modern technology is the ability to collect and analyze data, which, when implemented properly, can improve warehouse efficiency.

“You can harness data in real time to support warehouse management on the shop floor,” says Rashid. “We use AI to optimize inventory management. For example, automating data gathering and visualization on an inventory dashboard allows managers to make real-time decisions.”

The role of AI in warehousing

AI may seem broad and intimidating, but it’s proving to be a valuable tool across various areas of warehouse operations. At DHL, AI is particularly useful in robotics and the data generated by the company’s systems.

“We’re developing tools to learn from that data to assist with warehousing applications,” says Rashid. “This includes inventory management, optimizing product placement in the warehouse, task assignments and picking sequences.”

The industry is also exploring the potential of generative AI (GenAI) for future applications.

“For GenAI to be effective, especially in machine learning use cases, we need data from every process so the AI can learn and help automate decision-making,” Rashid says.

Khachatryan adds that businesses adopting automated inventory systems have seen improvements in efficiency and lower operational costs. For instance, incorporating AI for demand forecasting has led to a 25 per cent decrease in surplus inventory.

In Canada, automated warehouse management systems (AWMS) are primarily used in e-commerce and retail.

“The e-commerce sector leads the market due to increasing online retail activity and the demand for efficient order fulfillment,” Khachatryan says. “Retail also plays a key role, with AWMS improving inventory management and delivery efficiency in both physical stores and omnichannel operations.”

Building resilience with AI

AI is also helping to mitigate global disruptions, such as weather events or other risks, by creating business models that allow for quick responses.

“We have a tool that can assess the risk of shipping as planned or offer alternative routes,” Rashid says. “This is crucial for maintaining resiliency.”

Looking ahead

Rashid sees AI continuing to enhance supply chain resiliency by improving production strategies, inventory positioning and cost-effective solutions.

“I expect continued investment in robotic technology,” he says. “Robotic solutions are becoming more advanced, and AI capabilities are further enhancing them.”

Khachatryan agrees, saying that AI will become more predictive, improving the accuracy of inventory forecasts.

“McKinsey estimates that AI-powered predictive analytics can reduce forecasting inaccuracies by 20 to 50 per cent, and cut inventories by 20 to 30 per cent,” he says.