Inside Logistics

Warehouse growing pains

Retrofit your existing warehouse with automation


October 25, 2018
by Derek Rickard

With the rising popularity of e-commerce, SKU proliferation and customer preferences for more variety, many warehouses are operating at full capacity. Given these new market demands, most traditional, manual warehouses are struggling to keep up. They are often hindered by inefficient processes, outdated equipment and a lack of available storage space. When companies reach this boiling point, where their existing warehouse can longer support growing inventory levels and order volumes, most think the logical solution is to uproot their operations to a new, larger building.

In fact, a recent study found that the average new warehouse constructed in the United States between 2012 and 2017 had more than doubled in size from those built between 2002 and 2007 – an increase of 108,665 square feet and 3.7 feet in height. But new construction can be both costly and time-consuming, requiring resources that many companies lack. And, for those looking to go the rental route, vacancies are limited, and rental prices are higher than ever.

Instead of a drastic location move, companies can retrofit their current facilities with automated solutions. Though automation is often viewed as technology reserved for new, modern construction projects, robotic material handling hardware and automation software can be used to optimize efficiency and better utilize available resources even in older facilities.

By retrofitting an existing facility, warehouses can realize the following benefits:

1. Optimized material flow

Order fulfillment speed and accuracy are more important than ever for companies to stay competitive. Manual facilities can implement flexible, automated solutions to optimize the flow of goods for both small, direct-to-consumer orders or large shipments for retailers. Warehouses can thereby get more orders out the door and to customers, faster and with complete accuracy.

For example, warehouses that store products in totes or bins can benefit from a goods-to-man picking solution. These systems use an automated storage and retrieval system (AS/RS), gantry robots, a shuttle device and a high-speed conveyor system to transport goods to order picking stations.

When a SKU is required for an order, the nearest corresponding tote is retrieved and automatically transferred to a staff member at an ergonomic picking station. This system enables rapid handling and faster fulfillment, and can be up to six times more efficient than manual picking alone.

Able to achieve higher accuracy with shorter lead times, facilities can increase throughput for greater profitability. And with more efficient operations, companies can eliminate redundant processes for greater time and cost savings.

2. Better space utilization for SKU variations

Many older warehouses were designed with lower SKU quantities in mind, resulting in less square footage and lower ceiling heights than facilities built today. These smaller footprints leave limited room for the bulky racks, shelving and storage systems needed for manual operations, leaving companies feeling strained in their existing space.

As SKU variations and inventory volumes grow – particularly during peak seasons – manual warehouses struggle to find adequate storage space for the influx of products. They need an efficient solution for storage and retrieval that makes both fast- and slow-moving items easily accessible, without taking up limited square footage or impeding the movement of staff and equipment around the facility.

An AS/RS can create high-density storage areas to optimize space utilization, even in buildings with a small footprint and low ceiling height. For example, a floor-based storage system in which goods are stacked on the warehouse floor and retrieved from overhead can replace massive conveyor sequencers and shelving, using up to 50 percent less space than traditional methods. This layout ensures that all fast-moving products can quickly be picked, and that slow-moving products are easily accessible when needed.
Warehouses can further optimize storage space by integrating these systems with a Warehouse Control System (WCS) to handle inventory management and replenishment. The system will maintain optimized inventory levels, ensuring that the right SKU is always available for rapid order fulfillment without the associated costs of carrying overstock.

3. Reduced labour requirements

Across almost every industry, warehouses are experiencing labour shortages as older, seasoned workers begin to retire. The younger generation is less attracted to labour-intensive jobs like warehousing and distribution, creating high competition among companies for skilled workers – particularly in highly concentrated, industrial areas. Lacking enough staff to keep up with orders, manual facilities easily fall behind, and existing staff are stretched too thin. As a result, some businesses consider moving their operations to areas with a larger labour pool.

Instead of relocating and opting for new construction, companies can retrofit their facilities with automated solutions to not only fill the gaps left by insufficient staff, but also cut labour costs and keep operations running 24/7. These solutions also free up existing workers from transporting and picking the majority of products in the warehouse, allowing them to take on more sophisticated positions, such as supervising order fulfillment and overseeing products that require special handling.

4. Rapid return on investment

Derek Rickard is distribution systems sales manager for Cimcorp.

Despite the high capital investments and long timelines of a new construction project, many companies are still hesitant when it comes to taking on a retrofit. While they often perceive automation as a massive, expensive project, it does not have to be an all-or-nothing implementation.

A modular, scalable system can be installed through a phased approach so that warehouses can gradually expand their automation over time. These systems then operate as “islands” of automation within a manual facility, and can then be scaled with business growth. And while moving to a new facility often causes a decline in productivity, a turnkey, modular robotic system can be installed without disrupting operations. This approach keeps costs down and helps businesses generate a faster return on investment.

For companies outgrowing their existing manual facilities, automation technology can be used to overcome the challenges caused by space constraints, inefficient processes and outdated equipment. Equipped with the right solutions, warehouses can optimize efficiency and make the most of existing resources to meet changing market demands and accommodate future growth.