Contact Us

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How Warehouse Automation Reduces Costs: 5 Things You Need To Know

Ian Smith

Lowering warehouse operating costs has become an ever-increasing priority, given that prices are increasing in tandem with the ever-evolving economic climate and customer expectations. Warehouse costs, in this regard, take into account more than just the required physical space—there is a lot more associated with warehouse costs than just paying rent. There are additional contributing factors such as worker compensation, the potential cost associated with a downturn in productivity, picking accuracy, and returns processing (reverse logistics).

This article highlights how warehouse automation can reduce costs and the five things you will have to know.

Taking the time to invest in automated storage and retrieval systems (ASRS) like carousels, vertical lift modules, and vertical buffer modules help optimize the manual picking process, resulting in lower warehouse costs and increasing profits. This is because when automation is implemented, numerous parts of a distribution or manufacturing facility are bound to benefit from savings in things such as floor space, inventory accessibility, time, improved accuracy, and ergonomics.


Warehouse automation can lower picking costs

When a warehouse implements an automated storage and picking solution, batch picking can be facilitated. This process helps to group orders that have a common theme or item together. If multiples of the same inventory are ordered, they can be picked together before being sorted into their respective orders. What this means is that it is possible to fill multiple orders at once.

Given that VLMs, VBMs, vertical and horizontal carousels work together in hand with inventory management, batch picks can be seamlessly completed in one cycle of rotation of the picking unit. Batch picking, in conjunction with an automated system, helps eliminate bottlenecks that are typically associated with having to wait for the last item required to either finish an order or complete a manufacturing process.

Additionally, it can be utilized to prioritize orders either by inventory availability or by importance. Doing this enables the cut-off times for customer orders to be extended, which has the benefit of raising customer satisfaction while increasing competitiveness. When it comes to logistics and customer orders, in particular, time is money. This is why automation is necessary, as it helps reduce the likelihood of unforeseen inventory shortages.


Warehouse automation can help reduce the cost of floor space 

Automating a facility's storage equipment can open up floor space as you can utilize the building's height by storing inventory overhead. This helps eliminate the amount of space needed by static pallet and shelving racks and the aisles that provide them access. Additionally, automated systems offer the opportunity to use tightly configured dividers, totes, specialized holders, and drawers. All of these components separate and arrange the peak number of possible items to be stored within the system.


Warehouse automation can help reduce picking error-related costs

Costs associated with picking errors are not just the item's cost but also the related expense of shipping that incorrect item back, processing it once received, placing it back in the inventory, and losing a customer's satisfaction. Additionally, costs in lost time to correct the error by picking, packaging, and shipping the right item are also included. Given that about 30% of facilities suffer from a minimum of 1% mis-pick rates, they can quickly add up and affect the bottom line when these errors happen frequently.

Automated storage systems typically come with real-time inventory tracking and advanced picking technologies to accurately highlight the precise Stock Keeping Unit (SKU) location and the specific quantity required. This can help increase picking accuracy to 99.9%. Automated systems mitigate errors caused by humans, thereby improving inventory control. This not only contributes to a drastic drop in picking errors, but it also results in significant cost savings. Furthermore, this is likely to improve customer satisfaction, which will, in turn, lead to a rise in repeat customers and purchases, which can positively affect the balance sheet.


Warehouse automation can reduce labor costs

When a VLM or VBM is implemented, warehouse fulfillment staff can work smarter. This is because these solutions offer the stored items right to an operator. This method of bringing goods to an operator eliminates the time spent going from one pick spot to another.

An automated solution, as such, comes equipped with indicator lights that highlight the location of an item as well as the required pick quantity. This reduces the amount of time spent searching for that particular SKU or stock keeping unit.

Additionally, given that such an automated solution collaborates with order management and inventory management, especially with drones, the picks can be sequenced to carefully optimize the drone's movement to select the required items. This means that the items are selected in a single cycle or rotation of the drone's storage trays or bin, further optimizing pick time.

These functions can seamlessly optimize an existing labor force, causing productivity to increase by 400% over manual picking models. With an automated inventory solution, a single worker can handle numerous operators' picking duties, with 2/3s of the workforce being reassigned to other tasks without affecting productivity.


Warehouse automation can help reduce costs associated with workplace absences and injuries 

Compared to manual processes, which require staff to go from one item location to another or climb shelves to get an item, an automated storage system presents sorted items known as the golden zone. This is a proper ergonomic work height. Doing so creates a safe working environment and minimizes injuries caused by reaching, stretching, and bending. Furthermore, climbing and walking will become superfluous. This not only helps to reduce fatigue, but it also reduces the chance of a work-related injury. This, in turn, causes worker's compensation claims, insurance premiums, and absenteeism to reduce.