E-Commerce Business to the Next Level Through Warehouse Automation
E-commerce is actively overtaking retail. In 2018, NPR, an independent media organization, carried out a poll that displayed that almost 70% of Americans ordered products online.
More and more customers rely on online shopping. By 2040, it is expected that the volume of online purchases will approach 95%. People find it convenient. They do not have to stand in lines. With just one click, the package is on its way to the destination.
Because online buyers are hugely active, the competition between e-commerce businesses is quickly growing. This is why companies are trying to find effective ways to minimize the time between when the customer makes an order and when they receive it. At this point, warehouse automation can be very helpful.
So, today we are going to discuss the following topics:
- Key challenges in warehouse operations management
- Warehouse automation as one of the best ways to overcome these challenges
- Successful cases of automated warehouses
- Summarized benefits of its implementing into your operations
Key Challenges in Warehouse Operations and Common Ways to Overcome Them
In general, warehouse management is a complicated, multi-layer process consisting of multiple operations, including inventory management, quality control, sales, and distribution, among others.
It is difficult to maintain all these operations and make them flow smoothly to avoid unforeseen issues, such as mistakes in order fulfillment or shipment delays.
Overall, businesses face many challenges in warehouse operations, specifically inventory count inaccuracies, lack of picking optimization, and poor performance visibility. Let’s find ways to overcome these challenges through warehouse automation tools.
Inventory Count and Control Difficulties
Many e-commerce businesses face difficulties with maintaining an accurate inventory count in their warehouses or distribution centers. The process of counting all products may take days or even weeks depending on the warehouse size and the volume of stored products.
If counting is performed physically, it is impossible to avoid inaccuracies. Human errors occur all the time. To minimize the number of these errors, businesses often turn to cycle counting, which means they break counts into smaller and more manageable iterations to reduce the number of errors but not get rid of them at all.
To overcome the challenge of maintaining an accurate inventory count, retailers can implement warehouse automation through a variety of solutions. The two widely used inventory management tools are barcode labeling and radio-frequency identification (RFID).
Barcode labeling is the core of the entire process. All products are marked with a label containing their information, which can be gathered by scanning the barcode.
Information about all labeled products is stored in a warehouse inventory system (WIS). Thus, it becomes difficult to lose goods during, let’s say, order fulfillment because all of them are tracked through the WIS.
Radio-Frequency Identification (RFID)
The RFID technology is similar to barcode labeling, but it provides more benefits:
- While barcode labels are printed on paper and can be used only once, RFID applies reusable tags that are humidity and temperature proof.
- RFID allows you to scan multiple items at the same time from up to 50 feet away, significantly saving you time.
- RFID chips can store more data than barcodes and can also be encrypted.
However, the implementation of RFID technology is more expensive than barcodes, which, in fact, provide similar sets of capabilities.
A solution based on either barcodes or RFID tags can prevent loading the wrong pallets onto trucks by installing sensor controllers at gates. All orders that cross the gate line are scanned and validated. If the one includes the wrong items, the controllers track this and notify the system.
Lack of Picking Optimization
When it comes to picking, a lot of problems may arise.
First, it may take lots of time for a picker to find the right goods in the warehouse to collect the order.
Second, sometimes pickers select the wrong products or quantities and forward them for packing. As a result, customers are dissatisfied because they receive goods they did not ask for.
Third, with the lack of picking prioritization, urgent orders may be neglected while less important ones are being fulfilled first.
Finally, picking routes across the warehouse are not optimized, which causes workers to spend hours searching for necessary goods.
All these problems may lead to labor-intensive picking full of human errors.
To overcome order picking challenges, retailers have implemented warehouse management systems (WMS) into their operations. These systems have many features that can help optimize picking routes and eliminate the problems described above.
Such systems store information about all goods, including their coordinates in the warehouse and expiration dates. When the picklist for an order is formed through this system, it generates optimized routes based on the coordinates and expiration dates. It means that the picker will spend less time walking between pallets and will collect the goods that will expire first.
A WMS can allow you to create picking routes based on different approaches, with batch and wave being the most effective types.
Batch picking means that a worker takes the picklists of several orders and requests the system to build the route that will help pick products that coincide with these orders. It helps avoid repeated walks to the same locations to fulfill similar orders.
Wave picking involves breaking the order picklist into several parts based on the warehouse zones where necessary goods are located. This way, several pickers collect different products for the same order. Such an approach is perfect for orders that include products located at opposite ends of the warehouse.
Watch the video below to learn how Innovecs’ teams can automate the entire order management process, from receiving the order to picking and loading it on the truck.
Poor Performance Visibility
In the warehouse business, labor costs are huge. However, if human resources are used properly, these warehouse costs can be reduced without affecting overall performance.
Monitoring performance is complicated, especially when you have multiple departments. Performance visibility suffers, and it becomes difficult to assess the work of the department as well as the individual warehouse workers.
Without the right tools, you can’t understand what the general workload is and who is responsible for separate operations. Uneven workload distribution leads to lower performance and the inability to achieve key e-commerce business objectives.
To improve performance visibility, a labor-management system (LMS) can be integrated into your WMS. An LMS is a system aimed at controlling human resources operations within a warehouse.
While there are multiple ready-made solutions, software development companies, like Innovecs, can build a custom LMS with a required set of features that will suit your business.
Types of LMS
There are two main types of LMS: reactive and predictive.
- A reactive LMS stores information about already completed tasks and helps generate reports so the management can see the volume of work that has been done for a certain period of time. This is a “post-fact” system that only stores information and creates reports without the possibility to set KPIs and describe steps for achieving them.
- A predictive LMS includes features for estimating the time needed for completing a certain task. Such systems often have a more complicated architecture as compared to reactive ones, and they require more input data from the worker.
For example, to estimate the time needed to fulfill order X, the system requests a worker to provide a picklist with goods quantity and coordinates. Based on the routes built by WMS, a predictive LMS calculates the approximate time needed to fulfill the order.
For one logistics company, Innovecs’ team of engineers developed a custom labor management system as a part of a WMS that allowed for tracking all tasks, controlling time, and generating comprehensive reports. Our system helped significantly increase employee productivity.
Top Global Cases of Successful Warehouse Robotic Process Automation
It is estimated that the warehouse automation market will grow by more than twice in 2025, approaching $27 billion (at CAGR of 11.7%). This can be explained by the fact that global e-commerce and retail businesses, such as Amazon, Walmart, and Alibaba, invest more and more in warehouse automation.
Let’s see how these e-commerce giants automated their warehouses to reduce labor costs and eliminate human errors.
Amazon Warehouse Automation
At the beginning of 2019, the biggest e-commerce company in the world, Amazon, started testing warehouse automation technologies that can make order packaging processes 5 times faster.
The workflow is as follows: workers put goods on the conveying belt and robots scan them and pack them into boxes. This way the machine can process 700 orders per hour.
Reuters states that Amazon now uses such an approach in several warehouses, but they plan to implement this sort of automation in the majority of their locations. According to their calculations, each machine can do the job of 24 people.
Amazon applies the Italian CartonWrap robots and their own SmartPac machines. Although all of them still require human control, they help boost performance and reduce labor costs.
Walmart Warehouse Automation
Walmart is another great example of warehouse automation. In 2016, the company started testing drones to keep track of their warehouse inventories. This way, they could easily find lost goods. While a human could spend a month searching for a product in a warehouse, the drone managed to do it within a day.
Also, Walmart has found a way to automate their order fulfillment process by using the Alphabot robot in its distribution centers. This machine was created by Walmart in partnership with Alert Innovation.
The robot works by first gaining access to Walmart’s inventory system. It’s then permitted to retrieve information about the orders made online. Second, Alphabot reads this information, checks the warehouse layout, finds necessary goods, and delivers them to workers for packaging. Just like Amazon’s robots, these ones also require partial human intervention.
Alibaba Warehouse Automation
It is said that Alibaba is a Chinese Amazon, which is true in part because this e-commerce giant is also turning its warehouse into a smart robotic environment.
In China, the job market is huge, but the cost of labor is constantly growing. This is one of the reasons why many companies have implemented autonomous technologies based on artificial intelligence. In 2017, the number of robots in China exceeded 100,000, which is more than in the USA and Europe combined.
Alibaba is using robots for segregating supplies in one of the warehouses in Huzhou. They are controlled via Wi-Fi, are taught to make 360 degrees turns, and bypass obstacles due to special in-built sensors. Moreover, when their battery runs out, they move to the charging stations without any instructions.
Summarizing the Value of Warehouse Automation
Warehouse automation is a powerful method used to overcome the majority of the challenges you face in warehouse operations.
- First, by implementing an inventory management system into your operations, you improve inventory control, get rid of count inaccuracies, and minimize the number of human errors.
- Second, by implementing a warehouse management system, you reduce costs associated with order fulfillment mistakes and eliminate shipment delays.
- Third, by integrating a labor-management system, you enhance employee productivity and cut labor costs.
If you need to develop a system to automate your warehouse operations, do not hesitate to send us the requirements, and we will think over the best services we can offer.