As businesses continue to navigate the complexities of modern supply chains, the need for efficient warehousing solutions has never been more acute.
According to the latest research by real estate advisor Colliers, total prime warehousing rents surged by 8% last year. This has made things even tougher for companies trying to preserve their profit margins. In this context, it’s understandable why many businesses are hesitant to increase warehousing costs through automation.
Business leaders often consider the initial capital required for such upgrades as too substantial to warrant the investment, particularly when profit margins are already under pressure. This sentiment is especially prevalent among small and medium-sized enterprises (SMEs).
The perception is often that warehouse automation is a luxury that only large enterprises can afford and that it’s too costly and complex to be worthwhile. In reality, there is no size requirement for automation technology – warehouse automation can yield a rapid return on investment for businesses of all sizes. This is especially relevant in the current climate, where labour is not only scarce but also becoming more expensive, and automation technologies are more accessible than ever.
The importance of reducing warehouse costs
Controlling warehouse costs is vital for maintaining profitability, regardless of a business's size or the industry in which it operates. This becomes increasingly challenging in regions where rental costs are considerable. In the UK, for example, warehouse costs typically span £5 to £9 per square metre but can escalate to nearly four times that amount in prime locations such as London.
Implementing automation in warehouse operations is a strategic move that can mitigate these high costs, allowing a business to provide more competitive pricing while boosting efficiency and productivity.
The following are three practical strategies through which warehouse automation can decrease operational costs.
Maximise existing space
Automated systems significantly outperform manual racking and shelving in maximising warehouse space. This advantage is particularly crucial for small-scale enterprises with limited expansion options and organisations managing micro-fulfilment centres.
A prime example is an automated storage and retrieval system (ASRS) like AutoStore, which employs a sophisticated high-density grid configuration. In this setup, storage bins are vertically stacked, and advanced robotic units traverse the grid's surface to retrieve or store items.
Simplify labour-intensive processes
Implementing an ASRS yields a substantial reduction in labour costs. It streamlines critical processes like pick and pack operations. Rather than reducing staff numbers, warehouse managers can reallocate employees to perform more value-added tasks, thereby boosting operational efficiency.
This shift allow staff to focus on more complex tasks, making the best use of their skills, while automated systems handle the routine, labour-intensive processes with precision and speed
Boost inventory management
Integrating an ASRS with a Warehouse Management System (WMS) or other intelligent software platforms unlocks essential inventory and operational insights. Such an integration offers greater control over product inventory and forecasting.
Furthermore, minimising manual picking processes increases order accuracy, boosting customer satisfaction. It simultaneously reduces expenses related to returns and reverse logistics.
A strategic investment for future growth
While the upfront costs of automation can appear formidable, the potential for a significant return on investment is immense, with many organisations recovering their initial outlay within just one to two years. Reductions in operational and labour expenses are instant quick wins. Additionally, the capability to operate continuously, 24/7, without breaks, together with improved accuracy, substantially increases the value of the investment.
It’s important to highlight that automation technologies are evolving to be more flexible and scalable, allowing systems to be tailored and expanded as the business grows. In a world where costs are always rising, companies must innovate to stay competitive. Warehouse automation not only addresses current operational challenges but also strategically positions businesses for sustained future growth.
Moreover, the growing trend of automation-as-a-service (AaaS) or robotics-as-a-service (RaaS) provides an additional layer of financial flexibility. These models allow businesses to test the impact of warehouse automation without committing to purchasing a full system outright. By subscribing to AaaS or RaaS, companies can leverage cutting-edge automation technologies on a pay-as-you-go basis, minimising risks and enabling scalability as needed. This approach makes automation more accessible and provides businesses with the ability to adapt quickly to market demands, ensuring a smoother transition and more financially manageable deployment.