We’ve been writing a lot about warehouse automation lately on our blog, and it’s easy to see why. Automation is modernizing faster than ever before, with robots that can open doors and automatic sorters becoming common place in larger warehouses. Companies like Amazon use small robots to help speed up the picking process, and soon enough, humanoid robots may even become a thing.
Ready for Warehouse Automation?
But how do you know if your warehouse ready for automation, or if the investment is worth the money? Here are a few key metrics to look at:
Data is incredibly important when deciding whether or not your warehouse is ready for automation, and whether you’ll make more bang for your buck. The best way to fetch data on your warehouse is by pulling it from a warehouse management system (WMS) you’ve been using. For example, let’s assume we’ve fetched data from Warehouse X using Logiwa. By looking at X’s data, we can use the following metrics to measure viability:
Median number of shipments or shipment orders = 388/hour.
Average # shipments: 416/hr
Median # products shipped: 1328/hr
Average # products shipped: 1376/hr
These metrics are very important to analyze your data because it indicates the amount of work an automated system would have to do to complete the same amount of orders and remain a profitable asset to Company X. If these numbers are too low and the rate of orders doesn’t increase, the automation used will go through these orders too quickly, which could result in a disrupted order flow. Worse, the investment in this automation might not pay off within a year and could end up taking longer to return true value. However, if these metrics are high, this means that installing automation such as an automatic sorter will return its value quickly because it will be constantly utilized and bring efficiency to the warehouse.
Another key metric we looked at is the pattern of shipments over time. As you can see, the # of shipments over time for Company X was erratic but should have been more constant like the graph on the right. If your number of shipments over time fluctuates dramatically from week to week, automation will not be able to return much value because it will be underutilized during the slow days. In order to properly implement automation, you should constantly have a smooth pattern for shipments over time.
Finally, a last key metric to look at is your company’s service level. In this case, that means a company’s commitment to shipping and delivery speed. The service terms, such as same-day delivery or next day delivery, will drastically affect your decision. In an erratic demand environment, if the service level is just 24 hours, it would be very difficult to implement an automated sorter.This is because, during the low volume days, you can not use your sorter efficiently. However, if the service terms are longer such as 4 days, then you can take advantage of your delivery terms to smoothen the shipments. A high volume days shipment can then be scheduled over the next four days rather than in one single day. This way, you can have a smooth shipment pattern, which you can utilize your automation investment.
Overall, some key questions to ask yourself when considering investing in warehouse automation are:
- Will it be in constant use?
- Will it return value quickly?
- Does your company handle enough orders to justify automation?