Guide to Warehouse Automation

Automation and technology have improved the efficiency and cost-effectiveness of many different business activities and facets. Automation of warehouses is a proven way to enhance accuracy, reduce labor demand, improve efficiency, and gather the highest return on investments.

Some people have the view that warehouse automation comes in the form of software and digital technology. Some others say that warehouse automation is the implementation of certain automated retrieval and storage systems. However, the complete and elaborate warehouse automation involves the automation of many different facets of warehouse and inventory automation (including software systems, automated data capture, and automated storage, retrieval, and movement among others).

When is the time to automate warehousing?

The interest of consumers in online shopping has increased manifold in the aftermath of Covid 19 pandemic. Warehousing of items and inventory management is more important now than ever. Technologies including wearables, RFID tags, barcoding, and automated inventory management storage and retrieval systems can provide better productivity, accuracy, and profitability. You should be choosing a fully automated warehouse and inventory management system if you find any of the signs (listed below) affecting your business and warehouse

Labor Issues: 65% of the total operating cost of a business is towards labor. Some warehouses and businesses may have a high employee turnover rate as the staff there fail to keep up with the workload. If you are facing such issues, you should be switching to full or at least partial warehouse automation technologies such as barcodes, RFID, and AGVs, among others.

High Error Rate: High rates of error, damage, and wastage not only reduce profitability but may also damage the reputation of a business. You should be choosing automated technologies if your business is suffering from high rates of error that are uncontrollable during warehouse operations.

High Chargebacks and Return Rates: Some businesses may have to face an extensive list of back orders and complaints from their sales teams and customers. The errors may occur due to issues with warehouse efficiency. You can replace the stale and traditional mechanical and labor-intensive processes and upgrade your warehouse management processes and systems to avoid losing your business to competitors.

Reduced Space: Sometimes the warehouses may run out of space and resources as they cannot fully utilize them due to incapability. Warehouse automation can help you make the best use of all the resources and uncover the untapped spaces in the facility. When you want the most cost-effective operations and exploit your space fully, you should be choosing the automation technologies of warehouse management.

What warehouse processes can be automated?

Warehouse automation is for improving the repetitive activities and tasks that consume more time and are error-prone. Automation can reduce and prevent errors that may occur in a variety of warehouse processes including documentation, stocking, picking, shipping, receipt, and others. Below are the important warehouse processes that can be automated.

Picking Automation: The picking process has been time-consuming and repetitive in the past. Warehouse automation can use warehouse robotics and modern shelving systems for automating a picking process completely. Such automation reduces errors and time and prevents wastage.

Voice tasking technology is another picking technology used in warehouses nowadays for automated storage and picking. The warehouse workers can communicate with the automatic warehouse management system through the headsets. The automated system has synthesis and speech recognition technological capabilities. The warehouse personnel needs to speak only a few numbers of the stock keeping unit (SKU), and the rest can be done by automated vehicles and technology. Similarly, the "pick to light" systems can also point the correct locations of the items to the associates to improve accuracy.

Label and Barcode Scanning Automation: Earlier warehouses used registers and manual documentation and record of all the items that moved into and out of the facility. Warehouse automation can automate all these documentation procedures using warehouse labels, barcode labels, and the software and hardware that can read the barcodes and scan items automatically. When you want to speed up your documentation process and eliminate error, you should be choosing warehouse automation and the latest scanning technology and software that are based on barcode labels. Drones and RFID (Radio Frequency Identification) are some other technologies used for the automation of receipt and transfer.

Automated Utility Vehicles (AGVs): Traditionally the movement of goods within the warehouses was facilitated by traditional equipment such as pellet carts and forklifts. However, nowadays the use of self-guided and automated forklifts and palette carts is increasing. These automated vehicles are also called AGVs (automatic guided vehicles). Automated vehicles can be run without requiring any human operators. The self-run AGVs can follow the digital paths throughout a warehouse and facility for loading and unloading the boxes, palettes, and other kinds of containers. Also, the AGVs do not require an elaborate overhauling of the existing layout and the systems and can be swiftly implemented and used in any existing facility. These AGVs can also be leased so that the cost can be reduced substantially while retaining all the benefits.

Automated Inventory Management: The inventory management software can digitalize and speed up inventory management in all types of warehouse. The software can manage and track the inventory in real time with minimum errors and effort. The automation can also process the delivery of customer orders, raise an alert when the item quantity falls below a certain level, and provide metrics for analysis. Other key features of the inventory management software and system include:

  • Automatic recording.
  • Automatic transfer of the stocks.
  • Inventory notifications and alerts.
  • Integration with E-Commerce and other sales channels.
  • Automated management of the orders.
  • Streamlining of the reporting processes

Automation of Back Office Processes: A recent report by Motorola states that approximately one-third of the warehouses cannot access the inventory and other warehouse data in real-time. It results in errors in the cycle counts and may be a cause of disruptions in the supply chain. Such an adverse impact on the traditional processes may also damage the reputation of a company and may result in loss of business. The use of digital technology, automation, and software ensures that all the stakeholders can get access to inventory-related data in real-time through a single dashboard. It improves transparency in the supply chain and provides better customer satisfaction.

Facility Layout Planning: Optimizing the warehouse space is the predecessor to its automation. Optimization of layout will support functions including product storage, inbound operations, outbound operations, and other value-added processes. You can utilize the available space and plan your warehouse operations in the best way when you start to implement warehouse automation software and hardware system.

How much does it cost?

The cost of labor employed in the fulfillment processes of the warehouse may go up to 65% of the total cost. Apart from the wages, the labor costs may also be impacted by other factors including benefits, health Insurance, vacations, disability insurance, and paid leaves, among others. Accidents may also occur at the warehouses and the companies may have to spend massive amounts of money to compensate for the impairments and injuries.

Warehouse automation can provide significant savings over a period and also minimize expenses related to labor. The actual cost of warehouse automation would depend on the kind of technology and automation equipment included and its complexity. A wide range of technologies including artificial intelligence, cloud, and others, and the latest automated equipment (including the AGVs) may be required for complete automation.

The complete automation of a warehouse may require approximately $ 25 million. The semi-warehouse automation solutions may cost approximately $ 10 million. However, companies can also go for partial automation and can start with a few activities such as picking. For instance, the approximate cost of automating the order picking processes may be approx. $ 750000.

While the cost of warehouse automation can be high, it provides great savings and efficiencies over a period. Companies also need not commit themselves fully by spending these huge amounts on automation. Companies can switch to automation of warehouse processes and phase out the traditional equipment and technology gradually. Below are the rules that you should keep in mind when evaluating warehouse automation and implementing it.

  • Find the right partner that holds a specialty in the segment.
  • Involve your staff and employees early on to increase the chance of success of the change and implementation.
  • Choose excellent quality equipment to prevent inconvenient downtimes and costly repairs.
  • Do not expect immediate results on the investments as the savings will come gradually.


Warehouse automation can reduce up to 30% of expenses related to labor and manufacturing, which results in substantial savings over a prolonged period. Your picking errors may be reduced by more than 65% when you can automate your warehouse activities. You can partner with a leading warehouse automation services provider and talk to the company to know more about the cost and the benefits involved. You can also compare the warehouse automation technology options from a few vendors to find out the more affordable options. However, you should not compromise with quality to ensure that there are no downtimes and errors in your operations.