The Complete Guide to Warehouse Automation: Basics of Organization and Warehouse Labeling, Automation Technologies, Best Practices, and More

Warehouse automation is widely touted as one of the most effective ways to boost ROI by reducing labor demands, enhancing accuracy, and improving efficiency. “One indisputable fact exists,” according to Supply Chain Management Review. “Warehouse automation is one of the last areas where long-term costs can be significantly reduced.” But some think of warehouse automation as software, while others think about the idea of automating a warehouse as implementing automated storage and retrieval systems (AS/RS). In reality, complete warehouse automation entails automating a variety of aspects of operations, from automatic data capture to software systems, storage and retrieval, and more.
Guide to Warehouse Automation
Still, according to a 2014 report from Monteage Technologies, 90% of warehouses worldwide today are either entirely manual or have implemented only low-level automation into their operations. And while the average logistics division might be looking at a period of four to five years before realizing a return on investment for automation innovation, the payoff is well worth the wait for those who make smart, strategic investments in automation.
We’ve put together this comprehensive guide to outline the many aspects of warehouse automation you should know – and the best practices for implementing each facet of automation successfully.
In this guide, we’ll discuss:

The Basics of Warehouse Automation
At its core, automation revolves around identifying repetitive tasks that are process-oriented, time-consuming, or error-prone, and finding ways to automate them. And as anyone in the warehousing industry is well aware, warehouses are rife with repeatable, process-oriented, and error-prone tasks, ranging from manual documentation errors to picking and stocking errors, shipping and receiving errors, and much more. For this reason, there are many aspects of warehouse operations that can be automated, including:

  • Picking automation – The process of picking is a clear example of a repetitive and time-consuming process. Modular shelving systems combined with warehouse robotics are making it possible to automate the picking process, which once depended entirely on humans. And anytime humans are involved, the likelihood of introducing human error is very real.
  • Barcode labels and scanning automation – Warehouses rely heavily on documentation to keep track of which items are moving in and out of the facility, where specific items are stored (to speed up the picking and stocking process), and manage inventory. Warehouses save dramatic amounts of man hours by automating these documentation processes with barcode labels, rack labels, warehouse signs, and the hardware necessary to read these signs and labels. Barcode labels combined with the right software and scanning technology can practically eliminate errors and drastically speed up documentation processes.
  • Automated vehicles – Forklifts and pallet jacks are among the traditional equipment used to move goods throughout a warehouse facility, but even this aspect of warehousing is becoming automated today thanks to self-guided forklifts and pallet carts, known collectively as automated guided vehicles (AGVs). The key differentiator is that these automated vehicles don’t require human operators; instead, they follow digital paths through the facility to load and unload pallets, boxes, and other containers. AGVs can be implemented in an existing warehouse without a complete overhaul to the layout and overall system, and it’s not an all-or-nothing investment – warehouse operations can add AGVs as necessary, gradually replacing human-operated machines with automated equipment over time. Plus, they can be leased or purchased, so warehouses can even try before they commit to buying.
  • Inventory automation – In a 2014 report, “From Cost Center to Growth Center: Warehousing 2018,” Motorola notes that 41% of warehouse facilities were still reliant on pen-and-paper methods for cycle counts. This results in errors related to data entry and transcription, as well as inconsistent inventory processing and, in some cases, disruptions to overall operations. Yet, automating inventory management processes is one of the easiest and most cost-effective strategies warehouses can implement to start realizing the benefits of automation.
  • Back-office automation – Inventory automation often goes hand-in-hand with automating back-office processes. According to Motorola’s report, nearly one-third (32%) of warehouses don’t have access to real-time data in their warehouse management system (WMS), leading to inaccurate inventory counts – which can cause supply chain disruptions ranging from mild to catastrophic – and other inaccuracies. In today’s fast-paced warehousing industry, access to accurate, real-time data is crucial.

Relying on outdated, manual processes not only leads to errors and delays, but they are practically guaranteed to have a negative impact on the company’s bottom line. Out-of-stock conditions can lead to dissatisfied partners and customers, damaging brand reputation, and excess inventory that spends too much time sitting idle on racks and shelves continues to eat at bottom-line storage and operational costs. And when downtime occurs as a result of lost productivity or more serious errors, warehouses are either hindering growth or actively lowering profits.
Driven by the demand for less disruption, increased productivity, and improved visibility, Motorola predicted in 2014 that by 2018, just 12% of warehouses would still be relying on manual cycle counts, and that 65% of warehouses would have real-time access to a WMS from mobile devices.
Warehouse Organization for Optimization Warehouse organization for optimization
Sound warehouse automation begins with optimizing your warehouse with strategic organization and other measures. Of course, it’s helpful to know what automation capabilities you plan to implement before undertaking a warehouse layout overhaul, but some of the automation options discussed below offer the flexibility for easy integration into existing buildings without the need for a total facility overhaul.
In general, warehouses should make use of vertical space and configure layouts to support the optimal traffic flow. A warehouse layout optimization project is, in itself, a multi-step process requiring thorough analysis and planning. An optimized layout should support the four primary functions of the warehouse:

  • Product storage
  • Inbound operations (receiving, returns)
  • Outbound operations (picking, staging)
  • Value-added processes (re-labeling products, applying price stickers, special knitting processes, etc.)

UPS Compass recommends evaluating four areas to determine the optimal layout:

  • Aisle width – Traditional schools of thought suggest a width of 11 feet to accommodate forklifts, while modern wire-guided vehicles allow for cutting aisle widths to just 5 feet, freeing up additional storage space.
  • Product velocity – Rather than group similar products together, group products according to velocity by putting fast-moving products closer to shipping lanes.
  • Travel time – More space does not necessarily equate to better product storage. In fact, in some cases, expanding the square footage only serves to double or triple travel time.
  • Dust and honeycombs – Identify slow-moving and stagnant products that are gathering dust. Additionally, look for wasted space that’s being unutilized between, behind, or alongside products.

You’ll need to rely heavily on data to determine the best facility layout. You’ll also want to size storage means accordingly to avoid having to restock fast-moving products in storage more than once per day – otherwise, you’ll experience outbound delays. According to Supply Chain Link, most warehouses operate most efficiently at about 85% full, so take this into consideration when planning a layout, as well.
Laying the Foundation for Warehouse Automation with Barcode Labels
While there are several core underlying facets of complete warehouse automation, barcode labels – providing a means for tracking goods and inventory assets – generally provide the foundation for automation. Without the ability to track items as they flow through the company, generating the data required to facilitate automated processes is impossible.
Cerasis points out that automated data collection technology has now reached a point at which the cost of implementation no longer exceeds the potential benefits of eliminating human error. With the technology to support automated data collection now within affordable reach for many warehouses, implementing automated data collection puts these and other benefits within reach for today’s warehouses:

  • Tracking the flow of inventory through transaction-based movements– Each transaction introduces the possibility of losing track of a piece of inventory or contributing to picking errors or order errors. By tracking the movement of inventory at each transaction – including every movement from an item’s arrival at the facility, to the item being placed in a slot, the item being picked, packaged, and ultimately wrapped and shipped – drastically reduces the likelihood of lost inventory and other errors.
  • Better planning for dock arrival times– Automatic data collection puts a wealth of information at a warehouse operator’s fingertips, allowing for better preparation and planning. This includes ensuring that all inventory for a shipment arrives at the dock at the same time the designated truck arrives, eliminating the wasted space of inventory sitting at docks (and possibly interrupting other traffic flow) hours, or even days, before it needs to be there.
  • More efficient picking procedures– Additionally, having greater visibility into the flow of goods throughout the facility makes it possible to plan and make predictions for not-yet-arrived orders. Workers can be reallocated to areas expecting an upcoming demand from lower-priority areas to ensure that staff utilization is properly optimized and avoid creating unnecessary delays due to staff shortages. In other words, the ability to plan ahead means being able to ensure that every order leaves the warehouse at the scheduled time without delay.
  • Optimizing the flow of traffic– Warehouse signs can be used to provide traffic cues and other information to speed the flow of goods through the facility while optimizing the flow of traffic by avoiding congestion in aisles, helping workers to rapidly identify the appropriate areas, racks and shelves for stocking and picking, and more. Retro-reflective signs and labels, for instance, are suitable for long-range warehouse applications, allowing the use of long-range barcode scanners to readily identify proper locations.
  • Automating replenishment– When items are automatically tracked with barcode labels and data is synced in real-time with a WMS, out-of-stock situations can be completely mitigated by setting replenishment triggers that prompt the automatic reordering of inventory the moment stock reaches a pre-defined low threshold.

Warehouse Automation Software and Hardware Solutions
Speaking of warehouse management systems, the hardware and software goes hand-in-hand with a warehouse label and warehouse signage solution. Barcode labels provide a fool-proof method for storing valuable data, but barcode scanning devices are necessary to decode barcode symbologies and transmit the data to a WMS. The WMS, in turn, aggregates data about inventory, vendors and suppliers, parts, ordering information, manufacturers, and every necessary detail about an item in a centralized database.
Warehouse automation hardware and software
Compatibility is a key consideration when selecting barcode labels, hardware, and software solutions to support warehouse automation. Barcode scanners come in a range of options with varying capabilities such as:

  • 1D barcode scanners
  • 1D and 2D barcode scanners
  • Linear barcode readers
  • Image barcode scanners
  • Wireless and cordless models
  • Omni-directional barcode scanners

Choosing the right barcode scanning system depends on a number of factors including, but not limited to:

  • Barcode label symbology
  • Durability requirements
  • Operating systems and software compatibility
  • Scanning speed and distance
  • The need for wireless or wired connectivity

Likewise, there are dozens of warehouse management software solutions, which range in features and functionality based on several factors. Some are targeted to specific industries, for instance, with specialized reporting capabilities that can aid in regulatory compliance, while others are better-suited to support certain warehouse automation functions. Some key considerations include:

  • Integration with barcoding technologies
  • Ease of use
  • Real-time inventory updates
  • Scalability and flexibility
  • End-to-end transaction management
  • Back-office integration
  • Robust reporting capabilities
  • Compatible mobile applications

When implementing a warehouse label solution, along with the hardware and software components to complete the foundation, you’ll want to ensure that these elements are fully compatible and will work seamlessly together to enable your warehouse to function as the well-oiled machine it should.
Automatic Guided Vehicles (AGVs)
Automatic guided vehicles are a newer innovation compared to warehouse labels and warehouse management software solutions. AGVs offer direct savings on labor costs and also improve the efficiency and reliability of storage and retrieval processes. They’re essentially robots that rely on markers on the floor of the facility, wires, or laser vision technology to navigate through the building and are able to perform functions such as: Automatic guided vehicles (AGVs)

  • Storing pallets, racks, and other containers
  • Storing pallets in warehouse racks
  • Storing pallets in floor-based deepstacks
  • Vertical reel storage
  • Horizontal reel storage in cradles
  • Controlling the full receiving process for raw materials (from trailer to processing lines)
  • Automatic trailer unloading
  • Transporting raw materials to intermediate storage

There are an increasing number of AGV options for warehouses to choose from, with varying capabilities. For instance, there are automated carts which can move products on an assembly line or transport goods from warehousing to manufacturing plants. Because these carts are guided by magnetic tape, setting up the initial flow or reconfiguring the route as necessary is simple. Transponder tags are used to convey when the cart should stop or perform a specific action, such as increasing or decreasing speed, or lifting or lowering.
Some companies offer a range of options spanning everything from standard, basic configurations to completely custom-built AGVs that can be designed to meet highly specialized application requirements. In the middle of the spectrum are dual-use AGVs, which can operate either manually or as a fully-functional AGV. For some warehouses, dual-use options are a smart investment that can ease the transition from manual to automated processes. For those already in the trenches of automation or those with specialized applications, the growing availability of customized AGV solutions is a valuable option.
Automated Storage and Retrieval Systems
AGVs, of course, play a role in automated storage and retrieval systems, but they’re not the only automation option when it comes to these functions. Automated storage and retrieval systems (AS/RS) have actually been around since the 1950s, having first been introduced in Europe, Japan, and the United States. AS/RS consist of a few key components:

  • Storage and retrieval machines
  • Rack structures
  • Conveyors such as AGVs
  • Warehouse control systems

Automated storage and retrieval systems ASRS
Pallet lifting and lowering devices are among the most commonly used AS/RS devices. These fixed aisle storage and retrieval machines move pallets into and out of storage locations, and they can be configured to match SKU density profiles, varying load types, and delivery speeds. There are also case and load handling devices, which are a scaled-down version of pallet lifting and lowering devices used to handle smaller storage containers. Newer varieties of case and load handling devices that make use of shuttle cars and robots are known as goods-to-person systems.
The use of AS/RS offers a multitude of benefits, including:

  • Reduced space and labor utilization
  • Flexibility to operate as a stand-alone structure inside existing buildings or as rack-supported structures (commonly used for cold/freezer storage)
  • Consistent and safe product handling
  • Consistency in following storage putaway roles
  • Maintenance of real-time product tracking and identification
  • Order picking and consolidation facilitated by automated replenishment
  • The ability to create highly-controlled storage environments, eliminating human access entirely
  • The ability to keep products fresh and mitigate recalls
  • Ensuring regulatory compliance
  • Consumer protection

In addition to these benefits, warehouses implementing AS/RS realize long-term cost savings through improved efficiency, the ability to keep up with increased consumer demand, lowering risks, and boosting throughput and increasing overall inventory accuracy. According to Westfalia, the average lifespan of an AS/RS is 25 to 30 years, while payback periods are typically between just three and five years.
Best Practices for Warehouse Automation
Automating a warehouse, particularly a warehouse once operated entirely manually, is a serious undertaking, but one that pays off in dividends when automation is evaluated, analyzed, and planned taking all available data into consideration. According to Path Guide, warehouses operate most successfully when seven key fundamentals are addressed:

  1. Warehouse management – Management teams guide daily performance, coach teams, and plan for continuous improvement.
  2. Warehouse management system (WMS) – The WMS is the locus of control, allowing management teams to guide the operation.
  3. Warehousing best practices – The processes and systems proven in a warehouse’s specific vertical or specialty, as well as the processes and protocols proven successful for the individual company.
  4. Training – All change is met with some resistance, and when it comes to implementing warehouse automation, these changes may be met with trepidation as workers fear that their value will be displaced by automated machines and robots. Proper training and change management can help to smooth the process of change and ensure efficient operations.
  5. Employee motivation – Likewise, employees who feel supported by the company are motivated to perform at their best, increasing overall productivity and efficiency.
  6. The physical plant – Addressing the underlying foundation of a warehouse operation is crucial for success. This means ensuring adequate dock and storage capacity, staging areas, and the like, as well as recognizing the need for physical improvements and taking action on those needs to mitigate pain points.
  7. Automation technology – Ultimately, choosing the right automation technology ensures a successful outcome. Management should evaluate potential automation projects periodically and identify areas for improvement and innovation, recommending implementation for automation that is likely to offer return on investment within an acceptable payback period.

Further Reading on Warehouse Automation
For more information on warehouse best practices, the latest innovations in warehouse automation, and how modern warehouses are automating processes to improve processes and boost profits, visit the following resources:

Products and Tracking Solutions from Camcode:

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