Warehouse Automation Solutions: Best and Worst Practices

Fails are fairly common when it comes to warehouse automation solutions. According to an Ernst & Young study, 30% to 50% of robotic process automation projects fail globally.

So what can go wrong in the evaluation and analysis stage – and how can companies make sure they’re not one of the 30% to 50%?

It turns out just doing the evaluation and analysis is a step companies often short-change, according to Donald Derewecki, Senior Consultant at St. Onge Company. It’s one of the many insights he shared during a recent episode of Unboxing Fulfillment hosted by host Harry Drajpuch. Read on for more.

“You have to do the hard analysis and evaluation to determine if automating is right.”

Not every technology that comes down the pike is appropriate for every fulfillment operation, “You really have to do the hard analysis and evaluation to determine what the needs are to best serve your customers, keep your costs competitive and provide the service that customers expect.”

Companies that spend the time, effort, and money to do so tend to get the best return on automation investments, Donald says.

The opposite is also true. “If they don't automate appropriately and at the right time, they're going to get left behind. They're going to end up with more people working harder and not as accurately or productively as they should,” he says.

“Companies with an aggressive long-term approach to automation have fared better in recent years.”

A commitment to automation was a key survival play for many St Onge customers throughout the pandemic and post-pandemic months.

Donald says their moves to automate have paid off. “That's why many of them have been able to stay in business in spite of the fact that every time you pick up the paper, there's another company in chapter 11,” he says.

It’s a strategy Donald sees as essential going forward as warehouse automation solutions and information systems continue to get better, faster and cheaper. He says customers remain committed.

“Most of them are, if not implementing immediately, making plans for more sophisticated technology, both in terms of information system support and distribution center fulfillment hardware like collaborative robots,” he says.

“Companies should reevaluate their fulfillment operations at least every two years.”

Donald’s firm advises people that they should relook at current tech deployments in the warehouse every two years. It's not necessarily a deep dive into the details, but to evaluate where they are at in terms of their cost structure, their relative service to customers compared to their competitors, and where they are relative to growth projections.

“If new technology comes in that your competitors are leveraging to reduce costs and improve service, that puts you at a competitive disadvantage and you can't afford to sit on your hands,” Donald says. “If you let your competitors get a couple years’ head start on you, it's very hard to catch up.”

In addition to these two-year summary evaluations, he recommends a deep dive every five years to assess internal operations, as well as strategy.

“Evaluation should lead with a detailed look at the customer order profile.”

Many systems were designed for customer order profiles that have changed, Donald points out. Customers today are placing smaller orders more frequently. Systems that may have been designed to fulfill an order from a customer once a week with 25 to 50 lines are now being used to fulfill orders from the same customer who is now ordering daily or more than once a day – all while expecting the same level of performance.

“You have to really do the analysis of your operational requirements and understand the accuracy level your customer expects,” Donald says.

Going through the evaluation has a direct bearing on revenues, so it’s a crucial exercise. “If you order something online and it's wrong, you may not go back to that brand again,” Donald adds.

“Spreadsheet analysis won’t show where your monsters are, but simulation will.”

The more sophisticated, the internal operation that you're looking at, the more important computer simulation is, Donald explains.

Simulation provides advantages to spreadsheets in its ability to point out the weak points in an operation so engineers can make adjustments.

Also the benefits when it comes to evaluation can’t be beat. Simulation can be used to validate an operation’s design and confirm what combinations of information system support and physical hardware will produce the expected productivity and throughput levels.

“The companies that are the best at everything else do the best forecasting.”

The highest performing companies focus on predicting future volumes in order to plan better in their fulfillment operations, Donald observes.

“That's a big reason how they got to be where they are,” he says. “They do meticulous planning and a lot of contingency planning, asking, ‘Well, what if this happens? What if that happens? What are the effects on our overall plan?’”

With Staci Americas' customers, Harry describes forecasting for fulfillment operations as a mutual effort. “We've been pushing customers for forecasting data that helps us to help them.” It is also wise to temper the “forecasting and optimism” with a look back at what’s happened in the past to ensure the forecasting trajectory makes sense, he says.

“Fast growing brands should partner with a 3PL or do a hybrid.”

Larger companies that are well-funded can obviously do a better job in rigorously analyzing what technologies will perform best. Harry points out it’s more challenging for smaller companies, though. He’s observed that companies with annual sales of $10 million all the way up to $150 million typically do not have the resources to perform deep analysis and could benefit from an outside look.

Donald adds that if they're fast growing, many of them are conserving their capital for other things. His team at St. Onge will often tell companies in this position to look at partnering with a third-party logistics (3PL) provider who has experience in their business segment and can carry part of the capital burden.

Remove the Variables to Success with the Right 3PL

One of the advantages of outsourcing fulfillment to a tech-forward 3PL is that you gain immediate access to productivity-enhancing technology that can increase throughput without raising costs – and without requiring an investment of your own capital. Most 3PLs are willing to evaluate your data and your operations and estimate the cost to handle your volumes through its infrastructure.

To discuss what warehouse automation solutions could benefit your business talk to a fulfillment expert at Staci Americas – part of the Staci global fulfillment network.