How Much Does a Fully Automated Warehouse Cost?

How much does a fully automated warehouse cost?

The Cost of a Fully Automated Warehouse

A growing number of businesses are saving money and boosting productivity by automating some of their warehouse processes. Yes, there’s some investment required, but it’s followed by payback in areas such as:

• Higher productivity
• Lower labour costs
• Less mistakes and waste
• Improved customer satisfaction

 
A well-implemented warehouse automation helps boost efficiency and competitiveness. It contributes to profitability and can make it easier for a business to grow.

If you’re considering automating some or all of your warehouse operations, it’s important to understand the types of cost you will encounter. This is our guide to helping you explore the costs of warehouse automation.

It’s not possible to give figures for the cost of automating a warehouse. This is because it depends on a wide range of factors including location, industry and the scale of the operation.

The Fully Automated Warehouse Explained

It’s estimated that over a quarter of warehouses, worldwide, will feature some form of automation by 2027. However, the fully automated warehouse does not exist. Even the most highly automated operations, run by firms such as Ocado and Amazon, are a blend of humans and machines working side by side.

Many warehouses are ripe for automation. They have predictable, repetitive workflows, handling stock of consistent size and shape. Today’s robotic and digital technologies, combined with developments in artificial intelligence (AI), make it easier to implement automated systems that require minimal human supervision.

Priority areas for warehouse automation

There are many forms of automated systems being implemented in the logistics sector. The most common are:

• Warehouse Management System
• Warehouse Labour Management System
• Conveyors and Automatic Sortation
• Put-to-Light/Pick-to-Light (PTL)
• Picking Robotics
• Autonomous Mobile Robots (AMRs) and Autonomous Guided Robots (AGRs)

 
Each of these areas comprises multiple systems, integrated to function as a whole.

The benefits of warehouse automation

While the fully automated warehouse remains out of reach right now, there are still huge advantages to be gained by automating specific processes or workflows within your warehouse.

The benefits include:

• More accurate stock records
• Faster, more accurate item picking
• Higher and more predictable levels of productivity
• Improved safety in the workplace
• Reduction in human error

 
Using machines addresses some of the issues that arise from a human workforce, such as unpredictable absence due to sickness. Automation also frees your human team from repetitive, manual tasks, allowing them to prioritise more value-added tasks.

The Costs of Implementing Warehouse Automation

Choosing what to automate

While almost all aspects of your warehouse operation could be automated, some areas offer a better return on investment than others. Before deciding to implement a particular solution, it pays to look at the warehouse as a whole, and review the entire operation.

Assessing the big picture means looking at areas such as:

• Construction and layout of your warehouse building
• Total space available, including vertically
• Seasonal changes in demand
• Availability of labour

 
Today’s technology gives you tools to model warehouse design and operations, allowing you to test different setups and scenarios. Using these systems can help you determine where to invest in warehouse automation.

Software to manage the systems

It’s no surprise that a warehouse management system (WMS) is the top priority for many businesses looking to improve their logistics functions.

A good WMS helps streamline all aspects of warehouse operation, from receiving, put-away, and pick, pack, and shipping processes to inventory tracking and replenishment. It also integrates with other tools, from the basics such as bar code scanning and RFID labelling, to more advanced robotics and augmented reality wearables. It also shares information with other key business systems such as transport management, enterprise resource planning (ERP) and logistics.

A WMS is a software solution that allows a business to manage all movement of stock into and out of a warehouse. It gives visibility of where items are in the supply chain, whether in storage or in transit. A WMS is a vital system for monitoring and control, and provides information essential for commercial decision-making.

Implementing a WMS is a major project that requires considerable investment and time. The payback is that it can help a business become much more competitive.

Warehouse design and layout

Your warehouse is a huge three-dimensional space that can be utilised in many different ways. Typically, the internal design has evolved over time, based on changing commercial requirements. Before implementing automation in some areas, it makes sense to stand back and consider the operation as a whole. When you don’t do this, you run the risk of not getting maximum benefit from your investment.

Using tools such as machine learning, extended reality and virtual twinning it’s possible to model different designs and layouts. When used correctly, these systems take into account huge amounts of data from your business, allowing the systems to model based on past performance.

They can also take into account the potential offered by the latest technologies in logistics, such as:

• Autonomous Vehicles (AGVs and AMRs)
• Automated Storage and Retrieval Systems (AS/RS)
• Pick-to-Light and Put-to-Light Systems
• Automated Sortation Systems
• Shuttle Technology

Costs of maintaining warehouse automation

Maintenance and repairs

Automating your warehouse operation comes with ongoing costs. Some of these are around maintenance and repair of the automation devices, such as conveyors and self-guided vehicles. These costs can be offset against savings made in the labour budget. Increased productivity should also be taken into account: logistics company DHL reports that assisted picking robots increased the number of items picked per hour by 180%.

Many of the ongoing costs associated with maintaining robots and other automation systems are largely predictable. Maintenance can be scheduled to fit into the operations plan for the warehouse. While not all breakdowns can be anticipated, systems can be put in place to ensure their impact is minimised.

Energy costs

Automated systems require energy to power them. This is often electricity, although some vehicles could run on other fuels.

While the increased energy demand will put up the running costs of the warehouse, this can be mitigated in various ways. Automation can extend to include lighting, which is often a considerable portion of a warehouse energy budget. Many robotics systems can function with much lower light levels than a human workforce.

Part of your investment in automation can also include installing sustainable sources of power, such as solar panels or heat pumps.

Software updates and support

All the computer programs that support your automated systems will need to be maintained and updated from time to time. As with mechanical breakdowns, this can usually be managed through a programme of scheduled maintenance.

Other Factors That Impact the Cost of Automation

This guide has covered some of the main influences on the cost of automating a warehouse. Here are some other factors to consider:

• Size and location of your business
• The vendors you choose to work with
• Cost difference between competing technologies
• Level of customisation based on your business needs

 
Another factor to take into account is your approach to measuring return on investment.

Next Steps Towards a Fully Automated Warehouse

We help businesses design and implement automated systems in their warehouse.

Our dedicated and experienced sales teams, data analysts, designers, project managers and customer service staff communicate and collaborate to design and install the best possible system for your needs.

Start your journey towards warehouse automation with help from SEC Storage today.