Menu
When considering an investment in warehouse automation, focusing primarily on the initial technology and implementation costs is tempting. These costs are important but should be balanced with the long-term benefits of technology.
It’s just as important to ask: “What is the cost of NOT automating your warehouse?”
The hidden costs of manual processes are substantial and should be part of the decision process. Following are points to consider.
Manual order processing productivity can be improved by analyzing workflow, eliminating redundant tasks, and reducing the touches made by workers to process an order – but only to a point.
These efficiency gains are eclipsed by the efficiency gains achieved with technology. Tools such as voice picking technology, mobile robots, inline scan-weigh-dim systems, print-and-apply, and more, managed by a warehouse automation platform, can optimize and accelerate all areas of order picking, packing, and shipping.
Technology as a Force Multiplier
In contrast, in a manual or semi-manual order processing environment, productivity increases are typically limited by human capabilities.
For example, workers in a traditional warehouses have picking ranges between 50-100 picks per hour. When paper-based picking is replaced with voice-picking technology, the same workers’ picking rates can be increased by 70% or more.
In fact, several Numina clients have increased workers’ picking rates to 230-300 lines per hour in high-velocity, properly SKU-slotted pick zones. They have also reduced recurring annual overtime and seasonal labor costs, further accelerating the ROI gained on their warehouse automation solution.
Case Study: Schumacher Triples Throughput in Existing DCs with a 12-Month ROI in Warehouse Automation
During slower order demand periods, pick-by-voice commands can direct operators to pick zones with the highest demand between two or more zones to minimize downtime and boost productivity per employee.
Green Rabbit, a cold chain 3PL, has realized spectacular efficiency gains by replacing manual procedures with warehouse technology. “We’ve at least doubled output in the original Massachusetts facility with the same headcount and have nearly tripled output in other facilities as business has grown,” said Green Rabbit’s Director of Operations.
In today’s competitive market, many businesses have identified warehouse automation as critical in keeping up with highly dynamic customer shopping and delivery preferences.
According to Invespcro, 80% of shoppers surveyed want same-day shipping, while 61% want their packages even faster — within 1-3 hours of placing an order.
Additionally, customers want their items to be shipped correctly, on time, and with real-time visibility into the order as it is processed and shipped.
According to a consumer study by Oracle Retail, 13% of surveyed customers will avoid using a retailer in the future if their delivery is late.
Calculating the Cost of a Lost Customer
How much does it cost to replace a lost customer? Depending on your industry, studies suggest that acquiring a new customer can cost five to seven times more than retaining an old one.
Satisfied customers also spend more. According to Inc., current customers spend 67% more on average than those who are new to your business, making customer retention a top priority.¹
How to Calculate Customer Lifetime Value (CLV)
It’s important to quantify these cost areas as you weigh your investment in warehouse automation, especially if order errors are affecting your company. Every lost customer sets in motion the need to acquire a new one, a costly process.
A real-time warehouse execution platform, integrated with the company’s ERP/WMS and material handling systems, helps companies accelerate the order-to-delivery cycle, eliminate errors, and foster higher customer retention rates.
According to Zippia, the average warehouse worker’s salary ranges between $26,000 and $40,000 in the US.² Warehouse order-picking operations can consume 50% or more of a DC’s labor spend when accounting for order picking, quality control, and packing activities.
For this reason, one of the most crucial improvements a company can make is to invest in warehouse automation.
Blog: Cut Labor and Increase Profitability with Proven Warehouse Automation Solutions
With the right combination of process improvements and warehouse automation, businesses can:
“With the efficiencies gained with the RDS solution, we’ve eliminated the need to hire roughly 100 temporary workers,” noted the company’s CEO.
Manual processes inherently carry a higher risk of human error, which can lead to higher-than-necessary order error rates, higher customer dissatisfaction, returns, and lost revenue.
In addition, error corrections are costly. According to Orderease, correcting an order error could cost a company 50% to 125% of the cost of the product in the first place.³
Human error can occur at any point in the pick, pack, and ship process if manual processes and paper-based work instructions are used. For example:
Warehouse solutions such as print-and-apply labeling and Pakt™, Numina’s all-in-one pack-and-ship automation solution, replace these manual tasks with touchless processing. Employees can be reallocated to other important work, and the cost of errors is significantly reduced.
Warehouse automation allows for easy scalability as your business grows. Automated systems can be adjusted and expanded to handle increased demand without significant additional investments.
In contrast, scaling up manual processes to meet higher demand typically requires more hires, increased training, and a potential loss of efficiency during expansion.
By focusing solely on the costs of automation, businesses may overlook the potential for innovation and growth that comes with embracing new technologies.
Automated systems can provide valuable data insights, enabling companies to make more informed decisions and explore new opportunities.
Additionally, automation can free up employees to focus on creative problem-solving and other high-value tasks, fostering a culture of innovation.
Automated storage equipment opens your facility’s floor space by utilizing your building’s height to store inventory overhead.
Shifting the focus from the cost of automating a warehouse to the cost of NOT automating provides a new perspective on the true value of automation.
By considering the missed efficiency gains, lost competitive edge, increased labor costs, greater risk of human error, limited scalability, and hindered innovation, it becomes clear that the long-term benefits of warehouse automation far outweigh the initial costs.
Guide: The Basics of Warehouse Automation
Video: Numina Group Warehouse Systems Integration Services
Video Case Study: How Northshore Doubled Fulfillment Productivity
###
About the Numina Group
The Numina Group is a top-tier designer and integrator of warehouse automation solutions, offering decades of experience in warehouse design, warehouse software, material handling equipment, systems integration, and implementation services for mid-to-large-sized enterprises.
Our team has designed and successfully implemented over 1,000 warehouse automation projects in diverse warehouse environments throughout North America.
Contact us to schedule a complimentary on-site warehouse assessment today.
The Numina Group
10331 Werch Drive
Woodridge, IL 60517
630-343-2600
How the Right Warehouse Automation Decisions Can Solve Your Labor Woes As the economy roars
The Numina Group
10331 Werch Drive
Woodridge, IL 60517
630-343-2600
