Year over year, businesses have increasingly adopted online shopping models, and consumers have demanded faster delivery times. The pressure has never been greater for warehouses, supply chains, and logistics to complete rapid fulfillment while maintaining accurate inventory management.
In an era where operational efficiency and inventory precision can make or break a warehouse’s business, automated inventory management has become a notable transforming agent of warehouse operations.
Traditional warehouse management depended largely on manual labor, which was prone to errors and inefficiencies. When warehouse shrinkage reportedly accounts for 3% to 5% of a company’s revenue, and 25% of shrinkage is due to administrative errors, this approach can no longer keep up with today’s industry demands.
To stay competitive and ensure long-term success, automated technologies such as drones and computer vision systems powered by artificial intelligence and machine learning are the “secret sauce” where warehouse clarity meets simplicity.
Automation offers opportunity for warehouse efficiency
In the past year, the global warehouse automation market has demonstrated remarkable growth, as warehouse managers increasingly recognize that the future lies in automation and are adjusting their operations accordingly for enhanced efficiency, accuracy, productivity, and worker safety.
According to a report by The Business Research Co., the warehouse automation market size is estimated to grow from $19.2 billion in 2023 to $36.4 billion by 2028 as more businesses adapt to the modern supply chain environment.
The beauty of automated systems is that they can operate continuously, no matter the time or day. This means whether warehouse managers are asleep or on vacation, these automated systems continue to run and complete inventory counting so that warehouses continue to operate smoothly and efficiently. This increases production and reduces labor costs in warehouse management.
New equipment, such as automated guided vehicles (AGVs) and autonomous mobile robots (AMRs), are already aiding inventory management. Not only do they save warehouse managers a significant amount of cycle time, but they also free up human workers to focus on different, customer-facing tasks where they add strategic value.
Moreover, implementing warehouse automation enables operators to put the productivity and safety of employees first. The warehouse injury rate in the U.S. is 5.7 injuries per 100 FTE (full-time eemployees).
Aerial drones can reduce the chances of a worker gaining an injury from trying to scan inventory from high and far-reaching places can create a compounding effect that results in significant cost savings for warehouses.
Robots can improve inventory visibility, accuracy
Using the right technology for inventory visibility is extremely crucial to be successful in today’s business environment. Today, the combination of AI-enabled drone-based hardware, camera-based indoor localization, data analytics, and computer vision provides tracking in a comprehensive automated inventory management system.
The autonomous drones can fly through warehouses, scan inventory, and provide managers with real-time insights into all the products on their shelves. This equips them with the capability to find misplaced and lost inventory, as well as to detect empty bins.
Other advancements include the ability to properly count individual inventory items such as cases, cartons, etc. in a racked location, rather than inferring them.
Essentially, anything that a human worker can do, such as manually scan and locate inventory or count the number of items in a location, these advanced inventory management systems can do the same. The bonus is it can be completed in an automated manner, at any time and any place.
The result is improved accuracy and efficiency at lower costs for warehouse operators, as well as more ergonomic workplaces.
Why warehouses need automated inventory management
Improving worker retention and safety, operational efficiency, cost, and inventory accuracy presents a significant opportunity for enhancing warehouse operations. These opportunities tie back to several key concerns of warehouse operators, as identified in a report by management consultancy Roland Berger.
These include attracting labor, reducing human error, mitigating accuracy-cost tradeoffs, preparing for count and shutdown, and more. Automated inventory management is in a prime position to address these key opportunities.
Warehouse managers are consistently trying to strike the right balance between accuracy and counting costs. The Roland Berger report showed the cost of cycle counting directly corresponds to accuracy levels.
Warehouses that spend more on cycle counting labor achieve greater accuracy in inventory counting — the more accurate the count, the higher the cost, and vice versa. By comparison, automation can be cost-efficient to deploy without sacrificing accuracy levels – instead, it increases these levels while providing more revenue savings.
For example, the report showed that implementing autonomous drones could lead to an improvement of inventory accuracy of 0.5% to 1%, which could save roughly 0.2% of total inventory. While seemingly small, it’s a mighty number as it could amount to an estimated savings of $52,000 to $138,000 per year.
Drones offer ease of use
Drones and computer vision systems are now easy to deploy, require no changes to a warehouse’s existing infrastructure, and require little to no training to operate. Automated inventory management systems (AIMS) can deliver high accuracy at costs that are comparable to or lower than those of manual labor.
Once deployed, an inventory instantaneously begins delivering a return on investment (ROI) by eliminating discrepancies between actual inventory and book records. This can subsequently mitigate the negative impact of stock-outs on revenues, profitability, and customer satisfaction.
The Roland Berger report also showed that in a warehouse of 200,000 sq. ft. (18,580.6 sq. m), drones can count 25 pallets per hour, which culminates in an ROI of 30% or higher. This is over the typical hurdle rate for a new technology investment.
Autonomous drones also addressing the challenge of warehouse turnover. No one likes to do monotonous, tedious tasks like individually scanning inventory in a warehouse for hours on end.
Inventory is often placed in hard-to-reach places, creating risks to worker health and safety. This leads to high job turnover and the expense of hiring new staffers and training them from the ground up. Any worker injuries further incur medical and compensations costs.
The report found that automated inventory management can conduct inventory counts remotely during non-operational hours without the need for employees’ presence. This can increase safety and productivity.
Warehouse operators are always striving for the next best solution that can simultaneously boost performance and reduce costs at scale. AIMS are the catalyst that will supercharge a warehouse’s digital transformation to keep it in lockstep with a rapidly evolving industry.
Exorbitant operating expenses, inventory shrinkage, and the occupational hazards that come with manual cycle counting now become a thing of the past, liberating human workers to engage in more dynamic, customer-facing roles where their strategic value thrives.
The time is now for warehouses to tap into this warehouse automation opportunity to gain a business edge – or risk being left behind.