8 ways to mitigate risks of warehouse automation projects

Let’s face it: the implementation of an automated warehouse might not deliver as successful and profitable results as originally planned. You’ve probably heard about “bad experiences” with warehouse automation: companies that embraced an automation project and ended up regretting making that huge investment.

Instead of achieving the original goal, the company is still left with the logistic headache, and a huge financial gap. Is then rejecting change and doing things “the old way” the path of minimum risk? Arguably, it is not: in a landscape of competitors investing in automation, digitalisation and process improvement, standing still is not an option.

Ultimately, the question is: what can designers and purchasers do to mitigate the risks of a non-successful automation project? How can they avoid jeopardising the health and wealth of a company because of a poorly designed system? Here are 8 recommendations.

1. Get data. A lot of data

Any automated warehouse should be designed based on the data of the existing operation and of the future one. The higher the quality and the granularity (= level of detail) of that data, the deeper the analysis that can be run.

It may look like it’s a lot of work to retrieve and process those data, but a large sum of money is at stake, so it’s worth the while.

At Toyota Material Handling we can collect data automatically through our truck fleet management system, I_Site and then analyse it for you, to help you find efficiencies and optimisations within your existing processes.

2. Careful with averages

With large amounts of information and complex logistic operations, it may be tempting to look at averages to simplify the analysis, but in real life things work very differently.

Peaks and averages should be correctly evaluated on a yearly, monthly and daily basis: operations do not run at the same pace throughout the workday, but they will show peaks and valleys. Buffers, throughputs and workstations, among others, must be designed to withstand that rollercoaster: even if on average they meet the requirements, they may run short of capacity several times a day. And you don’t want to operate a warehouse like that.

3. Paint the full picture

A logistic operation is more than the sum of its individual sub-operations, which may be well designed individually, but not be correctly integrated. Poor planning of interfaces among those sub-operations may result in bottlenecks and the good design of the individual parts is useless when the individual components of the orchestra are not playing to the same rhythm.

4. Don’t leave the details for later

Even though by design the full picture works well overall, the devil is always in the details. Buffer areas, exchange times between areas, accumulation zones: poor design of one of them, and there you have your bottleneck, collapsing the flows upstream and downstream.

Fixing those little, punctual mistakes costs little money in the design phase, but can cause major problems once the system is up and running, so make sure you address them very early on.

5. Explore different strategic scenarios

The overall strategy of a company has a direct impact on its logistics, and it may involve growth by expansion of market share, opening new channels and markets, broadening the portfolio of products or narrowing it, among others.

All the above translates into changing operational requirements: orders may become smaller, or bigger. The stock keeping units’ range may grow or get smaller. More daily deliveries may be needed, or less of them.

With a model fueled by detailed data, it is possible to explore those scenarios in different combinations and therefore you can make sure that the automated system is resilient and consistent with the strategic evolution of the business. Automation should be designed to adapt to the foreseeable future business scenarios. It should serve the operation, not the other way around.

6. Explore different technologies

You would be surprised about the number of companies that have invested in a technology because they’ve seen it at a fair, or because the warehouse next door has implemented it, and which ended up not being the right fit for them.

We live in times where you see an unprecedented availability of different technologies. In principle, they all do the same thing: optimise and automate warehouse tasks. But don’t all car models bring you from A to B, have 4 wheels, a throttle and a brake, and still target very different markets?

The same goes for warehouse automation. Depending on the order profile, product characteristics, order line distribution and many more factors, different technologies may perform very differently and provide significantly different value-added calculations for the same amount of money.

As there is no “one size fits all” solution, proper modelling of the automated logistic operation allows for comparison between different solutions in a digital, simulated environment, and helps point out the right technology.

7. Simulate, simulate, simulate

Simulation is a life insurance when it comes to validating a design. It makes room for “mistakes” in a simulated environment, you can discard wrong set-ups and lets you narrow down to the best-performing scenarios in detail.

In addition to that, simulation will pay for itself 99 times out of 100, for 2 main reasons:

simulation can help you reduce the initial investment. Most companies simulate the automated warehouse only after the system is purchased, for fine-tuning. But what if there is a different set-up that is much cheaper? You’d want to find out before placing an order for a multi-million-euro automated system.

Simulation can save you money on correcting mistakes. Say that a buffer area was underdesigned, and you can only expand it by removing some fixed elements of the newly installed automated system. Correcting this mistake alone will cost you more money than the simulation itself.

8. Be ready for change

We have mentioned that automation should serve the operation, and not the other way around. It is then of outmost importance to question each single process within the operation and to define whether it brings added value, or it is rather a heritage of an outdated way of working.

In many cases a shift of perspective should occur as automated systems are implemented, embracing a whole new approach to avoid redundant, inefficient processes and costs.

Investing time in a consultancy allows to look at the operation in a holistic way, making sure that all the pieces of the puzzle come together. Toyota Material Handling supports companies in achieving operational excellence. We support you from design to implementation. Are you ready for change and looking into warehouse automation, reach out to our experts to discuss your needs.