Warehouse automation in times of crisis: rescuer or executioner?
Table of Contents
How is the ROI (Return on Investment) influenced by a warehouse automation investment during a crisis?
An economic crisis can strike unexpectedly, generating declines in business volume and financial difficulties. At such times, warehouse owners may feel overwhelmed by uncertainty and the need to cut costs.
It is known that one of the biggest costs of a warehouse is the cost of employees. In a period of economic decline you can reduce staff, assuming the following risks:
- It could negatively affect the image of the company;
- It could have a negative impact on your company’s microenvironment;
- High costs with inexperienced employees in the next growth period due to the loss of the already skilled and experienced workforce.
On the other hand, in the case of an automated warehouse, during an economic downturn it is much easier to deactivate a robotic line, the only risk involved being that of a delayed ROI (for example: from 3 years to 4 years). Automation solutions have the advantage of being easily adapted to various needs and volumes of activity, depending on the field of activity of each company. In times of crisis, with declines in production volume and deliveries, the system can automatically adjust, reducing operational costs.
The yield of an warehouse automation
Looking at it from another perspective, automation is not only about a high order processing volume, but also about the quality of products offered to customers. Automated procedures minimize errors and therefore reduce the return rate that a company can have, starting from the risk of products being wrongly picked by pickers or damaged in the logistical handling process. Product return policies are very expensive for any retailer to follow.
Whether we’re talking about an automated warehouse or not, investing in software is an inevitable and absolutely necessary expense. But the software is connected to robots, not humans. Productivity and performance data, inventory and maintenance data are highly accurate when all processes are automated and provide you with real-time reports.
Also, warehouse automation reduce the space required for storage by increasing the density by up to 80%, which means that for the same volume of logistics processes an automated warehouse is a good investment also from the point of view of cost with rented premises/land .
Regarding expenses, all major automation integrators have leasing or rental services that you could take advantage of to avoid a substantial investment, having the opportunity to test systems and constantly make technological advances.
Work safety can affect the yield of a warehouse
Regardless of industry, we are often faced with hazardous work processes [eg handling hazardous (toxic/flammable) materials, heavy/unusual items, etc.]. Occupational safety is not only a legal obligation, but also an essential factor for the good functioning of a warehouse. A safe working environment contributes significantly to increased productivity and reduced costs. With the help of automation solutions, the efficiency and productivity of the warehouse will increase, and work accidents, damage to goods or the tense atmosphere among employees will become history.
Automation does not completely replace the workforce, but complements and protects it, contributing to a safer, performance-ready work environment.
Is warehouse automation a good idea, regardless of when orders are up or down?
There are companies that can be permanently on an upward trajectory, but it is important to keep in mind that evolution cannot be a straight line. There will be ups and downs along the way. It is normal if from time to time there are also losses (for example during the pandemic, for the HoReCa and aeronautics industries). However, by implementing the right strategies and adapting to changes in the market, a company can maximize its chances of achieving steady growth.
In conclusion, even in a time of economic recession, a warehouse automation is still a good investment from a strategic point of view because it actively contributes to the best possible return of the business, from all points of view:
- Work safety;
- Eliminating errors from internal processes;
- Increased work speed;
- Saving energy and various necessary resources;
- Adaptability of existing systems according to needs.
It is important to consider the impact of the economic downturn on traditional workflows. For example, if you have a warehouse with a large footprint and no automation, you will have to incur high facility maintenance and management costs.
