Business is always changing, and the world of supply chain and warehouse distribution is no exception. New game changing technology has made it possible to construct what are called “automated warehouses”. As the name implies, these new warehouses employ automated systems, including conveyor belts, pulleys, and robots to store and move items. This obviously cuts down on the need for humans to drive around on forklifts and retrieve items manually. Several well-known companies have already made the change to automation. Nike for example, built what is called the “distribuzione”. Located in Europe, this warehouse uses a 280-meter long loop sorter to handle both inbound and outbound orders (around 43 million each year).

While the idea of an automated warehouse is luring to many companies, not everyone should necessarily jump on the bandwagon right away. There are some obvious distinct advantages to automation. However, for some companies a switch would do more harm than good. The following are important points to consider.

Advantages

An automated system offers several key benefits. You will no longer need warehouse workers driving around on forklifts. Also, automation creates a more efficient use of space. With less floor space and building height taken up by storage, companies can dedicate the extra space for other functions. Because they can operate 24/7 and don’t rely on manpower, automated warehouses are much more efficient. The machines used are designed for safety and will likely result in fewer accidents than a forklift system.

Disadvantages

Obviously one of the biggest potential downsides for companies considering an automated warehouse is cost. Simply building one of these places can push into the $20 million range, so a lot of thought should be given to the decision. If your company is not growing, you might want to hold off. If there is a chance that your company might be sold within the next five years, it may not be worth the investment. Don’t forget that you are going to have to fork up some extra money for maintenance. A system of conveyor belts, pulley’s and robots require more attention than a forklift. A dropped box or jammed conveyor belt could cause issues. A human being can think and problem solve in a warehouse whereas a machine simply repeats the same motion over and over. Even with the most advanced robots, humans still have intuition, something a robot is not capable of.. yet.

Another point to be aware of when considering an automated warehouse is the fact that you might have less of an ability to store a wide variety of products. Products have to be modified and packaged differently in order to be stored in this new type of warehouse. If you are a smaller company that may not be able to influence a supplier to change the way they package, automation may not be an option. Larger companies on the other hand have more influence on a particular supply chain. Because suppliers rely on them, larger companies can demand their supplier’s use new packaging, containers and barcodes. Consider your company’s influence on the supply chain because it will determine how big the risk would be to change.