Essential Warehouse Automation Capabilities for Retailers

Key takeaways:

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What are the challenges of modern retail & fulfillment?

Retailers face a tipping point where warehouse modernization is essential for growth, driven by complex operational needs. Retail warehouses manage diverse SKUs, frequent stock rotations, and varied order volumes, adding complexity to infrastructure, storage, and customer experience (CX). Rising warehouse costs, a labor crisis, and the e-commerce boom further strain resources. Space is more expensive and riskier to expand, labor competition is fierce with high wages, and surging e-commerce demands heighten customer expectations. Retailers must ensure 24/7 availability and high-quality fulfillment to stay competitive. This complexity requires efficient storage, greater stock depth, and the introduction of new product segments, pushing the limits of current infrastructure while maintaining tighter margins and higher service standards.

The trouble is identifying areas to improve and the technology that best meets the needs of your particular retail segment.

How can retailers solve their fulfillment challenges?

Automation is increasingly recognized by many retailers as being the most cost-effective and realistic solution. Without automation, you simply can’t keep up in the modern retail world. We’ve focused on four ways to achieve the biggest operational gains and and listed the highest-value technologies for each of the four areas:

1) Space Optimization & Storage

Fundamental storage factors

Automated storage better utilizes available floor space in a warehouse to increase storage capacity. There are three fundamental factors underpinning the effectiveness of automated storage for retailers.

1. Storage density: How much stock can one solution store in a given space, versus another storage solution, without impacting the efficiency of other processes?

2. Diverse storage capabilities: Is the storage "product-agnostic," or is it intended for storing certain types of products and product categories?

3. Flexible layout design: How well can the layout be customized to your unique warehouse space to maximize storage in the available space and floor layout? How accessible is your SKU range? Are certain SKUs more difficult to access?

Storage capacity needs

Many storage solutions such as certain rack systems are intended for storing specific types of products, such as small spare parts, while other systems like mini-load are more usually intended for bulk stock in cases or pallets.

For storing high densities of SKUs ready for typical retail order fulfillment, an automated storage and retrieval system (AS/RS) will offer the most flexibility as well as improve storage density.

Many AS/RS solutions use some kind of shelving system to help maximize vertical space utilization. While storage density will improve, this kind of setup doesn’t maximize the available space. Additionally, because of the need for uniform rows with enough clearance for robotics equipment to move in between, floor layouts are much less flexible, with some SKUs naturally harder to access, with more distance and equipment to navigate around in order to retrieve them.

Cube storage solutions, such as the AutoStore system, are a newer type of AS/RS that eliminate shelving and aisles. They use a cubic grid layout to tightly stack storage containers ("Bins") in rows in order to maximize space utilization both vertically and horizontally for maximum density. Filling up cubic space in this way instead of just expanding your storage footprint also makes spare capacity more cost-effective, since it won’t take up extra floor space.

The design also provides fast, complete access to the entire SKU range stored inside, no matter if they're A, B, or C movers. Using an approach called "Bin digging," all SKUs can be efficiently located and brought to the top of the Grid, simplifying consolidation and keeping throughput flowing. Finally, the aluminum Grid is also easy to customize for any floor space, as it can easily be designed around corners and other obstacles.

Learn more: How Does Bin Digging Maximize Throughput?

What else to consider?

• Can the storage easily be adapted? (E.g. using dividers to store multiple smaller products in a single Bin to enhance density further.)
• Can it support high throughput, even in limited space?
• Can the layout be adapted to fit your warehouse and other equipment? This is important if you need to deploy more than one type of storage.

Learn more: How AutoStore can reduce your storage footprint by 75% by unlocking the hidden dimensions of your warehouse.

2) Order fulfillment & returns

In manual operations, up to 40% of a worker’s time is spent walking to locate and retrieve items. This makes automation critical. Retailers, in particular, face higher return rates — up to 25% of orders come back to the warehouse. A poor returns process risks losing repeat business due to increased customer expectations.

Throughput requirements

Larger robotic systems like autonomous mobile robots (AMRs) and automated guided vehicles (AGVs) are effective for moving large, heavy items but are less suited for quick picking in dynamic environments due to their size and operational needs. In contrast, Goods-to-Person (G2P) solutions significantly reduce manual labor by automating the retrieval of items from storage, allowing warehouses to process more orders with the same or fewer staff.

G2P systems using larger equipment and autonomous robots require more floor space, potentially limiting operational agility. Changes in demand may necessitate reconfiguring floor layouts, which can be time-consuming and costly. However, an AS/RS with smaller modular components can provide a more flexible and efficient solution. These systems use smaller robots for real-time optimized routing, increasing throughput and picking efficiency.

Best-in-class AS/RS solutions like AutoStore offer significant advantages, including a 99% reduction in error rates and exceptional throughput speeds. These systems adapt to varying demand and new SKUs seamlessly, with robots dynamically routed for optimal efficiency. They allow for easy capacity increases without additional floor space, using existing setups to activate more robots and stations as needed. AutoStore and similar systems also streamline returns, integrating the process with picking operations to make returned stock immediately available.

‍Read more: Enhancing Returns Management in Retail. Discover how AutoStore automation can help streamline return management.‍

What else to consider?

Add-on technology

AS/RS solutions can be enhanced by adding complementary technology and devices on top. Example devices include robotic piece-picking arms, pick-to-light systems, or pouch sorters. A display screen will usually function as a user interface (UI) to help workers as they interact with the devices and augment overall efficiency. It can also help with labor costs by reducing the average time to train workers.

Layout flexibility

You don’t just need flexible performance features. Flexible design is also important. The customizable layout options of a cube storage solution like AutoStore make it well-suited to being deployed alongside other specialized solutions, for example if you're using a mini-load or shuttle system for case picking.

Integration capabilities

It's best to avoid add-on solutions with limited or no API options. We’ll discuss integrations more in group four, but this will impact how well you can integrate your fulfillment stack and the most efficient process management possible.

3) Daily operations & inventory management

As warehouses get fuller, and service expectations go up, there’s more potential for things to go wrong — more equipment, more workflows, more picks, and so on. But in a highly competitive market, you likely can’t simply pass rising costs onto customers. Key systems need to perform reliably around the clock to support profitable operations. Successful automation is built on a foundation of accurate, visible data across systems and processes.

Reliable performance

System uptime

Uptime good indicator of how reliable a given solution is. Best-in-class uptime for leading warehouse automation systems should be above 99%. Additionally, you can also check the average time between system outages. Additionally, consider how much maintenance a system needs. Can equipment be serviced or repaired without significantly impacting operations?

Systems designed without a single point of failure (SPoF), ensure critical processes aren’t slowed or shut down if there is a mechanical failure. This means they’ve been designed so that if one component fails, the fault is isolated and the rest of the system operates as normal. For example, think of a shuttle system that uses conveyor belts to transport goods from storage to a workstation. If one of the conveyor belts has a mechanical fault, you instantly get a bottleneck with a backlog of items.

If a single Robot fails within an AutoStore, which is designed with no SPoF, the other Robots continue to pick items, and fulfillment continues uninterrupted.

Inventory management: WMS & data management

Your WMS will obviously be at the heart of your warehouse and inventory management. If you haven’t already, you should consider switching to a purpose-built WMS for retailers. It can provide specialist features, such as omnichannel order fulfillment, batch processing, seasonal & promotional support, etc.

Read more: Understanding and Implementing Cloud-based WMS

With dynamic ordering, real-time data about inventory status and availability is more critical than ever. You can enrich inventory data and tracking in a couple of different ways:

• Integrating your e-commerce platform or ERP with your WMS for faster order processing and more accurate inventory status in real-time.
• The use of peripheral or handheld devices equipped with scanners or sensors (such as barcodes or RFID chips) to track stock as it moves through your warehouse.

What else to consider?

Larger equipment will likely demand more resources in terms of regular servicing and maintenance.

Enriched data and analytics requirements are putting a growing focus on the technical infrastructure required to host and manage these capabilities. For many operations, considering cloud-based solutions for hosting your WMS, data processing, and other key systems. This means your IT team can focus resources on analyzing and optimizing daily performance, rather than maintaining technical infrastructure and hardware.

"One of the most common operational challenges we encounter when talking with customers is limited or missing integration capabilities."

4) Extended integrations & flexible scaling

Any large investment in warehouse automation will involve a number of different but (hopefully) complementary technology, with both hardware and software. One of the most common operational challenges we encounter when talking with customers is limited or missing integration capabilities. If systems can’t communicate or transfer data effectively then it will prevent you from maximizing efficiency and performance.

Integrations  

Ideally, solutions should offer interoperability for easy compatibility with third-party devices and systems. If provided, standardized APIs can be used out of the box or be customized to integrate key systems and hardware in order to achieve the precise functionality you want. This should also future-proof your setup in terms of providing compatibility for integrating new technology later on.

Agile scaling

Look for solutions designed with modular components. This means you can extend the system after the initial installation by adding individual modules, rather than needing to extend the system. This makes scaling more agile and reduces the need for continuous large CAPEX investments and large implementations every time you need to grow your operations.

For example, the AutoStore Grid can be expanded in just a few days to add more total storage, due to its lightweight aluminum construction. It’s also really flexible in terms of layout, as it can be built around corners, etc. to accommodate existing equipment and maximize the available space when you need to add more storage capacity.

What else to consider?

Not all systems expansions can be installed while existing operations continue. For example, larger robotics equipment or systems using shelving using standardized rows, may take longer to plan and execute since you’ll likely need to significantly adjust floor layout, move existing equipment, etc. Adding large mechanical solutions can impact more than your warehouse layout. It may mean significant changes to safe operating areas, requiring new risk assessment reports and additional staff training for example.

Conclusion

For retailers, the time for automation has arrived. The question is no longer "do we need automation?" but "what shall we automate first?" Warehouse automation is now an operational imperative, essential for meeting both warehouse needs and customer demands.

AS/RS can boost storage density, maximizing revenue per square meter. Cube storage, offering the highest density, is ideal for retailers. Opt for product-agnostic automation designed for high-throughput and diverse SKUs. AS/RS systems streamline manual handling for faster, more accurate fulfillment and return management, though not all systems are suitable for high order volumes and diverse SKUs.

Seek flexible API options for clear data visibility and smooth integration across systems and devices, ensuring efficient, accurate inventory management. Real-time data integration with your WMS is crucial.

Prioritize ease of use and reliable performance, avoiding single points of failure for critical tasks. Modular designs in your solutions can simplify expanding your operating capacity.

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