By: Aaron Rubin, Founder & CEO of ShipHero
Technology has dramatically advanced the logistics industry in recent years, with warehouse and inventory management systems providing real-time analytics, tracking features, and many more tech-enabled features that streamline fulfillment processes.
But what if your warehouse could directly communicate low inventory and pick your items for you? What if your warehouse always maintained the right inventory levels? It might sound futuristic, but the technology is already here.
Welcome to smart warehousing.
What is a smart warehouse?
A smart warehouse is a tech-driven warehouse that stores raw materials and/or inventory, and uses various tools to monitor inventory and optimize warehousing processes. Unlike traditional warehouses, smart warehouses leverage AI and technology to streamline internal processes.
Smart warehouses can identify and accept orders, count your inventory, track goods, and make sure orders are sent to the correct location. They automate almost the entire journey of items from supplier to customer, with minimal mistakes.
Components of a smart warehouse
Intelligent warehouses are ‘smart’ thanks to various tools and technological features that automate and optimize warehousing operations. These advanced warehouses offer:
With traditional warehouses, your team is primarily responsible for managing inventory and optimizing warehouse processes. This means that, as your brand grows, your workforce is under more pressure to manage a growing inventory and larger order volumes.
Smart warehouses, however, alleviate these stresses by scaling with your brand. Smart warehouses use warehouse management software (WMS) and other technology to accurately manage inventory (and monitor real-time inventory levels), fulfill large order volumes quickly, and minimize errors.
Data & analytics
Smart warehouses collect data from cameras, sensors and RFID cards to track and measure temperature levels, real-time inventory, order accuracy, pick and pack times and more. Access to data & analytics helps eCommerce merchants identify problem areas in the supply chain, and take action.
Additionally, smart warehouses monitor inventory levels and industry trends to improve the accuracy of demand forecasts, so merchants don’t have to worry about overstocking or being short-stocked.
Robotics & artificial intelligence (AI)
In general, robots can move faster and carry more items than humans, making them ideal for picking and packing. Smart warehouses leverage AI-powered robots to optimize these processes; robots can identify optimal routes, further decreasing picking times.
Radio-frequency identification (RFID)
You might be familiar with RFID from its application in credit cards. Instead of manually swiping your card through a machine, RFID cards transmit radio waves that verify your transaction from a distance.
Smart warehouses use RFID technology to optimize pick and pack processes, count inventory faster, and reduce errors. A digital RFID tag is added to each package as it enters the warehouse so the items can be counted automatically.
RFID technology offers more efficiency than traditional labeling and barcode scanners. Unlike barcode scanners, RFID can scan tags from a distance based on the package’s general proximity. This makes them superior not only for identifying packages but locating them in the warehouse too.
The Internet of Things (IoT)
IoT integrates warehousing processes by syncing data between different systems using the internet. Each machine or system, including robotics, WMS, and RFID, are linked through internet-enabled devices, allowing them to communicate effectively.
With IoT, robots can use RFID to quickly locate packages, WMS can help humans process orders faster and track order shipping. Thus, IoT facilitates an integrated data-sharing system that optimizes warehousing processes and minimizes errors.
Warehouse management software
WMS is used in both traditional and smart warehouses to optimize everyday operations. Advanced WMS integrates with your eCommerce store and other systems (such as robots or mobile workstations) to optimize pick and pack processes, manage inventory levels, and forecast demand, among other functions.
Smart warehouses get the most out of WMS by integrating them with other systems through IoT, like robots, sensors, and scanning systems.
Automated picking tools
Automated picking tools can be robotic or semi-robotic – they work with your pick and pack team to optimize inventory management.
Order pickers spend a great deal of time walking around warehouses, but computerized cranes and forklifts can automatically pick items and transport them across long distances in minimal time. Conveyor belts are also a popular, semi-automated option to increase picking speed.
Some more advanced warehouses use robots to automate picking times. Using IoT, AI, and RFID, robots can communicate with your WMS to know which items to pick, quickly scan and locate products, and deliver packages directly to your packing team.
How to benefit from smart warehouses
If you’re wondering how smart warehouses can improve your supply chain operations and optimize order fulfillment, here’s a rundown of the key benefits they offer:
Reduce manual labor & human error
Labor costs generally contribute the most to your warehousing expenditure, and as your brand grows, hiring more manual labor becomes inevitable. Unless you leverage automation, that is.
Smart warehouses leverage technology to automate labor-intensive, time-consuming processes, so your human team can focus on more specialized tasks and cut back on labor costs.
Another reason why businesses are gravitating towards tech-enabled warehousing practices is to reduce human error. Picking errors can result in additional costs for returns (and thus additional shipping), refunds, lost sales, and customer service.
Pick and pack errors can drain your profitability by 11-13%, which is why it’s important for brands to adopt IoT and automation. Robotics guarantee faster, more accurate pickings and help ensure orders are shipped to the correct location.
Lower inventory damage and inaccuracies
Damaged goods are another costly expense that’s inevitable when you’re using human labor. While you can’t eliminate damage risks entirely, smart warehouses mitigate them significantly by leveraging technology and robotics.
WMS, robots, and RFID work together to correctly identify each item and determine optimal transportation routes. Additionally, robots can carry heavier items without dropping them, ensuring packages are safely transported from inventory to your packing team.
Better analytics & reporting
Analytics and reporting not only help you optimize inventory management but also identify problems in supply chain management. With detailed analytics, you can determine where errors/damages occur, and investigate the issues.
Moreover, with smart warehouses, your WMS provides real-time inventory data and analyses trends to encourage accurate demand forecasting. This helps businesses prepare for demand surges, such as during the holiday season, and prevent overstocking.
Faster shipping & fewer returns
Customer experience is everything nowadays, and providing expedited shipping helps eCommerce retailers stay ahead of their competition. Unfortunately, warehouse picking can be a lengthy process, especially if your team has to navigate a large, well-stocked facility.
Smart warehouses help speed up picking times and optimize tracking and reporting to speed up your fulfillment process, resulting in faster shipping. Additionally, with a tech-enabled system, order inaccuracies and damages are reduced, resulting in fewer returns.
Efficient warehouse space utilization & optimization
Utilizing and optimizing warehouse space is a complex process that involves many considerations. Smart warehouses use inventory tracking to ensure your inventory levels are always balanced by preventing overstocking and alerting retailers to deadweight items.
Additionally, smart warehouses perform ideally when your warehouse is properly organized. Thus, to ensure your warehouse functions optimally, it’s important to implement a layout that makes retrieval and storage processes convenient.
Predictive order processing
Predictive order processing employs technology and automation to deliver better customer experiences. While supply chain processes were once primarily analog, smart technologies use buying patterns, trends, sales history, and similar data to predict orders before customers place them.
Thus, with predictive order processing, your team can get a head start on order fulfillment and deliver better customer experiences.
Higher customer satisfaction
Keeping customers satisfied is vital for improving customer retention, loyalty, and growing your brand sustainably. Smart warehouses help mitigate errors and speed up the fulfillment process to deliver better experiences, enhancing customer satisfaction.
Lower costs lead to lower prices
Speaking of customer satisfaction, low prices are a great way to attract customers and outdo your competition. With smart warehouses, brands can reduce warehousing costs by leveraging automation and reducing errors and damages. Thus, you can list goods at lower prices without hurting your bottom line.
Over the years, the rise of technology has dramatically improved warehousing and inventory management processes, optimizing supply chain efficiency. While smart warehouses may seem futuristic, the technology is here, and top eCommerce brands are leveraging it to stay ahead.
Smart warehouses use IoT, technology, automation, sensors, robotics, and other robust technology to reduce errors, minimize pick and pack times, accurately track and forecast inventory, and ultimately deliver better customer experiences while optimizing your revenue.
Schedule a meeting today with our experts to learn more about our powerful shipping software built for eCommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.
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Aaron Rubin, Founder & CEO
About the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.