In today’s tech-obsessed world, “smart warehouse” may seem like just another buzzword. We’re already used to smartphones and other types of smart technology in our everyday lives, so it’s natural to wonder what smart technology can do for businesses, including distribution companies. The reality is that smart warehouse technology is already making a significant difference in the way the distribution industry does its job. Technologies like robots, artificial intelligence (AI), radio frequency identification (RFID) and cutting-edge software solutions have radically changed what’s possible.
Consider how amazed you might have been a couple of decades ago if someone had told you same-day, next-day and two-day shipping would become common expectations for online shoppers today. Of course, they have, and customers’ expectations will continue to challenge the limits of what’s possible. The modern distribution center has to deal with higher demands than ever before. With more SKUs and higher expectations for efficiency, smart technology isn’t just a luxury — it’s a necessity if you want to keep up.
The widespread implementation of warehouse automation technology can clearly be seen in the fact that worldwide sales of these technologies reached $1.9 billion in 2016. By the end of 2021, the market value is expected to reach $22.4 billion. Why are distribution companies embracing smart technology? There are several convincing reasons, which we’ll discuss in this article. We’ll also discuss a few different specific categories of technology impacting the distribution industry and consider the best ways to implement smart technology in your warehouse.
What Is a Smart Warehouse and How Does It Help the Distribution Industry?
The term “smart warehouse” refers to warehouse operations that minimize the need for manual tasks in favor of more efficient automation. Automation doesn’t just mean making things easier for people, though that’s certainly a part of it. It also means using technology that is intelligent enough to carry out tasks on its own without any need for human assistance.
Many warehouses today, especially smaller ones, are using a combination of older methods and newer methods. For example, in your warehouse, you might use software to manage your inventory, but you may still have warehouse employees pick and pack items manually. As long as technology continues to progress and open the door to improved warehouse operations, the ideal of a smart warehouse will begin to be realized for more and more companies.
The move to more advanced technology isn’t just arbitrary. It has some major advantages to both consumers and distributors, including:
1. Less Manpower
More automation means less need for human workers. While this may raise a concern for some people, the reality is that there is a shortage of workers in the logistics industry. Smart automation can help to fill the gap that the workforce has left. Technology doesn’t just offer an adequate replacement for people. It has some advantages over human workers, namely that it eliminates the possibility for human error. Robots that perform manual tasks also have an advantage over people in that they don’t get tired.
2. Reduced Costs
Converting a warehouse that’s still relying on manual methods to a smart warehouse involves a substantial upfront investment, but this investment has the potential to deliver an impressive rate of return. That’s because greater process automation reduces the number of employees you have to pay, can prevent expensive mistakes and can encourage better efficiency that leads to cost savings in lots of little ways. That all adds up and can have a significant effect on your bottom line.
3. Improved Efficiency
Efficiency should be the ultimate priority for distribution managers. When a warehouse is running inefficiently, that means needless waste is occurring. That could be wasted time, wasted manpower, wasted funds or wasted space. Whatever the case, it costs you and slows you down. For distribution centers that ship direct to consumers, efficiency is also key to maintaining tight timelines. Consumers today expect their packages to arrive at their door promptly, and distribution centers play a key role in delivering on this expectation.
4. Real-Time Information
A significant advantage of tracking inventory and carrying out other managerial tasks online is that this data can reach far beyond the loading dock doors. Retailers, wholesalers, and customers can check to see what items are in stock. They may even be able to see the exact number of items. This level of accurate transparency is only possible in a smart warehouse. Manual data entry means there will always be delays between real-time reality and what’s reflected online. An enterprise resource planning (ERP) system eliminates that delay, so what you see online is always accurate.
5. Enhanced Accuracy
Another significant benefit of more advanced technology in distribution is that it can enhance your accuracy. We already mentioned the benefit of fewer human errors when you replace people with technology, but this is just one way you can be more precise with smart technology. An ERP system can also provide you with analytics that help you make data-driven decisions so your predictions are as accurate as they can be. There’s no need to guess whether you need to order more product or whether you have enough pallets in stock. The real-time data will let you know.
What Are Some of the Technologies Supporting a Smart Warehouse?
Now that you know what a smart warehouse is and how it helps the distribution industry, let’s look more closely at some specific types of technology that are making smart distribution possible. These include robots, AI, RFID and ERP systems for warehouse management.
One type of technology improving warehouse operations is robotics. As technology progresses, robots are capable of more and more. They also come in many different forms. They may look like vehicles or single arms. Some robots are designed to function independently while others, called “cobots,” are intended to collaborate with humans to help them do their work more efficiently.
Some of the functions robots can carry out include:
- Depalletizing goods
- Picking pallets and individual items
- Palletizing for shipping
- Tracking inventory with an RFID scanner
- Transport items to human workers for processing
Some robots navigate the facility with the help of magnetic strips or tracks. More advanced robots can use sensory technology like camera vision to avoid obstacles. Though they may seem pretty smart, robots are not technically intelligent. They are controlled by computers as part of your whole warehouse management system.
2. Artificial Intelligence
Though the robots we just talked about cannot think for themselves, artificial intelligence is all about developing technology that can. AI takes technology a step beyond performing routine tasks. Capabilities like machine learning and pattern recognition fall within the umbrella of AI.
An example of how AI can go beyond mindless tasks is in its handling of data. You likely have a plethora of data regarding past orders, present stock and more. AI can look at this data and can even factor in Big Data from other warehouses to make accurate predictions about the future.
AI doesn’t just reside in your computer. It can also combine with robotics to perform intelligent tasks such as detecting damaged goods and determining the appropriate course of action to remedy the problem. Since AI is capable of so much, it’s no wonder it’s having a profound impact on the distribution industry.
3. Radio Frequency Identification
Radio frequency identification is especially helpful when it comes to tracking inventory. When stock comes in, either whole pallets or individual items are labeled with an RFID tag. These tags are digitally encoded so the information they contain connects directly to a digital database.
The tagged objects communicate with the database with the help of an RFID reader, called an interrogator. The interrogator uses radio waves to continuously scan tags. This technology is superior to barcode technology because of the real-time communication between the tags and the database. With barcodes, you must physically scan each item, but RFID tags eliminate this need.
In the Internet of Things (IoT) era, smart warehouses are taking advantage of technology that allows different devices to communicate with each other. This technology is extremely convenient when it comes to inventory tracking.
4. Enterprise Resource Planning or Warehouse Management Systems
Individual technologies can all be great, but they won’t streamline the process unless you can integrate them. This is where an ERP or warehouse management system (WMS) comes in. These software systems are designed to automate and integrate the various aspects of your operations to help you run efficiently. Adopting the right ERP or WMS system can make a profoundly positive impact on any warehouse’s operations, even if they aren’t using any other smart technologies.
Though both systems are helpful, there is a difference between an ERP and a WMS. Let’s start with a WMS. Warehouse management software provides a platform where all your inventory data comes together in one place so you can manage it effectively. The system is cloud-based so other members of your supply chain can also access it.
ERP for distribution companies goes beyond these capabilities to also automate aspects of your organization outside of inventory management, such as payroll. If you want a more comprehensive solution for managing your warehouse, an ERP is the way to go. A cloud-based ERP system can deliver a whole host of benefits to your distribution company.
What Are Some Considerations When Selecting Smart Technologies?
If you’re feeling enthusiastic about adopting smart technology in your distribution company, you may be wondering how to go about choosing the right technologies for you. There are three main factors to consider to make sure you integrate smart technology in a way that will give you a great return on your investments. These include scalability, flexibility and customer focus. Let’s take a closer look at each of these considerations.
Scalability is a factor you should consider whenever you’re looking to integrate new equipment or technology into your warehouse. Scalability is all about thinking toward the future.
For instance, a certain ERP program may would great for you now, but are you planning to grow in the future? If so, make sure you choose an ERP that will grow with you. Some programs are tailored to smaller companies, while others are better suited for large companies. Make sure to talk to a knowledgeable value-added reseller who can help you choose the best program to fit your current and future needs.
Scaling isn’t the only way warehouses can change. Is your warehouse operating today the same way it was five years ago or even last year? As technology changes and distribution industry workers learn more about the best way to carry out operations, they make positive changes. You need technology that can keep up with these changes.
Adopting AI that can learn and adapt to new environments and circumstances is one of the best ways to factor in flexibility. When it comes to your ERP program, flexibility may look like having a program that’s user-friendly enough that you can easily make changes to suit your company’s evolving needs.
3. Customer Focus
As you’re considering your own company’s needs, don’t forget to factor in the needs of the customer. There are lots of ways technology can help your organization, but it’s also critical to remember that it can help customers just as much.
It’s easy to become overwhelmed wading through the possibilities for new hardware and software to make your warehouse smarter. When this happens, take a step back and ask yourself whether a certain technology will help you better serve the customer. If a piece of technology helps you work faster or more accurately, then chances are this will lead to more satisfied customers. Or, if it helps you save money, you can pass those savings along to consumers.
How Should You Select a Partner to Implement a Smart Warehouse and Smart Distribution?
This article has only scratched the surface when it comes to the many ways you can implement smart distribution at your warehouse. To take full advantage of current technology, you need a partner you can trust to help you find the best smart tech solutions for your company.
Especially in regards to choosing an ERP, you should work with a value-added reseller (VAR) who can help you make the best selection and successfully implement the program. Just purchasing an ERP program won’t be a turn-key solution for smart warehouse management, but it can be when you also have the help of a VAR with the necessary expertise to help you configure the software and get it off the ground.
Look for a partner who is knowledgeable about ERP systems as well as your industry. Make sure your partner understands the size and specific needs of your company. ERP for distribution shouldn’t look the same as ERP for a completely different type of business.
Clients First Business Solutions understands the distribution industry, and we have the tools to help you optimize your inventory levels, analyze your sales data, manage your order processing and even increase your cash flow. Contact us today if you’re interested in learning more about how your company can implement smart distribution.