Warehouse automation is becoming more affordable and flexible, but is it right for you? That question can only be sensibly answered by gaining a knowledge of what’s on the market in terms of capabilities and running costs and knowing your warehouse cost structure down to the nth degree.

There is, however, another driver that cannot be ignored – the remorseless rise of e-commerce which is fundamentally changing the face of how we shop and therefore the way the supply chain reacts to meet that paradigm shift. Fifteen years ago e-tailing was negligible. Today, average weekly online shopping is £1.2 billion, an increase of 14% over the last year to September and accounting for 17% of retail spending. The flip side of that is that the projected 5-year period for 40% of the UK’s bricks and mortar shops to disappear is on track.

Most automated warehouses in Britain today are a mixture of automation and annual/mechanical handling and so the payback criteria for centres will obviously depend on the level of each. These hybrids may even only involve the automation of information technology. Generally speaking, a fully automated warehouse dealing only with full pallet loads is unlikely to achieve a payback in under five years. However, where partial automation involves, say, an investment in AGVs guided by magnetic tapes, the ROI can be as little as only two years, claims Jon Buckley, commercial director at Toyota Material Handling. Payback criteria can also be misleading or incomplete. In such exercises accountants are unlikely to factor in the beneficial impact of warehouse automation on customers, like prompt and damage-free and correctly picked orders. It’s true that figures cannot be placed on that but it has significant value nevertheless. There is also an environmental dividend because ‘dark’ warehouses need much less heating and lighting.

Generally, the case for warehouse automation is strengthened as the scale and demand for speed and efficiency increase. Favouring factors include: 1) 24 hr, seven-day week operations 2) When repetitive tasks are regularly performed 3) When long travel distances are involved 4) Lift heights rise above 12 mt 5) When high land values dictate the need for very high bay warehouses to exploit height 6) When hazardous environments preclude human operations. 7) When tight inventory control is essential along with security and almost negligible damage levels. 8) When the use of very high storage heights and densities allow closure of scattered distribution centres.

If looking for a new automated warehouse it is important to remember that all automated MHE suppliers agree that such a project must be designed from the inside outwards, because the working equipment is paramount, the shell only being there to keep the rain off and cold out. The safest turnkey operator choice would be to make the main handling equipment supplier as the turnkey operator. These should have a good track record of successful projects, helped by their own software expertise. They will also have the substance and after-sales technical service support as a comfort if things go wrong.