In a world where fluctuating order volumes and rapidly shifting customer expectations are placing intense pressure on supply chains, effective management has become essential. At the same time, rising operational costs are pushing many warehouse operators to explore new ways of running their businesses, writes Kevin Price, logistics consultant at Dematic.
In this context, and as indicated by our recent study, on-demand robotics and warehouse-as-a-service (WaaS) models have emerged as attractive options, particularly for small and midsized operators. On the surface, they offer flexibility, reduced upfront CapEx (capital expenditure) and the ability to scale capacity up or down as needed. While they can deliver short-term benefits, they do not guarantee long-term success.
Robots-as-a-Service model
Leasing robots and automation tools through a subscription model rather than buying them outright allows businesses to avoid large upfront investments. It provides organisations greater flexibility around peak periods in line with demand or supporting short bursts of growth.
However, this should be considered a temporary solution rather than a long-term business strategy. Subscription fees can quickly exceed the total cost of comparable systems, particularly in stable, high-volume environments, while the model can also limit opportunities for customisation. Instead, businesses should focus on investing in their own tools or leasing technology in key, high-impact areas. A further concern, highlighted across the industry, is what happens if the vendor, or even the finance provider, goes out of business.
Larger organisations with more available capital are already taking a more cautious route, choosing to buy automation outright and outsourcing operations to reduce risk exposure. At the same time, operators are beginning to recognise the need to award third-party logistics providers (3PLs) longer-term contracts, allowing them to make the substantial infrastructure investments required to deliver futureproof solutions.
For SMEs, however, the landscape is shifting. Affordable and scalable automation can open the door to service levels traditionally associated with major retailers, so that organisations can start small and expand as required. We’ve seen around 80 per cent of the projects we’re supporting focus on incremental, modular automation rather than entry-level solutions. This signals a dual appetite for flexibility and for control.
Warehousing-as-a-service model
WaaS is rapidly gaining traction as businesses look for flexible ways to store inventory and manage fulfilment without committing large amounts of capital upfront. Instead of owning facilities or equipment, companies can rent capacity and services from 3PLs, specialists who manage outsourced supply chain operations, allowing businesses to scale with demand.
For many businesses, especially ones unable to invest heavily upfront, working with 3PLs offers a practical, low-risk entry point into more modern and efficient operations as the automation infrastructure has already been developed. It also spreads the risk between the 3PL and business, and when combined with flexible contract durations, helps businesses plan confidently for the future.
Shared user facilities run by 3PLs make it easier for organisations to justify new investments and recover costs of pay-as-you-go (PAYG) options that reduce barriers to automation. As a result, organisations can transition strategically from manual processes to more sophisticated systems.
A blended approach
To get the best long-term results, organisations are taking a blended approach which incorporates some fixed automation with newer, more flexible solutions to suit individual circumstances. This enables businesses to be more strategic in their strategy and ensure the best return on investment.
For instance, a full shuttle system may be cost-prohibitive. Instead, a business might deploy a mix of fixed automation and shuttles, supported by a core fleet of owned or rented AMRs, and then lease additional shuttles or AMRs to handle peak periods.
While fixed automation remains the right choice for predictable, long-term operations, many companies cannot forecast their needs decades ahead. For them, pursuing a blended strategy offers the best combination of agility, long-term value and accessible ROI.
What every organisation needs to know
Leasing robots can be a useful first step to enable pilot experiments and manage short-term peaks. However, it shouldn’t become the entire automation strategy, particularly for larger organisations with existing infrastructure and significant CapEx capacity. For many businesses, a blended approach will be the best route forward. It spreads risk across a mix of automation models across the distribution network, rather than relying on a single solution.
For SMEs beginning early in the automation journey through a 3PL model, it can be a strategic way to share risk, manage contract durations, ensure smooth integration and build automation capability over time. However, this should only be pursued once the associated costs and integration requirements are fully understood. By doing so, this model can strengthen operations and improve resilience, but it’s important to focus on building lasting capability, not just renting it.
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