Automation has been on the rise in the materials handling and logistics industry for years, and this trend shows no signs of slowing down. DLL’s intralogistics experts explain why automation remains a hot topic and why businesses should be taking a closer look at their automation strategy moving forward.
According to an industry report by Mordor Intelligence, the logistics automation market is expected to register a compound annual growth rate (CAGR) of 12.5% over the next five years. This should come as no surprise, as Modern Materials Handling also predicts that 75% of large enterprises will have adopted some form of intralogistics smart robots into their warehouse operations by 2026.
Here are five reasons why companies are looking to invest in warehouse automation projects.
1. Future proofing
While the initial investment required for automation equipment, and the costs involved in moving from manual to automated processes, can be high, it’s important to remember the key to automation lies in its medium- to long-term benefits.
With fluctuating markets and changing consumer requirements, automation offers resilience, flexibility, and scalability to businesses, allowing them to rapidly respond to changes in demand.
2. Manage Peaks
The massive increase in e-commerce volumes, seen especially during the pandemic, highlighted that many companies have a need for more flexible systems to cater to peaks in demand.
Whether seasonal peaks or increases in demand due to unforeseen external factors, automation allows exponential increase in throughput with a limited increase in operators. Historically, the addition of an extra shift or extension of working hours to cope with increased demand would require the hiring of extra staff or overtime pay. However, automated machines are capable of running for longer periods, which helps keep operations moving when demand is high.
3. Achieve customer service levels and delivery timeframes
Another leading factor in the adoption of automation is the importance of uptime and reliability. Again, the upturn in e-commerce due to the COVID-19 pandemic has highlighted consumers' expectations for rapid, accurate, and increased service levels.
Automation allows distribution centers to get orders prepared, packed, and out the door faster than ever before, allowing businesses to meet increasing consumer demands.
4. Save costs
With considerable deficits in warehouse labor availability and increasing salaries impacting many businesses globally, automation can help to keep costs down in the long term.
When mistakes are made, the cost-per-product inevitably increases while reduced customer satisfaction could impact repeat business. A reduction in errors afforded by automation also brings additional value to the business, by reducing the cost of error-fixing.
5. Reduced overall Total Cost of Ownership (TCO)
As alluded to in previous points, there are several cost benefits to automation, from decreased staffing requirements to increased accuracy. Automated warehouses can also save on energy bills, as vast areas do not require heating or lighting where automated machinery is in operation instead of human labor.
These savings reduce the TCO of automation equipment while decreasing the time taken to see a return on investment.
Partner with DLL for affordable intralogistics automation
Whether customers are undertaking large-scale automated warehouse transformation projects or simply automating a few parts of an operation, DLL’s Intralogistics team is experienced in creating flexible finance solutions to help customers achieve their goals.
Get in touch to discuss your automation strategy and how DLL can help you invest.
