As warehouse operations evolve, smart warehouses and new technologies are helping organizations balance growing operational challenges and deliver goods efficiently
Running a warehouse today involves overcoming a changing set of obstacles. Alongside the rapid growth of e-commerce, warehouse managers must navigate an ever-changing landscape of customer demands, sustainability challenges, and resource shortages. Additionally, they must consider regulatory requirements and skills management. In this environment, cost optimization becomes an increasingly difficult task. To improve their chances of success and stay competitive, warehouse managers need to adopt the latest technologies such as a smart warehouse management system. The concept of the “smart warehouse” represents an evolution, understanding the maturity of your warehouse operations today is crucial to seizing future opportunities.
Warehousing operations are faced with multiple challenges
Navigating the complexities of today’s warehouse operations involves addressing a variety of challenges, including:
- Customer needs: Managing continually changing customer needs requires the agility to quickly adjust to fluctuating volumes and meet increasingly high service level expectations.
- Climate challenges: Environmental responsibility is a significant and pressing issue, compelling warehouses to embrace their role in ensuring adherence to sustainability targets.
- Resource scarcity: Labor shortages and inventory shocks create a scarcity that clashes with the growing demands of consumers. Efficient operations and focusing labor on complex client value driven tasks is becoming paramount in finding innovative ways to navigate these constraints and deliver results.
- Strict regulatory frameworks: Regulations, particularly concerning traceability, add layers of complexity to supply chains. Warehouses must be compliant with these regulations while effectively managing logistics across geographical borders.
- Competency management: The constant turnover of employees and subsequent loss of knowledge become significant hurdles to long-term productivity, demanding constant effort to maintain a skilled and knowledgeable workforce.
The first step in warehouse optimization and transformation
To meet customer needs, warehouse managers must optimize warehouse space and identify areas for improvement. For that to happen, warehouse managers need to be able to assess and visualize capacity and demand at the facility level and below. As new companies enter the market, the need for warehouses to be more competitive – and provide complex service offers – has increased.
The evolving role of warehouse management systems
Warehouse management systems (WMS) fulfill a critical role in warehouse transformation. They provide a centralized software interface for processing, managing and monitoring operational processes. WMS have significantly evolved over the last few years. And this evolution includes cloud warehouse management systems which are currently in high demand. The popularity of the move to cloud is due, in no small part, to the fact that WMS that use cloud computing offer unparalleled flexibility, scalability, and cost efficiency.
Applying a core model to your deployment approach shapes your WMS in a way that addresses your needs across all geographies to enable faster transformation projects at scale.
But, nowadays, modern WMS are moving beyond streamlining core processes. They are increasingly incorporating new use cases like workforce management, enabling dynamic task allocation and improved labor efficiency. This is ultimately driving operational excellence in warehousing.
As well as preparing a foundation for warehouse operations, WMS also set the stage for further optimization efforts, such as integrating with automation technologies to provide established business rules, communicate orders and enhancing the data visibility needed to unlock data-driven improvement use cases. WMS systems act as a pivotal enabler for the transformation of traditional warehousing into smart, connected operations.
Warehouse automation and robotics
Warehouse automation that integrates into WMS has been accelerated by multiple technological leaps and fueled by massive investments from marketplace players. The need to address both traditional objectives (cost efficiency, service and quality), as well as new challenges (labor scarcity, assortment complexity) has made the decision to invest in automation easier to justify.
While automated guided vehicles (AGV) and autonomous mobile robots (AMR) are the most visible tip of the iceberg within the solutions landscape, there is no “one-size-fits-all” approach making it important to consider the full scope of solutions within the warehouse and all the variables at hand.
Warehouse automation and robotics solutions can boost labor productivity by 85%1 allowing businesses to not only reduce labor costs but also face head on the shortages some experience. For instance, Exotec’s Skypod system with its put-to-light cells and orchestration engine enables end-to-end automated order fulfillment and achieved a throughput and efficiency increase of more than 600% for one of its customers.
Data-driven optimization and IT/OT integration
A proper IT/OT strategy, including operational tools and IT integration, and a data factory approach, is just as important as the technology itself. It is key to empowering the supply chain as a strategic asset and to continuously identifying new business cases. Data analytics enables warehouses to harness vast amounts of data, created by their systems, to drive efficiencies, costs and CO2 footprint reduction through real-time monitoring and data-driven decision making. This data can be harnessed to drive extended visibility solutions such as digital twin, transportation control towers and process mining solutions to take operational issue diagnosis and resolution to the next level.
Towards smarter and more sustainable warehouses
Generative and agentic AI tools unlock a new enhanced layer of data intelligence. Revealing a realm of unprecedented adaptability and resilience will certainly revolutionize supply chains. Warehouse space optimization is a great example of how Gen AI allows you to go one step further than with traditional AI. Discriminative AI can be used for warehouse layout constrained optimization, considering factors like distance travelled and tasks duration minimization, reducing congestion, and products category. Generative AI then enables layout generation for visualization, simulation of a wide range of scenarios (e.g. seasonal peaks) and suggestion of optimal layout.
Finally, it is equally as important for industry stakeholders to prioritize sustainability as an integral part of warehouse optimization. By leveraging the power of technology and adopting sustainable practices, warehouses can not only enhance operational efficiency and customer satisfaction but also contribute significantly to mitigating the environmental impact associated with their operations. We believe this can be achieved through a combination of sustainable execution and sustainable assets.
Sustainable execution involves implementing initiatives that promote the more sustainable use of existing assets and resources within warehouses, while “sustainable assets” focus on designing and utilizing assets that are inherently sustainable, such as eco-friendly warehousing facilities and sustainable primary materials. From reducing energy consumption and optimizing packaging to implementing effective waste management practices, new technologies also offer the potential to revolutionize the way warehouses operate in an environmentally conscious manner.
Partnering for end-to-end warehouse transformation
As warehousing solutions continue to advance, it is crucial for industry stakeholders to collaborate with the right partners in their warehouse transformation journey. At Capgemini we provide end-to-end support for organizations, from the analysis of your current situation and exact context, the selection of the most suitable technologies that align with your goals and needs, the definition of the right implementation strategy and delivery execution, to the set-up of a continuous improvement approach to ensure your warehouse remains at the forefront of innovation.
