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Manufacturers: Learn How Robots Can Cut Costs in Automated Warehouses

Posted by Concannon Miller on Tue, May 28, 2019

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industry factory iron works steel and machine parts modern indoor hall for assemblyThe latest technological innovation in manufacturing is likely coming to a plant near you — maybe even to your plant. It's the "automated warehouse." As technology, such as Big Data and the Internet of Things, improves other aspects of the supply chain, the traditional warehouse is undergoing radical changes. Manufacturers can't afford to ignore these developments.

Evolution of the Warehouse

Lehigh Valley Manufacturers' Guide for GrowthThere's a traditional image of warehouses. It features big bays where workers load and unload goods stacked in rows of shelves. Employees wear hard hats and drive forklifts to move goods and hustle to fill orders and meet other customer demands. A foreman barks out management's instructions. Even when workers are careful, accidents may happen.

But that image is fast becoming history. Warehouses are evolving to include robots that circulate between pallets, scan shelves, retrieve items and deposit them at delivery stations. Progress now is often monitored electronically with supervisors controlling operations from remote locations. If your warehouse doesn't yet resemble this 21st century model, it's time to learn more about the advantages of automation.

READ MORE: Lean Manufacturing: 8 Steps Manufacturers Should Consider to Reduce Waste

Three Key Benefits

There are three primary benefits to using robotics:

  1. Cost savings. Switching to robotics will involve significant financial outlays initially and subsequent updates and repairs. But, over the long run, automation is often less expensive than human labor. Robotics increase productivity and utilize warehouse space better than workers, thereby reducing overhead costs. The bottom line: Automated warehouses typically cost less and produce more.
  2. Responsiveness. With robotics, you can move faster, especially when procedures are integrated with Big Data. For example, with an automated warehouse, you might be able to fully process an order in an hour or less that regularly would take a day for manual processing and delivery.
  3. Health and safety. In the past, warehouses could be hazardous work environments where accidents and injuries occurred. Automated warehouses can use robotics in situations that might be dangerous for workers. For example, automated storage and retrieval systems (ASRS) can access locations that an employee with a forklift might find difficult and risky to reach.

Manage Challenges

Of course, automated warehouses present certain challenges, even for cutting-edge manufacturers. For example, workers can recognize certain conditions — uneven floors or obstacles blocking exit doors — that robots may not. That's why most companies that transition to automation retain at least some members of their human staff.

It's also important to remember that automation doesn't provide a one-size-fits-all solution to every manufacturer's needs. It's up to owners and management, working with their financial advisors, to conduct due diligence to ensure that automation will save money over the long run.

READ MORE: Cash Management & Obtaining Financing: What Every Manufacturer Should Know

It Takes a Team

The first step to adopting automation is to put a team of knowledgeable managers and employees in charge of selection and implementation. To maintain its focus, the team should develop a detailed strategic plan with a timeline and clear objectives.

Besides the upfront price of the automation system, budget for long-term maintenance and repair costs and expenses related to modifying facilities for the new equipment. If your company plans to eventually expand its warehouse, your total cost estimate should include the cost of additional robotics for use in the expansion.

Keep in mind that your company may not be forced to buy all new machinery. In some cases, you may be able to retrofit your existing equipment with robotic upgrades. For example, any conventional warehouse vehicle can become an automated guided vehicle (AGV) by installing a robotic module. And AGVs can be introduced quickly and efficiently into existing operations.

Training workers, including those who will maintain and repair the machines, should be a priority. Although there's no guarantee robotics will save your company money, losses are virtually guaranteed if workers can't operate systems or use them incorrectly. Outside experts or members of your selection and implementation team might do the training. Just make sure you coordinate with the system's vendor.

Learn All You Can

You don't need to be in a rush to automate. First focus on learning all you can about automated warehouses and how new technologies may help your company grow. After all, robotics can be expensive, and you probably need time to explore your financing options. Contact us. We can help guide you through these major decisions.

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© 2019

Topics: Manufacturing

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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