The rise of e-commerce warehouses
26 February 2019

More and more people are doing more and more of their shopping online. One current estimate puts the growth of e-commerce at 23% year-on-year. Internet shopping offers not just a broader range of products that could fit into most department stores but, through the ease of price comparison, unprecedented reassurances of value. And smartphones have empowered consumers to make purchases wherever and whenever they like.

From the retailers’ point of view, online selling has global reach, with even the smallest seller able to access traffic in excess of the busiest high street’s footfall. And overheads are low. The considerable costs of running a traditional shop, or chain of shops, on rented prime real estate, with staff, are entirely removed. Instead, stock is consolidated and held in warehouses.

E-commerce warehouses and logistics

The smooth functioning of these warehouses is intrinsic to the viability of online commerce, which from the start has cultivated high consumer expectations of product availability and swift (same day or overnight) delivery. In order to operate this efficiently, however, the new warehouses need to meet certain challenges, many of which are dictated by points of difference from their predecessors.

For a start, these places can be vast – millions of square feet in some cases. In addition, for all their size, they need to afford the retailer rapid access to a complex and diverse inventory. Items from that inventory are typically called for piece by piece, in direct response to customer orders, rather than in bulk. And facilities for packing and shipping orders, as well as for processing returns, complicate the inward and outward flow of goods. 

E-commerce warehouses are, in fact, not just conventional storage facilities but also function as processing and distribution hubs. A lot more activity goes on in them than in traditional warehouses. And the latter’s operating methods – workers with pens and paper walking or riding forklift trucks up and down aisles, manually retrieving or replacing inventory – are not ideally suited to the massive scale, relentless pace, long hours and exacting standards of the new environment.

Automation in e-commerce warehouses

Automated storage and retrieval systems – combining the advantages of dense architecture, mechanised transferals and computerised inventory management – have long been used in manufacturing, wholesale and institutional contexts. And as e-commerce has taken off, they have proved a natural answer to its organisational and logistical demands.

Freed from the constraints of a human being’s natural lifting and carrying abilities, robotic stowing and picking devices can work with racks higher and deeper than were formerly practical. Retrieving a plastic box (or tote, as warehouses call them) from the back of a shelf ten feet off the warehouse floor – and then to do it again twenty minutes later in response to a new order – is clearly a job for a robot, not a human.

That automated systems can function without light (literally, as in lights-out manufacturing), with the considerable energy savings that entail, or at very low temperatures (dovetailing here with the requirements of refrigerated storage facilities) suggests further points of compatibility with current trends.

A conventional warehouse’s wide aisles were always there because of forklift trucks. Alternative conveyance systems bring with them the potential not only to cut down on empty floor space but to enhance operational speed and efficiency. Continuously running conveyor belts, for example, can be used dynamically in combination with automated guided vehicles – mobile shelving units or pallet bearers crisscrossing the warehouse floor guided by magnetic tape, transponders, lasers or, more recently, specially adapted wi-fi technology.

Warehouse management systems are the overall means by which operations are run and inventory kept up to date.  Tracking is typically accomplished through barcodes and scanners or radio-frequency identification tags; and all stock changes are noted and acted upon in real time, an essential precondition for being able to guarantee availability without recourse to cumbersome volumes of reserve supply.

Beyond accurate stock control, warehouse management software assists in the analysis of data in order to improve operational efficiency. Fast-selling products, for example, may be identified with a view to being stored close to conveyor lanes. Again, the picking and transference of different goods destined for a single shipment may be coordinated in order to minimize delays down the line in the dispatch area.

At its most developed, a warehouse’s automation software can function in the same way as an air traffic control system, prioritising certain conveyance paths at the expense of others, and pre-empting incidences of congestion.

The automated warehouse of the future

The sight of hundreds of robots shuttling around a warehouse floor under the guidance of such a system, however, is still relatively uncommon. A handful of industry giants – Amazon, obviously, and in the UK the successful online grocery retailer Ocado – have showcased their pioneering systems in the media not just to give a snapshot of progress but partly to advertise robotic and software management solutions in which they have a developmental role and proprietary stake.

And it is worth noting that even the cutting-edge Amazon and Ocado warehouses feature prominently the ongoing employment of human workers. Both organisations, in fact, claim that increased automation has not resulted in any layings off. Instead, while robotic arms and cranes lift, stack and transfer totes, human co-workers either monitor the machines or carry out sorting or packing tasks too fiddly or complex for current robot technology.

Will all warehouses one day look like this? In some ways, very likely – though the future may be more varied. After all, the scalable, modular nature of warehouses automation favours businesses of all sizes. More than in some contexts, the partial, or gradually incremental, automation of warehousing is a real option, and real incentive, for e-traders, many of whom, attracted by the low overheads, start very small.

By the same token, at the other end of the spectrum, our largest retailers are facing a future in which the cultivation of all sales avenues – the digital complementing the high street – promises the most realistic satisfaction of customer expectations. These outfits typically already possess substantial storage facilities ripe for modernisation.

To every degree, then, and especially as the notion of e-commerce loses its niche status, automated storage, supply and distribution processes are set to become an increasingly standard feature of the everyday consumer experience.


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