Automation—it’s getting headlines and transforming industries, warehousing among them. But is it right for your e-commerce business? Here are some factors you should consider wether to make the move to an automated warehouse.
WHAT’S YOUR BREAK EVEN?
The biggest risk in moving to a fully automated warehouse is the expense. The up front costs of moving your inventory and setting up a new system can be significant. You also need to take future delivery into account. Will it be more expensive to get goods from your supplier to the new facility? To start, do a worst-case analysis of your break even point. Assume the transition isn’t smooth. Assume sales go down due to unforeseen market forces. How long will it take to recoup your investment and how much will it strain your cash flow?
If the move makes sense from a cost perspective, start interviewing potential warehouses to see what kind of visibility they can offer. E-commerce is an ever-fluctuating industry, and being able to catch problems or opportunities immediately in your shipping can have a huge impact on your bottom line. Does the warehouse offer real-time reports? Will you get a dedicated fulfillment specialist to be your eyes in the warehouse who is responsive when you call? Can the warehouse integrate their systems with yours so things run smoothly? For automation to live up to its potential, you need to be able to continue tweaking the system in response to changing conditions.
The third factor to consider is the nature of your merchandise. Is personalization important to your customers? If so, it might be difficult to replicate the unboxing experience they’re used to at an automated facility, which could lead to decreased brand loyalty. Do you have a lot of returns and exchanges? Automated warehouses are sometimes better at shipping things out than taking them back. On the other hand, if your competitive advantage is a low price point for customers who aren’t looking for personalization or easy exchanges, automation could be a big help in building scale for your business.
A HYBRID APPROACH
Another thing to consider is a partially automated warehouse. This is how we’re set up at One World Direct. Low touch operations move on a conveyor belt, while high-touch operations (kitting, specialty packaging, etc.) are handled by specialists at our packing stations. This hybrid approach works well for e-commerce companies who need the ability to customize parts of their operation while maximizing efficiency. If you’d like to learn more, just give us a call at 1-866-289-9010. Or drop us a line at sales (at) owd (dot) com. We’d be happy to help you figure out what level of automation is right for you.