How to Build a Smart Warehouse

The rise of e-commerce should be a top priority for warehouse owners and managers right now. The recent global pandemic has resulted in the drastic growth of digitalization and e-commerce. If warehouses are not doing anything to meet the demands of modern industries and supply chains, they will be left out. Building a smart warehouse with modern technologies, such as SOLUM digital labels, is the way to move forward.

A smart warehouse is an advanced and technologically driven warehouse facility designed to optimize various aspects of warehouse operations. This includes inventory management, order fulfillment, and overall efficiency. Like a regular warehouse, it stores raw materials, various parts, products, and more. The significant difference is the technological advances that level up the operations of the warehouse and give it a competitive edge above others.

The primary goal of a smart warehouse is to enhance productivity, accuracy, and even cost-effectiveness by leveraging various modern technologies and automation solutions. According to the "Warehouse Automation - Robots, Technologies, and Solutions Market, 2021 - 2030", the warehouse automation market is expected to grow by 1.5x in 2025 and is expected to cross $37.6 billion by 2030. This is a clear indication that warehouses and logistics are and should be looking to implement technologies that create a modern warehouse.

A smart warehouse performs a wide range of functions, all aimed at optimizing its operations, improving efficiency, and enhancing overall productivity. Here are the primary functions of a smart warehouse:

1. Inventory Management

Real-time inventory tracking: Smart warehouses use technology like digital labels, RFID, barcodes, and IoT sensors to monitor the location, quantity, and status of inventory items in real-time.

Demand forecasting: Advanced analytics and machine learning algorithms help predict demand patterns, ensuring that the right amount of stock is on hand.

Automated replenishment: Automated systems trigger replenishment orders when inventory levels fall below predetermined thresholds.

2. Order Fulfillment

Efficient order picking: Smart warehouses utilize automation, robotics, and optimized routing algorithms to speed up order-picking processes.

Order accuracy: With the help of various technologies working together, workers are guided through the order fulfillment process, reducing errors.

Sortation and packaging: Automated systems handle the sorting and packaging of orders, ensuring items are packed correctly and ready for shipment.

3. Warehouse Layout Optimization

Dynamic slotting: Smart warehouses use data analytics to determine the most efficient placement of inventory items within the warehouse, reducing travel time for the staff and labor costs.

Space utilization: Technology helps maximize the use of available space, both horizontally and vertically, to accommodate inventory growth.

4. Labor Management

Workforce optimization: Data-driven insights are used to allocate labor resources effectively, ensuring that tasks are completed efficiently.

Training and safety: Smart warehouses employ technology for worker training, safety protocols, and monitoring to reduce accidents and improve employee performance.

5. Equipment and Asset Management

Predictive maintenance: Sensors and machine learning algorithms predict equipment maintenance needs, reducing downtime and extending the lifespan of machinery.

Asset tracking: RFID, GPS, and other technology are used to track the location and status of equipment and assets within the warehouse.

6. Quality Control

Automated inspection: Smart warehouses employ computer vision and image recognition systems to inspect and identify product defects.

Temperature and environmental monitoring: Sensors ensure that products are stored in the right conditions, particularly for items that are sensitive to temperature and humidity.

7. Data Analytics and Reporting

Data-driven decision-making: Data analytics tools collect and analyze warehouse data to provide insights into operations, allowing for continuous improvement.

Performance monitoring: Key performance indicators (KPIs) are tracked to evaluate the efficiency and effectiveness of warehouse operations.

8. Security and Safety

Access control: Smart warehouses use access control systems to restrict entry to authorized personnel.

Surveillance: Security cameras and sensors monitor the warehouse premises to prevent theft and ensure worker safety.

9. Environmental Sustainability

Energy efficiency: Smart warehouses incorporate energy-efficient technologies to reduce energy consumption and environmental impact.

10. Customer Service

Faster order processing: Smart warehouses enable quicker order fulfillment, leading to improved customer satisfaction.

Real-time order tracking: Customers can track their orders in real-time, which enhances transparency and communication.

A smart warehouse needs cohesive components to function properly. In essence, a smart warehouse is a holistic ecosystem where every component plays a vital role in achieving its operational goals.

Here are the key components of a successful smart warehouse:

• Warehouse scalability - A smart warehouse needs to be scalable to easily cater to the increasing demands of modern customers, new product leases, and more. Smart warehouses should be able to scale their tools and their operations at any given moment to adapt to various changes in the industry and retail operations.
• Warehouse visibility - Logistics visibility is also a must when it comes to a smart warehouse. Not only does this have an impact on smart logistics warehouses and the supply chain, but it also impacts customer satisfaction and brand reputation. Knowing where certain raw materials, inventory, or end products are given a sense of efficiency. It also boosts trust and satisfaction among end consumers, who will be getting the final products.
• Data and analytics - Data and analytics fuel the decision-making process and efficiency in smart warehouse operations. These also help the warehouse adjust and prepare accordingly for any projected delays, complications, increased demands, and more.
• Smart warehouse technologies - And of course, smart warehouse technologies are needed to digitize operations and enhance effectiveness. Technologies are able to communicate with each other and are integrated into a central system to help automate and enhance processes.

Smart warehouse technology stands as a cornerstone of smart warehousing. This is also one of the significant advantages that distinguishes a smart warehouse from regular or outdated warehouses.

Various technologies are usually interconnected with each other for a more seamless warehouse operation. From inventory tracking and management to order fulfillment, data and reporting, energy efficiency, and more, there is a smart solution implemented to ease processes. Here are some of the most common tools and technologies used inside a smart warehouse:

Digital labels 

Digital labels are a modern alternative or replacement for static or paper labels. Digital label solutions for warehousing, such as SOLUM’s Newton Sub-Giga, are a necessity for a lot of smart warehouses.

The Newton Sub-Giga is equipped with a high-speed data transmission Connection, a fully graphic B&W e-paper module, LED picking label variation, mobile configurable installation, 7-color LED indicator, 7-page capacity, multifunctional buttons, built-in protection, and more.

All of these capabilities help enhance inventory management, automate the order-picking process or stock replenishment, and improve equipment tracking in a warehouse. It also helps information dissemination within the warehouse, helping employees perform their tasks more efficiently and safely.

Internet of Things or IoT

Sensors and IoT devices are used to monitor the real-time status of inventory, equipment, and environmental conditions within the warehouse. This helps with inventory and equipment tracking, ensuring that operations remain accurate and timely. These sensors are also able to provide insights or data to managers. This data is then analyzed to make informed decisions and improve operational efficiency.

Radio Frequency Identification or RFID

RFID technology is mostly known for its use in inventory tracking or authorization. In a smart warehouse, this technology is used to track inventory items and assets throughout the warehouse accurately. It allows for real-time visibility and reduces errors in tracking.

Robots and automated guided vehicles (AGVs)

Smart warehouses often incorporate automation systems such as conveyor belts, robotic picking, and packing systems, as well as automated guided vehicles (AGVs). They streamline tasks like material handling, order picking, and replenishment. Because of this, they are able to cut down labor-heavy tasks by a significant amount of time, which frees up employees to focus on other tasks.

Warehouse management system (WMS)

An advanced warehouse management system, or WMS software, plays a central role in smart warehouses. This helps in optimizing inventory placement, order processing, and tracking. These systems also use data analytics to improve warehouse operations. Data collected from various sources within the warehouse is analyzed to gain insights into operational performance, identify bottlenecks, and make data-driven decisions.

Artificial intelligence and machine learning

Artificial intelligence (AI) and machine learning algorithms can also be employed within a smart warehouse. These are mostly for demand forecasting, predictive maintenance of equipment, and optimizing routing for order picking and delivery. This helps warehouse managers and employees anticipate and prepare for any change of pace, downtimes, and more.

Energy Efficiency Systems and Safety Solutions

Smart warehouses often incorporate energy-efficient technologies to reduce operational costs and harmful environmental impacts. This includes smart lighting and modern HVAC systems.

Apart from operational efficiency, smart warehouses also prioritize worker safety. They can do this by using sensors and automation that reduce accidents and ensure compliance with safety regulations. There are also asset trackers and geofencing solutions that will help create a safe and wholesome workplace.

While creating a modern and smart warehouse seems simple enough, starting with the technologies, it helps to be a little more thoughtful. You need to think about your warehouse operations and how they will change, or how you want them to change for the better. This way, you’ll be able to make wise decisions that will contribute to your smart warehouse’s success. Here are key steps and tips for building a smart warehouse:

Step 1: List down goals and priorities

To turn your warehouse into a smart one, you must first analyze your operations. List down your goals and priorities for your warehouse. What are the processes that are taking the longest? Which processes can you automate? How can you help your employees achieve ultimate efficiency? Be mindful and be strategic with what you want to achieve with a smart warehouse.

Step 2: Implement smart warehouse technologies

Implementing smart warehouse technologies is, of course, crucial. However, implementing all or too many technologies can confuse your operations. Remember your goals and priorities, and choose technologies that align with them.

Start with something simple, including a digital label solution, like Newton Sub-Giga, to help you enhance inventory and management, streamline order-picking processes, allow asset tracking, and more. This way, you’ll be able to target multiple key areas in your warehouse operation even with only one solution.

Step 3: Train your team

And of course, don’t forget to train your employees. Having new technologies can be daunting, especially for those who are not familiar with smart technologies or those who have low technology literacy. You and your team need to work together to familiarize yourselves with the new solutions that will be implemented. Learn how to use it to enhance operations, how you can acquire insights and analytics, how you can use it to make data-driven decisions, and more.

A smart warehouse facility can be costly, especially up front. Since advanced technologies are utilized, you can expect that the initial cost will be a little more expensive. The overall cost will also depend on what kind of smart technologies you will implement.

For conveyor belt systems, robots, inventory management software, and more, it can cost from $1 million up to $25 million. Much more advanced systems and bigger automation like these can require a huge investment and commitment.

For simpler solutions, on the other hand, such as digital labels or electronic shelf labels, it can be cheaper compared to other technologies. For example, electronic price tags cost $6-$10, or $60,000 for every 1000 square feet of retail store or facility that would need 10,000 labels.

This makes listing down priorities even more important, as you don’t want to invest in smart warehouse technologies that will only confuse your employees or your operations. You want technologies that can be fully utilized and maximized when building a smart warehouse.

Smart warehouses are the future. It has a direct influence over the retail sector, the commerce industry, the supply chain, and more. As technology continues to advance and demands continue to peak, smart warehouses will likely become even more sophisticated and efficient.

Start building your own smart warehouse now. Talk to SOLUM experts today to learn how digital labels can modernize your warehouse operations.