Why digital warehouses often come with unexpectedly high costs

Warehouse owners are investing heavily in digitalisation and advanced stock management to increase efficiency and reduce operating costs.

However, according to Joshua Harvey, head of growth at Specno, budgets for automated systems often overlook the unavoidable downtime that occurs when systems fail. Harvey argues that the financial impact of system downtime can be more costly than employing human labour.

The growth of e-commerce has reshaped the demand for online goods, with customers expecting same-day delivery and free returns. Unexpected downtime hampers the ability to meet these high expectations. Dropped connections, frozen screens and corrupted data lead to delays and inaccuracies in order fulfilment. Inventory discrepancies also occur when a system’s records do not match the actual stock on shelves.

Another source of downtime is the wireless network, which can suffer from signal loss, dropped connections and delays.

Harvey points out that there is a tendency to see digitisation as a cure-all for warehouse issues, without fully recognising the impact of downtime or the true costs of inaccurate inventory data. He summarises the dilemma by saying:

“Until we confront these uncomfortable truths, our gleaming new digital warehouses will remain ticking time bombs, silently eroding the very profitability they were built to enhance.”

Automating warehouses may, therefore, be approached with caution. In many warehouses, manual handling operations remain necessary. Rather than rushing to digitise the warehouse, companies may choose to add automation that merely supports human workers.

Instead of allocating the entire warehouse development budget to automation, upgrading equipment from a warehouse equipment supplier may be the first port of call.

You may also interested in: