How to Digitize Warehouses and Distribution Centers

Strategy | Brian Estep |
08 March 2022

This Transportation & Logistics (T&L) Insights series is based on research by Levvel, who joined the Endava family in 2021. The team surveyed over 500 US-based companies who procure transportation and logistics services internally and externally to get their views on their challenges, needs, and use of digital technology solutions.

While companies often perceive technology innovation to mean things like high-end robotics, artificial intelligence, and fully autonomous vehicles, there are many elements in the supply chain that can be modernized without requiring great effort or cost, while still providing the competitive edge T&L companies are looking for. In this series, we will present current industry challenges and how digital technology can help reduce friction, enhance efficiency, and provide a better experience for businesses and their customers.

THE CURRENT STATE OF TECHNOLOGY IN WAREHOUSE AND DISTRIBUTION CENTERS

The supply chain is under unprecedented pressure, and the failure to meet growing customer demands is stressing operations from beginning to end. This is in part because the T&L industry still relies heavily on manual labor as well as legacy methods of managing cargo, such as paper and fax.

According to our survey, over 40% of companies are being held back by a lack of automation. And while there are concerns about the cost of upgrading facilities, the return on investment (ROI) is immense. Digital automation is a good example of a crucial upgrade. It relies on non-physical technologies, such as data and software to manage facilities, helping reduce costly human error and increase transparency.

Not all warehouses and distribution centers can employ the same automation strategies, but usually, starting with something is better than nothing.

Of the 560 companies surveyed, 75% had already implemented or were planning to implement some sort of automation initiative. Yet only 14% answered that over half of their warehouse capabilities were being automated – and that still leaves a lot of room for error.

The piecemeal approach many facilities take deserves a closer look. For example, 60% of companies had implemented control towers to oversee operations within the supply chain. And yet, 80% still relied on legacy tools like emails, phone calls, and spreadsheets as well. If businesses don’t embrace their automation initiatives fully, they won’t be able to harness the full potential to increase speed and lower error rates.

WHY WAREHOUSES AREN’T AUTOMATING FAST ENOUGH

An important factor for companies in the initial stages of automation is the cost – or perceived cost – of new technology. Stakeholders tend to assume that updating warehouses and distribution centers involves high-cost physical approaches, such as robotics. In fact, there are dozens of other options, and most of them are affordable and provide a satisfying ROI.

Even simple digitization strategies, such as cameras that record cargo unloading, can be enough to increase efficiency, transparency, and compliance, as well as reduce the opportunities for human error.

Implementing digital approaches first may make more sense for most companies, and the cost of tools like software for tracking and inventory efficiency is less disruptive to the bottom line. Physical approaches, such as robots and autonomous vehicle delivery, can come later and often require digital tools anyway.

It’s true that most technology requires a company to both hire and retain a trained workforce. However, digitization strategies that help increase efficiency make employees’ work easier in the long run.

AUTOMATION IMPLEMENTATION STRATEGIES FOR THE T&L INDUSTRY

There is no one-size-fits-all strategy that will apply to every facility when it comes to choosing and implementing digital automation tools. Each organization will have to survey its own needs and find places where it can benefit from digitization, whether it’s automating paperwork, such as Bills of Lading, or communicating more efficiently with drivers when they come to unload cargo.

The good news is that facilities have already begun to implement new automation strategies. We found that innovations around tracking cargo are the most common, including mobile scanning devices, digital barcodes, radio-frequency identification (RFID), and GPS tracking. Experiencing the benefits and ROI of these tools can encourage companies to take the next steps towards even more specialized software approaches to make everyone’s work along the supply chain easier.

Read our other Transportation & Logistics Insights articles to learn more about how technology can help alleviate industry challenges.

Brian Estep

EVP North America & Global TMTR Lead

Brian is one of the founders of Velocity Partners. Following their merger with Endava in 2018, he took on the role of Head of Sales, TMTR. With extensive experience in technology, starting in 2000, and a bachelor’s degree in computer science, Brian has deep knowledge of software systems and lean/agile processes, which allows him to truly understand the needs of customers and design the best solutions for them alongside his team.

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