The Smart Warehouse takes e-commerce to the next level

The steadily growing customer expectations in e-commerce are driving digitization in logistics. But not every warehouse is smart yet.

November 05, 2020

Fast delivery times are one of the most important customer needs in e-commerce. In addition to optimizations in parcel delivery that have already been successful in many cases, the seamless connection of order processes in the online shop to the merchandise management system (MMS) is crucial to shortening processing. The smarter the warehouse, the faster the delivery.

The retailer Mango, for example, has digitally networked all logistics areas from goods receipt, storage and sorting to packaging and shipping by upgrading its MMS to a highly automated warehouse management system. By 2023, the company wants to expand its logistics so that e-commerce orders are shipped directly to end customers.

However, not everyone is as advanced as the Spanish fashion group. The really smart merchandisers are probably still in the minority today. The potential is therefore still enormous when it comes to goals such as reducing costs while optimizing customer satisfaction. Investing in a smart warehouse makes just as much sense in times of economic recession as in economic growth phases. In the long term, it even seems indispensable in order to survive in a highly competitive market.

The basic advantages of a smart warehouse are:

  • greater agility, as capacity planning is continuously optimized and it is possible to react more quickly to emerging bottlenecks.
  • an extended scalability, as the software used can be continuously developed and capacities can be increased through productivity growth - to a certain extent independent of the spatial conditions.
  • greater data transparency, which reveals optimization potential.
  • the use of robotics to automate picking and picking processes. And not only autonomous transport systems are being used - "cobots" (collaborative robots) are also increasingly finding their way into in-house logistics. These robots bring the goods to the packing area, where human colleagues take over the fine work.
  • the use of RFID scanners and the abolition of barcode scanners. RFID scanners only need to be pointed in the direction of the RFID transponder (which can be as small as a grain of rice). This is what makes machine scanning practical.
  • the use of artificial intelligence (AI) to increase productivity and minimize errors in the use of technologies such as the aforementioned robots in the picking process.
  • the use of the Internet of Things (IoT) as a prerequisite for a modern Warehouse Management System (WMS). When a product enters the warehouse, an RFID scanner scans the product and passes the information to the WMS. The WMS in turn communicates with the robots and informs them of the specified storage location. IoT thus enables the seamless interaction of hardware and software without humans having to manually interact between the individual process steps.

With the help of the collected data volumes along the entire supply chain and the standardized use of machine learning and predictive analytics, it is also possible to forecast the future ordering behavior of customers. Orders can therefore be picked and prepared for dispatch even before they are received.

We need a Big Data strategy

In order to obtain correct predictions of customer behavior, the collected data must of course first be valid and of sufficiently high quality. First and foremost is the question of what customer data is needed for behavioral predictions, considering technical and legal requirements. In order to evaluate and classify large amounts of data, fundamentally identical data categorization specifications must apply to all processes. Ensuring high information quality is a continuous process that never ends. It is central to every modern company in the most diverse sectors and especially for functioning smart warehouse logistics.

One of the most important tasks in logistics and merchandise management will therefore be to recognize data as a decisive competitive advantage and to operationally implement a suitable Big Data strategy. All economic players that today lack enough data and processes for controlled collection as well as targeted interpretation will have a hard time maintaining their market position in the medium term.

Let's finally do away with the old merchandise management system systems

The heart of data procurement is and remains the MMS. If management now shies away from switching from an outdated system to a modern one, future switching costs will increase enormously. Open, flexible systems with sufficiently system-compatible interfaces to external databases and platforms are necessary to adequately accommodate changes in automated picking and distribution processes.

Not to be underestimated is a sufficiently high user-friendliness of the software used for the MMS, i.e. comprehensible masks and transparent, logical processes and procedures. Such programs must be smooth to use. This increases acceptance for the introduction of new systems into the organization.

Let's make our warehouses smart

For smart warehouses to gain acceptance, the following points must be met:

  • The technology must be easy to use.
  • The collected data flows directly to the required systems for further processing.
  • The sensor technology must fit into the spatial conditions.
  • If investment costs are high, sensor technology should also be rentable.
  • The highest possible data security must be guaranteed.

Marcel Kluckow,Senior Product Manager, Technology Data & Information Management
Marcel Kluckow
Senior Product Manager, Technology Data & Information Management