The concept of the automated warehouse is growing in popularity, bringing diverse configurations, flexibility and power needs.

Interact Analysis reports that more than a quarter of warehouses are expected to be automated by 2027. That is up from 14% a decade earlier. Amazon really started the trend  with its fully automated warehouse facilities, and Walmart and others took note.

Kraft Heinz Co. plans to invest more than $400 million in building a “state-of-the-art,” 775,000-square-foot, end-to-end automated distribution center in DeKalb, Ill. Expected to open in 2025, the warehouse is being designed to drive greater supply chain efficiencies and offer faster distribution. General Mills now has warehouse automation in four locations.

“Modern-day automation systems have a very easy user interface. Everything’s straightforward and guided for the employee.”
—Rueben Scriven, Interact Analysis

Rueben Scriven, research manager for Interact Analysis, Austin, Texas, provides research and consulting services for industrial automation, robotics, warehouse automation and commercial vehicles. 

Scriven attributes the rise in automated warehouses to several factors, including labor shortages, the fast rise in e-commerce stimulated during the pandemic and a continuing drive for operational efficiency. 

In terms of warehouse construction in 2023, China and the United States led, between them accounting for 58% of the total square footage added in 2022. Over the year, U.S. warehouse stock increased by 6% and China’s by 5%.

Different automations

Automation can take different forms within warehouses. For instance, conveyance technology is getting smarter. Intelligent assistive robots are on the rise, becoming more collaborative and mobile.

Scriven described the automated warehouse landscape as historically using “islands of automation”—an area of automation here and a spot of automation elsewhere on the warehouse floor. He said it then shifted to customizable end-to-end automation systems that essentially were multiple islands of automation connected by conveyor belts and other means. They were also customizable using sorters and storage systems. 

“Now we’ve entered a new, interesting phase that is almost a reversal, returning to islands of automation but with a difference,” Scriven said. “We see modular plug-and-play systems that are connectible, almost like Legos.”

Scriven went on to explain that in the early days of the automation market, it was largely serviced by the original equipment manufacturers that developed the equipment, such as Honeywell and Dematic. That still occurs, but now system integrators help design an automated warehouse landscape using third-party equipment. Get to know these integrators, as they may contract with outside electrical contractors if such work is not done exclusively in-house.

The Numina Group, Woodridge, Ill., is a warehouse automation designer/integrator that also develops software to help the end-user. According to the company’s website, it has designed and implemented more than a thousand automation solutions among diverse warehouses throughout North America. 

Numina’s supplier partners are a good illustration of what you might find in today’s warehouses, specializing in materials including automated conveyor systems, storage and retrieval, Goods to Person systems, autonomous mobile robots and more. Numina has its own voice-picking program, enabling voice interaction with automated systems.

“Customers right now are still relatively uncertain, or they don’t have the knowledge in-house to develop automation systems. The exception is the automotive sector that has in-house competencies to develop an automated factory,” Scriven said.

A shifting ROI perspective

Warehouse automation returns on investment (ROIs) have changed. Where historically it was possible to generate an ROI from automation “in less than five or sometimes three years, the COVID-19 pandemic shifted automating as a response to scarce on-site labor. It became less about ROI and more about continued operations. It also became more of a necessity than an ROI efficiency calculation,” Scriven said.

With a returning warehouse workforce, he sees ROI shifting back to efficiency gains. Whether or not workers find automated technology daunting, “Modern-day automation systems have a very easy user interface. Everything’s straightforward and guided for the employee. I don’t think there’s a huge aptitude requirement to operate the equipment. Now to service and maintain it, that will require staff with the technical know-how,” he said.

Some integrators offer different services after installation, with one model going as far as to provide staff to operate the equipment. Warehouse owners can also possibly save on IT labor by turning to the integrator.

Showing value from automation

Automation plays a role in the reshoring trend in North America. Stimulated by the Inflation Reduction Act, manufacturing in the states is slowly rising. As domestic labor costs are higher than abroad, warehouse automation is an attractive cost-saving option for manufacturers with warehouses. There are several markets that see value in automation.

“We are seeing investments in automation, especially when it comes to high-value products,” Scriven said. “Think about battery production, consumer electronics—these are areas where it makes sense to automate. Battery production sites are using warehouse automation for the raw materials that feed into the production process. There’s also been quite a few warehouse automation deployments in Apple distribution centers across North America.

“We started with fixed automation where automation is bolted to the ground,” he continued. “Think conveyor belts, automated storage systems. When you change an operation in a fixed-automation warehouse, you then need to change the conveyor belts, you need to change other things. It’s very cumbersome and difficult to do. Mobile automation is a different approach.”

Scriven explained that with mobile automation, you can have automation that moves about on wheels or other motorized systems. These are autonomous systems that use devices connected to the internet of things (IoT) to navigate the warehouse. Automated forklifts, for example, can be used to pick up online orders after sorting and bringing the items to a distribution dock. The unmanned forklifts receive their instructions from an IoT fleet management system.

Industrial IoT is also becoming part of the automated warehouse.

“IoT is a vital component in any automation system, as you have remote diagnostics and various other things. I think going forward, its value will grow. For instance, for warehouses moving to more of an OpEx model for automation (measuring efficiency), you need much better diagnostics of the equipment, which IoT can offer,” he said.

Robots on the rise

According to the Robot Report, whose online mission is to “explore the business and applications of robotics,” investments for robotics in May 2024 topped $2.1 billion, the highest monthly funding to date this year. Warehouses are one beneficiary of robotics. As an evolving technology, it seems certain new applications will be added to the warehouse space. In June 2024, Vecna Robotics, Waltham, Mass., received $40 million in new funding. The company offers robotic tuggers, self-driving forklifts and other automation solutions.

“Now we’re seeing more and more mobile automation projects where the automation can adapt and change quickly and easily as you change your business processes,” Scriven said. “We’re in the early days of mobile or flexible automation where software is really the driving force. The automated warehouse will look different with robots running around carrying out the directives of smart software.”

He added that five years ago, the mobile robot market was in its nascent stage. 

“Now it’s a more mature market and growing,” he said. Business Insider reported in June that Walmart is adding autonomous forklifts and retrieval robots to its warehouses. It also shared that Amazon has doubled the number of its robots among its fulfillment centers and warehouses over three years. Mobile automation offers a lower cost, is easier to deploy and works better with subject matter experts. 

“Automation that is flexible may displace fixed approaches. Mobile robots are already proving to be a better answer in automation,” Scriven said.

“When thinking about mobile automation—which is going to be a very important part of the market—of course you need charging stations (e.g., chargers for mobile robots),” he added. “I think this will be an extremely important part for electrical contractors, who will be the ones dealing with the charging apparatus of mobile automation.”

Right place, right time

“Obviously, with more automated warehouses there is going to be a need for more electrical contractors,” Scriven said. “That’s a given. System integrators historically have had the electrical engineers in-house. But what we’re seeing now are more of these plug-and-play, modular, almost prebuilt systems. Electrical engineering is essentially done ahead of time, so to speak. Integrators’ core competencies may shift more heavily to software in five years. In fact, I think we’re slowly shifting toward software first, hardware second. Software is really what will drive operations in an automated warehouse.”

In this shift, Scriven added that electrical engineering may no longer be part of the integrator’s wheelhouse. “The potential for winning business with system integrators could fall more with the electrical contractors,” he said. 

Warehouse integrators might look to electrical contractors with electrical engineering expertise. That familiarity could help with more highly engineered plug-and-play automation installations.

“I think developing that relationship, winning the trust of these system integrators could potentially lead to more business down the road,” Scriven said.

While the pace of automated warehouses is accelerating, Scriven views it as a relatively untapped market with room to grow. This changing landscape for distribution is just getting started. Electrical contractors that understand the world of automation in the warehouse space can position themselves in the path of growth.

stock.adobe.com / Sarawut