Summary Automated vs. Manual Warehouses: A Different Way of Thinking About ROI

This summary illustrates the differences between an automated warehouse and a manual warehouse by giving the advantages and disadvantages of both methods. Automated warehouses use sortation devices, retrieval systems and several other automated solutions. In contrast, Physical employees play a bigger part in a manual warehouse, by picking locations and goods and moving them to the delivery dock. Automated solutions are generally more popular in Germany and Japan than in America and the UK, mainly because America and the UK tend to focus more on the shorter payback period of a manual system.
The payback period of an automated warehouse, on the other hand, is commonly around five years. Although an automated system increases (market) risks, the costs to perform logistic tasks decrease significantly. However, automated warehouses are not as flexible as manual warehouses because manual solutions make it easier to add or remove new services. In contrast, adding or removing new services is more difficult and more costly in an automated system. Moreover, manual systems can recover quicker from a poor supply chain design than the automated counterpart. This risk concerning supply chain design is important to keep in mind when one wants an automated system with a high throughput flow. When a company builds an automated warehouse, they should make sure they have good overall visibility to deliveries. This could prevent a company from building more systems than there were required.
In conclusion automated warehouses decrease the handling costs but it increases risks across the supply chain. A manual warehouse has a shorter payback period and is more flexible than an automated warehouse. The decision for an automate warehouse or a manual warehouse is ultimately made by carefully balancing risks