Finance in Retail
Customer Footfall Analysis
February 12, 2025
Retail organizations across the world face multiple challenges when it comes to managing their business operations. Managing retail warehouses is one such challenge.
The task of effectively managing a warehouse can be quite complicated. This is because of the fact that retail warehouses typically contain several thousand SKUs. These SKUs can be stored in pallets or in boxes. Warehouses have constant flow of goods coming in as well as going out.
Also, different SKUs have to be retrieved and packed in order to fulfil the day-to-day orders. This can be quite cumbersome, expensive and time taking. The efficient management of these processes is of utmost importance to retailers who are concerned about their bottom line.
It is for this reason that many large retailers across the world have started innovating in the way warehouses are managed.
It is common for companies to implement automations such as robotics when it comes to warehouse management in the retail sector.
In this article, we will have a closer look at the financial effects of such automation.
Advantages of Warehouse Automation
Warehouse automation has become quite popular amongst retail companies. This is because of the fact that there are several benefits associated with warehouse automation. The details related to some of these benefits have been mentioned below:
- Faster Turnaround Time: As mentioned above, retail warehouses typically have several thousand SKU’s and all these SKUs are placed at different locations. Hence, retrieving these SKUs and packing them requires a lot of manual labour.
Retailers have started using robots which are programmed to know the exact location of the products. These robots are also equipped with sensors in order to avoid any obstacles which appear in their path.
Robots are able to retrieve products at a much faster speed as compared to human counterparts. As a result, deployment of robots in retail warehouses leads to cost savings in the long run.
- Increased Accuracy: The benefits of using robots in warehouses is not restricted only to the turnaround time. These robots are also very accurate when it comes to picking and packing products.
Human beings have a lower accuracy level as compared to robots. Hence, the deployment of robots in retail warehouses also ensures that products are not incorrectly shipped to customers. This increased accuracy has significant financial benefits.
- Increased Safety: Workplace accidents which take place in retail warehouses have been a major cause of concern for retail company. There are several human rights issues associated with such accidents.
The deployment of robots to do the heavy lifting and shifting work means that warehouses can now create human free zones where only robots operate.
- Firstly, robots have inbuilt sensors in order to avoid any accidents.
- Secondly, even if accidents do take place, there are no human casualties.
Hence, warehouse automation benefits retail workers as well since it allows to deploy their labour in other tasks which are not as hazardous.
- Space Optimization: Warehouses tend to have a lot of vertical space. Some warehouses have ceilings as high as 100 meters! In such cases, retail companies want to optimize the space utilization by ensuring that they utilize the vertical space as well.
However, it can be very challenging to utilize the vertical space using human work force. Robots can be built in such a way that they can easily retrieve products kept at greater heights without causing any damage or accidents. Hence, the use of robots allows retailers to maximize the utility they receive from the rental money that they pay to their warehouses.
- Efficient Scheduling: Scheduling the inward and outward movement of goods is a complicated task in retail warehouses. There are several factors which need to be taken into consideration and each of these factors has a financial impact. Hence, if scheduling is not done efficiently, retailers have to bear indirect costs associated with the same. However, the same tasks can be done by a software with a much greater degree of efficiency.
There are software tools which can simulate multiple schedules and the financial impact of each in a few moments and then decide on the best possible scheduling option available. Retailers have started deploying these tools in most of their warehouses. In most cases, the process is not fully automated. This means that the tool helps generate multiple options along with the financial impact of each. However, the final decision needs to be taken by the retailer.
- Better Communication: Lastly, software tools are able to enable better communication of the retailer with their vendors as well as buyers.
For instance, software can check the level of inventory available at a particular warehouse. They can also verify the optimal inventory level as well as the lead time required to obtain such inventory and automatically place orders as and when required.
Similarly, software tools can provide real time updated to customers regarding their purchase. For instance, customers can track when their products were picked and packed, when they were shipped, when they reach the nearest distribution centre and the expected delivery date.
It is important to take into account all the financial factors while making a decision related to warehouse automation.
From the points mentioned in this article, warehouse automation seems to be a financially prudent decision. However, there are certain disadvantages associated with warehouse automation as well.