The Role of Logistics Analytics in Warehouse Automation

Logistics is a critical element of everything we do today. It's important for commerce, production, life support infrastructure, and the military.

The experts from Precedence Research state that the logistics industry's value will exceed $18.23 trillion by 2030.

Such capitalization of the sphere is due to many factors, in particular:

• Demand for logistics services.
• Dependence of business on product distribution chains.
• Conditions of competition.
• Market dynamics.
• Consumer experiences.

Warehouses are one of the most critical components of logistics.

They serve as hubs for product transportation between distribution and sales points. Their productivity often depends on whether the customer receives their goods on time or whether the business faces delays.

Therefore, the automation of warehouses is becoming essential for economic development.

However, before modernizing these hubs, it is necessary to collect as much information as possible, analyze it, and make an informed decision. This will help the provider develop the infrastructure on time and at minimal costs.

Today, I will explain what exactly you need to pay attention to if you want to automate warehouses.

We will also discuss the role of logistics analytics in preparing for this process.

What Does Logistics Analytics Mean?

Logistics analytics covers all aspects of providers' and customers' activities.

This type of business analysis answers several critical questions:

• Why should you modernize production capacities?
• What will the automation of components provide?
• What is the ROI of a particular solution?
• How much time and resources will be spent on optimization?
• Which elements require immediate development, and which can wait?
• How will the innovations affect company processes and customer satisfaction?

Of course, it is not an exhaustive list of what logistics analytics covers.

Still, it gives you a pretty good idea about its importance if you're planning to automate your warehouses and related processes.

Why Apply This Type of Research to Warehouse Automation?

When we talk about warehouse automation, we conceptually cover a wide range of tasks:

• Staff management.
• Product management.
• Traffic flows and peak loads.
• Space management.
• Cargo registration.
• Movement of products inside the warehouse or to the point of delivery.

Conditionally, if you have relatively small volumes of daily deliveries, you can get by with classic work methods.

However, the question of optimizing processes arises when dozens of tons of cargo pass through your warehouse.

Analytics allows you to calculate potential service demand, update data on current conditions, and develop a financially sound automation strategy.

What to Pay Attention to During Logistics Analytics

It's tempting to say you should focus on everything at once. But often it is physically impossible and impractical.

Therefore, I have prepared a short list of points to consider when conducting logistics analytics.

Here they are:

• Type of business.
• Number of daily processes.
• Activity area.
• Current performance.
• Short-term, medium-term, and long-term perspectives.
• Trends and their impact on the industry.
• Technologies and innovations.
• Scaling potential.
• Volumes of automation.
• Roadmap of modernization.

I agree that some points look kind of large-scale, but further on I will explain why it is worth focusing on them.

Type of Business

A local store and a supermarket chain require different levels of automation. A local store has a small storage area, and goods are periodically delivered by contractors. A supermarket chain, on the other hand, requires a large-scale logistics infrastructure with warehouses, carriers, and delivery systems.

Therefore, the first thing is to determine whether you need full automation or can modernize the most critical processes.

For a local store, it may be enough to have basic inventory management software that tracks stock levels and automates reordering when supplies run low.

In contrast, a supermarket chain would benefit from a more comprehensive analytics solution. For example, this can be an advanced warehouse management systems (WMS) that integrate with other parts of the supply chain system. They handle complex tasks—real-time inventory tracking, demand forecasting, and route optimization for deliveries. Besides, these products provide detailed insights into warehouse performance, helping you identify bottlenecks and improve efficiency.

Number of Daily Processes

If your employees update product positions several times a day, and a truck delivers products once a week, it makes sense to automate a system for tracking inventory.

Automation is a must for larger businesses. For example, if you operate warehouses with a daily turnover of several tons of cargo and your staff is loaded at 110% of their capacity.

So, you may want to use a supply planning system, robotic conveyors, or capacity management infrastructure.

Activity Segment

When your business is focused on the production or selling of goods, then you need your own warehouses with automated accounting systems.

But sometimes, using a contractor's premises and equipment makes more sense than maintaining your own. For instance, when you are selling retail consignments, the most automation you'll need is a product indexing system and an ERP with a supply planning tool.

Actual Performance

When you manage items from different suppliers and work with warehouses in different regions (like one of AdvantISS's clients ), it is critical to automate logistics processes and warehouse systems.

This is especially true when the demand exceeds the actual capacity of the existing infrastructure. For example, if you face capacity shortages or delays in sending goods, you should consider automating accounting systems, logistics processes, etc.

Short-Term, Medium-Term, and Long-Term Perspectives

Even if your current warehouse and logistics capacity seem adequate, you shouldn't get too comfortable. If you plan to scale, enter new markets, or change your business format, the load on your infrastructure will increase.

Therefore, if your plans go beyond the company's current capacity, it is worth investing in the automation of the logistics infrastructure. This will ensure a smooth and timely transition to handling larger sales volumes.

Trends and Their Impact on the Industry

Your target audience always expects improvements. Sometimes, the reason is obvious: a trend that has captured attention and become important for the logistics domain.

For example, the parcel tracking system. Decades ago, providers served both B2C and B2B consumers without this solution. But now, don't provide a customer with a tracking number, and their satisfaction would likely be very low.

So, pay attention to the trends when researching the logistics market and planning the automation of your business infrastructure.

Technologies and Innovations

Artificial intelligence, RPA, GPS, POS, NFC, and RFID are all important for modern businesses. And they've already made their way to logistics and warehouse management. You might not need to implement these technologies simultaneously as they are quite expensive, so it's wise to introduce them gradually.

When analyzing the current system, look for areas that slow down the logistics chain. Perhaps one of the mentioned technologies will help you optimize it and speed up the application processing operations.

Volumes of Automation

Assess your existing infrastructure as a whole. If you see gaps or areas for improvement, congratulations—you are one step closer to comprehensive automation.

Full automation can be costly, especially if your logistics infrastructure is based on the manual processing of each link in the chain. Therefore, it's best to start a sequential transformation from the simplest components.

For example, at first, update the platform, implement a more convenient admin panel, and introduce RFID for fast processing of goods and tracking in warehouses. Then, move towards automating the rest of the elements.

Let's Summarize

Logistics analytics show where your business stands on a map of the ideal model of your company. It allows finding weak links in productivity, often fixed with automation.

Before making any decision, think about what automation will give you, where to start, and how to carry out this process without risks to the business.

Logistics analytics will help with this.

Have you already optimized your logistics chains? Share your experience in the comments!