Automated Warehouses vs. Manual Warehouses - Which is More Economical and Efficient?

August 25, 2021

Introduction

Warehouse management is a crucial part of supply chain management. Therefore, choosing the best warehouse strategy can play an important role in a company's success. The two main types of warehousing are automated and manual. In this blog post, we will compare the economic and efficiency aspects of both automated and manual warehouses.

But before we dive into the comparison, let's clarify what we mean by automated and manual warehouses.

What is an Automated Warehouse?

As the name implies, automated warehouses utilize automation technology to carry out and manage various tasks such as loading and unloading, sorting, and retrieval of goods. Smart technologies such as sensors, robotics, and internet of things (IoT) are used to carry out these tasks.

What is a Manual Warehouse?

As the name implies, a manual warehouse relies on manual labor to carry out various tasks such as loading, unloading, sorting, and retrieval of goods. In this type of warehouse, human workers are involved in all the processes.

Automated vs. Manual Warehouses

Economic Comparison

Initial Investment

The initial investment required for an automated warehouse is much higher compared to that of a manual warehouse. Automated warehouses are equipped with expensive technologies such as robotics, sensors, and software systems, which require a significant amount of capital to set up. According to a report by Interact Analysis, the initial cost of an automated warehouse can be five times higher than a manual warehouse.

Operating Costs

Automated warehouses have lower operating costs compared to manual warehouses. The use of automated systems such as robotics and IoT reduces the cost of labor and increases efficiency, which leads to lower operating costs. According to a report by MHI, automated warehouses can save up to 85% on labor costs compared to manual warehouses.

Maintenance Costs

Automated warehouses have higher maintenance costs compared to manual warehouses. Since automated systems require regular maintenance, any breakdown in the system can result in costly repairs. According to a report by Timetric, the maintenance costs of an automated warehouse can be up to two times higher than that of a manual warehouse.

Efficiency Comparison

Speed

Automated warehouses are much faster than manual warehouses when it comes to processing and retrieval of goods. Automation systems such as robotics and sensors help speed up the process, increasing the efficiency of the warehouse. According to a report by Logistyx Technologies, automated warehouses can process up to 25% more orders than manual warehouses.

Accuracy

Automated warehouses are more accurate compared to manual warehouses. The use of automation systems eliminates the possibility of human error, ensuring that all orders are fulfilled accurately. According to a report by Zebra Technologies, automated warehouses have an accuracy rate of up to 99.9%.

Flexibility

Manual warehouses are more flexible compared to automated ones. Since manual warehouses rely on human labor, they can quickly adapt to changes in inventory, customer demand, and other factors. On the other hand, automated warehouses have limited flexibility and require significant changes to adapt to any changes in the system.

Conclusion

In summary, automated warehouses are more efficient and have lower operating costs compared to manual ones. However, the initial investment and maintenance costs can be quite high. Manual warehouses are more flexible, but their operating costs are higher, and they are slower and less accurate compared to automated warehouses.

Therefore, the choice between an automated and manual warehouse depends on your business needs and budget. As always, a skilled warehouse manager can make either warehouse type work well.

We hope this comparison helps you make an informed decision.