The growing importance of warehouse simulation

We see more and more complex flow in warehouse logistics including several automation solutions, conveyor systems and packing machines. It is extremely difficult to predict how it will work in practice and what the consequence is with increased flow. How much growth can the solution take before bottlenecks begin to appear? Critical questions in heavy investments like this.

Because of the increased complexity I describe above, simulation tools is becoming more common. Companies cannot take chances and make expensive investments without some sort of guaranties regarding capacity and eventual growth.

In the procurement phase, you may be choosing of several different solutions. With simulation tools you can test the different solutions and see what suits you warehouse operations.

In these volatile times with new customer behaviors like exploding e-commerce and e-grocery you need all decision support you can get in warehouse logistics. If the pace of growth in e-commerce persists, wouldn’t it be great if you already simulated an increased capacity plan you know works? Being able to simulate in order to predict future bottlenecks, so you can focus and prioritize investments and projects.

You can also simulate future staffing needs and different scenarios, for example what happens if the order flow peaks two hours later on the day? In this way, you can plan the warehouse operations better and calculate eventual changes in costs.

Manual warehouses can also benefit from simulation. If you is too rigid with ABC optimization you risk bottlenecks and crowding in aisles with high frequency goods. Your optimization becomes counterproductive. With simulation you can “tweak” the flow until you find the right balance. This applies to not only the outbound but also the inbound flow.

AGV and STV is relatively new technology that many are interested in but few have experience of, with simulation, you can see how many units you would need to achieve the desired efficiency and at what cost. In this way, the reluctance to invest in innovations is reduced.

I am sure simulation will be more or less standard when developing warehouse logistics in near future. Warehouse logistics will be more and more complex and at the same time it is an important margin enhancer, not only in e-commerce and e-grocery. I am sure more suppliers of warehouse automation and software will offer this technology to customers as a service. It would benefit both suppliers and customers to feel safe in their decisions of solution.  

Warehouse logistics is too important operations for companies to control with gut feeling and estimates. However, still I meet people who think you can make professional decisions estimating with only experience and some data in an excel file. I always refer to Daniel Kahneman, Psychologist and economist who have been awarded Nobel Memorial Prize in Economic Sciences. In his book “Thinking, Fast and Slow” he writes, humans cannot think statistical. Even if you have worked with statistical data your whole life. Our brains are not developed for that and this is why we need all the tools we can get like simulation software when making important investments regarding complex warehouse logistics.

Roberth Karlsson

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