Meeting ever-shifting customer expectations is the only way to succeed in the digital era — especially if your company deals with direct sales, has extensive warehouse facilities, or is involved in the delivery process.

According to Zebra Technologies, 52 percent of warehouse executives plan to increase technology investments in the near future, in order to streamline goods delivery and achieve supply-chain transparency. Main expenditures will include a migration to modern warehouse management systems (WMS), implementation of real-time inventory tracking solutions and barcode scanners, and internet of things (IoT) devices such as wearables, drones and robotic packaging equipment.

The IoT — a network of devices which “converse” with each other, collect data using sensors, and pass it to cloud and on-premises servers for further analysis — is widely viewed as the cornerstone of the Warehouse 4.0 concept.

Digital Transformation of Warehousing

A key link in supply chains, warehouses must grow rapidly in number and adopt emerging technologies to keep up with consumer demand. Over the past decade, the number of warehouse facilities that make use of WMS has grown from less than 30 percent to almost 70 percent.

In addition, nearly 30 percent of warehousing businesses deploy voice and light-directed software systems, which navigate operators across storage locations and enhance the picking process.

These technology systems, however, are usually implemented on their own, or fail to exchange data with other software. The lack of application integration is often cited as the major barrier to effective warehouse management and cost optimization. By contrast, reports suggest that companies with fully integrated supply chains tend to perform 20 percent better than non-integrated businesses.

IoT in the Warehouse

IoT solutions produce rich inventory data. Enhanced with RFID tags, beacons and sensors that enable data capture and goods identification down to the item level, IoT warehouse systems ensure a continuous flow of real-time information on inventory levels and location. This alone could increase inventory accuracy by up to 95 percent. Further benefits of implementing connected technologies within the warehouse include inventory loss and damage prevention, forecasting demand based on historical sales data, timely detection of load discrepancies, and bottleneck identification.

IoT enables workflow automation. The traditional step-by-step approach to filling customer orders involves capturing requests via a WMS, allocating existing inventory to the orders, and manual picking. Order-picking robots, drone-based inspection and delivery, and head-mounted displays provide instructions to order pickers in a hands-free mode. Connected point-of-sale (POS) systems allow managers to seamlessly report order status and changes in inventory. As a result, warehouse companies can eliminate inefficiencies stemming from the legacy approach to order processing, which involves manual labor and data entry, paper-based processes, and inefficient use of storage facilities.

Some early examples of successful IoT implementations in warehousing include DHL’s smart warehouse system, created in collaboration with Cisco Systems and Conduce. Based on Cisco’s Wi-Fi infrastructure and Conduce’s data visualization platform, the system enables DHL managers to view data collected from the WMS, scanners and material handling equipment in real time, and match it against order records to increase operational efficiency and workplace safety.

Amazon, pioneer of the e-commerce warehouse transformation, now employs over 100,000 robots worldwide to move and group stock for specific orders. The company experiments with delivery drones and has been awarded two patents for connected wristbands which detect the position of a worker’s hands, and incorporate a haptic feedback system that’s designed to monitor the location of inventory bins.

Barriers to Implementation

Although the IoT is steadily making its way to storage facilities around the globe, the adoption of connected warehouse systems remains the exception rather than the rule, and is mostly driven by the market’s key players.

In the age of real-time everything, visibility is crucial to ensuring that a company’s supply chain works as a well-oiled machine. IoT-powered warehouse management and control applications offer a whole new way to administer storage space, equipment, tasks and material flows.

That said, warehouse digital transformation initiatives are largely undermined by slow technology adoption rates.

As mentioned earlier, WMS — which is considered the baseline for implementation of more advanced technology — is still missing from one-third of warehousing facilities. In most cases, companies rely on spreadsheets and standalone software solutions such as pick-to-light or voice-directed picking tools, which do not work in sync.

Furthermore, the cost of implementing custom IoT systems — especially across smaller warehouse facilities — often outweighs the benefits. Despite the diminishing price of sensors and greater availability of cloud-based infrastructure solutions, Industrial IoT app development involves integration with third-party devices and services, while the business logic of web and mobile applications is coded from scratch.

While retail and logistics companies are still struggling to create a holistic IoT perspective, truly connected warehouse experiences and seamless supply chains are supporting the growing amount of smaller customer orders. The answer might lie in mobile technology and industrial handhelds.

Additionally, potential IoT applications in warehousing stretch beyond niche-specific equipment. Smart sensors, for instance, may be incorporated into legacy building-management systems to reduce energy consumption, or be installed on delivery vehicles to track mileage and driver behavior.

All things considered, it’s safe to say the future of warehouse is connected. Is your company ready for the change?

Andrei Klubnikin is a tech blogger and content marketer for R-Style Lab, an IoT development company.