Automated Cold Storage Warehouse Technology: 15 ways to reduce costs

If you work in cold chain logistics, you know the importance of temperature-controlled warehouses.

Bananas require a precise temperature that’s much different than ice cream. This means a lot of varying temperatures to avoid spoilage.

This where automated warehouse technology can save you money.

Automated cold storage warehouse technology has many cost saving benefits over traditional warehouses.

With the growing demand in cold chain logistics, the business case for automating temperature-controlled warehouses, either chilled or frozen, is stronger than ever.

Here are 15 ways automated technology can save you money:

1. Smaller building footprint ­

Because an automated warehouse is higher than a traditional warehouse, a smaller building footprint is required. The smaller building footprint is typically 25 per cent of the traditional warehouse.


2. Reduced cubic space

Since the automated warehouse uses a high- density configuration, less cubic space is required for the same amount storage. This reduction is approximately 25 per cent to 35 per cent.


3. Energy savings

The energy operating costs are reduced with the high- density configuration of the automated warehouse because it houses more storage in less refrigerated space.

Energy costs for cooling are higher than heating.  Most energy loss occurs at the roof.  The automated warehouse has a smaller roof surface that translates into energy savings ranging from 35 per cent to 50 per cent.


4. Minimized exposure to harsh environment

Workers are not required in the automated freezer warehouse.  Instead, order fulfillment and load consolidation occurs on the shipping/receiving dock.

Elimination of labor in the harsh freezer environment means improved worker ergonomics, improved labor productivity, and the end of worker recruitment issues.

The employee turnover for the cold warehouse environment position tends to be high. Reducing this turnaround through automation results in cost savings.


5. Less de-frosting

Traditional warehouse de-frosts once per day, automated warehouse de-frosts once per week.  This translates to energy savings.


6. Reduced damage

Since the automated warehouse does not require the use of manually operated forklift trucks, damage to racks, product, freezer doors, and the facility is eliminated.

On average, a traditional freezer warehouse may need to replace a freezer door once per month due to fork truck damage.


7. Control of downtime

With the traditional warehouse, if an employee does not show up, the operation is constrained. If technology is down, managers have direct control to bring the technology back up.


8. Increased safety

No people are permitted in the aisles of the automated warehouse, thus eliminating safety issues. With the traditional warehouse, manually operated forklift trucks do create safety risks.


9. Improved inventory accuracy

Accurate computer control of inventory location in the automated warehouse eliminates location errors that occur with the manual fork truck method of inventory.

With the traditional warehouse, inventory can at times become temporarily “lost” in the warehouse.

Furthermore, inventory accuracy translates to a selling feature for freezer warehouse operations that solicit third party logistics (3PL) contracts.

Prospective 3PL customers are impressed with service providers that use technology that can provide extremely high inventory accuracy.


10. Omit physical inventory counting ­

With the automated warehouse, taking physical inventory counts is not required. This reduces operational costs.


11. Improved order accuracy

The overall benefit of accurate inventory location in the warehouse and FIFO (first in first out) inventory rotation, is improved order accuracy.

Furthermore, the cost of an inaccurate order for a food distributor is significant.

When a customer needs a food product, often that customer will need it the day of delivery.  If an inaccurate order is delivered to a customer, a costly emergency expedited delivery is required to satisfy the customer demands.

In the case of an emergency expedited delivery, the corrected shipment at some later date is not an option.

The customer needs the product that same day.  The cost to fix an incorrect order may range from $100 to $500 on average.

Traditional warehouses can experience several picking errors per day on average. In contrast, automated systems may experience a picking error once per month on average.


12. High order fulfillment rate

Due to the high inventory accuracy with the automated warehouse, the fulfillment rates is close to 100 per cent.

Accuracy rates for traditional warehouse is often significantly less due to human error.


13. FIFO rotation

With computer control of inventory in the automated warehouse, product freshness is assured by rotating stock FIFO.  This greatly reduces issues with expired products.

With the traditional warehouse, fork truck drivers may not always pick the oldest inventory first when performing order fulfillment tasks.


14. Control of “quarantined” product

With the automated system, inventory that is quarantined is electronically locked in.


15. Improved service reputation

Customers expect accurate orders once the trend has been established.

Customers are less likely to first blame the distributor for an error since order accuracy is so high.


The cold chain demand is growing

Currently, North America is the largest market for the cold chain demand, according to Persistence Market Research. The demand for fresh food in North America continues to rise year after year boosting the cold chain market

Warehouses that are optimized through technology will be better positioned to meet this demand and bring down the total landed cost.