The Role of AI in Optimizing Warehouse Operations

SHAHINA JAFFER Oct 12, 2023 • 6 Min read
AI in Warehouse Operations for Retail & eCommerce 1
AI in Warehouse Operations for Retail & eCommerce

Have you seen a warehouse of a retail or eCommerce business? It’s almost always a busy structured facility! 

Not only does it store materials and products, but a warehouse also comprises employees carrying out some tasks regularly. See those workers manufacturing raw materials, picking goods, and packaging products for domestic and Canada-US shipment? That’s the usual scenario in a warehouse facility!

As such, setting a warehouse management system in place is crucial. The proof is in the numbers: 

The global warehouse management system market could grow from $3.94 billion this year to $13.34 billion by 20230. It’s projected to expand at a compound annual growth rate (CAGR) of 19%.

global warehouse management system 1

Enter artificial intelligence (AI), enabling digital tools and technologies to think and work like humans. AI has drastically impacted various sectors, especially the retail and eCommerce industry.

But how can AI help optimize your warehouse operations?

Let’s explore the role of AI in warehouse management, and how this technology can help improve your entire operation.

How AI Helps Optimize Your Warehouse Operations

Warehouse management is crucial for retail and eCommerce operations. It entails overseeing the day-to-day functions of your stock facility, with the goal of streamlining your operations to achieve the following objectives:

  • Service efficiency
  • Data accuracy
  • Employee safety
  • Expense-related affordability
  • Business profitability

However, warehouse operations involve complex processes with various key aspects—your workers, tools and equipment, as well as raw materials and finished products. And AI can help! 

Unsure about what AI is?

Artificial intelligence is the simulation of human intelligence into technologies. This includes chatbots that can communicate with you, tools like ChatGPT that can write for you, and software automation that can crunch numbers for you.

AI can benefit your retail or eCommerce business, particularly in improving your warehouse operations. How? This technology can automate your processes, analyze data, and aid your workers in their tasks. 

As a result, AI can help boost task efficiency, improve data accuracy, and ensure employee safety. Not only will it reduce cost, but it will also help boost your profits.

According to InsightAce Analytic, the AI-enabled eCommerce solutions market is forecasted to reach $16.79 billion by 2030 from $5.23 billion in 2022 at a 16% CAGR. More and more business enterprises will invest in AI solutions in the years to come. 

Optimize Your Warehouse Operations

The AI global market shows no signs of stopping or even slowing down. Its role in retail and eCommerce is indeed revolutionary–and here’s how this technology can help optimize your warehouse operations:

1. AI accelerates the order fulfillment process

Let’s begin with order fulfillment as a crucial part of your warehouse operations. This process starts with taking customer requests and ends with delivering products. However, there are a lot of things going on in between, most of which happen in the warehouse.

Here are some AI-powered tools used for omnichannel order fulfillment:

  • Automatic Dialer for Calls: Customers place orders, and agents automatically receive calls to process them by using automated dialer.
  • Automated Email Messages: Customers can order products via email, and agents can respond using automated messages.
  • AI-Powered Chatbots: These artificial agents can process customer orders and forward the requests to the appropriate departments.
  • Intelligent Routing: This lets customer contacts automatically get routed to the appropriate departments or agents for processing orders.
  • Efficient Ticketing: Agents can automatically open tickets for requests. Then, they get automatically forwarded to the warehouse for order picking and packaging.

Jim Pendergast, Senior Vice President at altLINE Sobanco, recommends leveraging AI and automation for order fulfillment. 

“AI makes almost everything automatic, seamless, and efficient, from order placement to back-office handling to product shipping. How? Its byproduct, automation, helps remove manual work, automate certain tasks, and speed up the entire process.”

2. Automation reduces manual inventory tasks

How to reduces manual inventory tasks

Aside from order fulfillment, inventory management plays a crucial part in your warehouse operations. This process involves tracking raw materials, process components, and finished products from beginning to end. This is especially critical when the materials and/or products are stored and processed in the warehouse.

That said, AI technology automates many of your routine and repetitive tasks during:

  • Material Procurement: Automated software allows you to easily and quickly record and track materials obtained from suppliers.
  • Order Processing: AI lets customers place orders online and automatically assigns them to agents for processing. This process gets automatically recorded and tracked in the AI database.
  • Order Picking and Product Packaging: AI makes it easy and seamless for warehouse personnel to record the products they pick and pack for delivery.
  • Product Shipping: AI helps track orders, from when the products are sent out to when they reach customers’ doorsteps.

3. AI aids in product stocking and shipping

The primary function of a warehouse is to store and monitor your stock. It specifically houses both your raw materials before manufacturing and finished products before delivery. Often, the production happens in your facility itself. 

Fernando Lopez, Marketing Director at Circuit, highlights the impact of AI in warehouse management. 

“AI software can improve the communication and collaboration of different departments. That ensures your materials and products get properly managed and monitored. Automated tools surely let you stay on top of what goes in and out of the warehouse.”

4. Predictive analytics help forecast demand and supply

Who doesn’t know the law of demand and supply? It’s a key concept in the retail and eCommerce industry, where the goal is to ensure enough supply to meet your current and future demands. But overstocking and being out of stock are two cases you should avoid at all costs.

Volodymyr Shchegel, VP of Engineering at Clario, suggests capitalizing on machine learning (ML), a subset of AI. 

“ While AI helps record and track products automatically, ML can learn from datasets, analyze a vast amount of information, and make predictions based on patterns and trends. That helps you forecast the supply and demand and regulate your stock levels efficiently and effectively.”

5. AI helps ensure a consistent supply chain

Striking a balance between supply and demand is one thing; ensuring a steady supply chain is another. The goal? Have the right materials and products in the right place at the right time! This objective goes from material procurement to warehouse stocking and product shipping.

Anthony Martin, Founder and CEO of Choice Mutual, recommends utilizing AI for supply chain management. 

“Aside from predicting the demand and supply, AI and ML can also help forecast potential disruptions in the supply chain. They can help you make informed decisions and take proper action to address obstacles and mitigate risks. That way, you’ll always have enough materials for your products and supplies for your customers.”

6. Robotics assist in efficient warehouse operations

As mentioned, a warehouse is a pbusy, organized facility. It doesn’t only store materials and products as well as tools and equipment. It also involves workers manufacturing, picking, sorting, and packaging products before they get delivered to customers.

That’s where AI technology comes in to help in your warehouse management. AI-powered robotics like autonomous mobile robots (AMRs) and robotic pickers can reduce manual jobs. They can also assist your workers in the picking and packing process by navigating warehouse aisles, locating items, and packing products.

7. AI aids in warehouse maintenance and equipment upgrades

The warehouse requires various tools and equipment that help workers in their day-to-day operations. However, maintenance is necessary to keep your tools and equipment in top shape and working condition. Often, you need to replace, repair, or upgrade them as part of your maintenance process.

Mark Pierce, CEO of LLC Attorney, suggests leveraging AI for warehouse and equipment maintenance. 

“AI can help you manage warehouse operations as well as monitor tools and equipment conditions. Think of predictive maintenance, helping you stay on top of their overall performance. You can even increase their lifespans through proper care, whether through maintenance, repairs, or upgrades.”

8. AI streamlines performance monitoring and measurement

Generally, retail and eCommerce businesses seek to create and sell quality products successfully. Most of the work occurs in the warehouse, from production to order picking, packaging, and shipping. However, performance monitoring is a crucial part of the overall equation.

Jerry Han, CMO at PrizeRebel, recommends using AI for measuring your performance. 

“AI technology helps you set KPIs and automatically track your performance. But more than just tracking goods and items, see if you’re doing right in minimizing your expenditures and maximizing your profits. Ultimately, find ways to cost-cut and optimize your warehouse operations to boost your sales. ”

Key Takeaway

AI has become a game-changer in the world of business, and the retail and eCommerce industry is the one that benefits the most. Think of how this technology automates tasks, analyzes data, and streamlines processes. It surely does make your warehouse more accurate, efficient, and productive, not to mention cost-effective and profit-oriented.

That’s why it’s important to understand the role of AI in the warehouse operations discussed above. Consider leveraging AI-powered tools and solutions, whether it’s automation, robotics, or predictive analytics. 

These AI tools can assist in various facets of your retail or eCommerce business, from order fulfillment to inventory and supply chain management and product shipping.

Looking to leverage AI for your warehouse operations? 

At eShipper, we provide robust yet affordable shipping services, including warehouse management and order fulfillment. If you’re seeking to optimize your warehouse operations, get in touch with us today!

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