Many retails businesses that handle internet orders have huge warehouses with miles of warehouse shelving systems. To pick and dispatch items, some companies employ armies of workers, whilst others rely on machines.
Clothing and sports accessories company Sports Direct employs an army of workers to pick internet-ordered items off it warehouse shelves. The founder of Sports Direct, Mike Ashley, claims that the company does not make a profit from many of its orders, although the company is highly profitable and features in the FTSE 250 Index.
Retail warehouses face a difficult choice. To set up a warehouse with an automatic picking system costs several million pounds, whereas a warehouse fitted with pallet racking and using humans to pick items is much cheaper to set up. Which is more profitable, though?
Amazon and John Lewis are two companies that have gone the automatic system route, investing heavily in new warehouses with automatic systems and fewer workers. John Lewis has spent £250m on an automated warehouse and employs about half the number of staff when compared to Sports Direct’s workforce. Tesco, on the other hand, continues to use its existing warehouses and relies mainly on human workers.
Sports Direct is considering a more hybrid approach by investing in semi-automation, retaining many workers but introducing some automated systems.
With major retailers taking different approaches to automation. it is not clear which is the more profitable way to organise a retail warehouse, but there are certainly examples of both humans and robots forming effective solutions for major retailers.