Revealed: The race to reinvent the modern warehouse

Costs are falling but ROI still matters

The cost of automation remains one of the most debated topics in warehousing. While panellists agreed that automation is becoming more affordable, they also cautioned against oversimplifying the business case.

“I think it very much depends, of course, on the solution and the scale you automate,” said Malik. He pointed out that entry-level automation solutions are significantly more accessible than they were a few years ago: “There are some easy-entry solutions, which are, compared to some years before, much more accessible in terms of costs, in terms of scalability and in terms of easiness.”

However, fully automated warehouse systems still require considerable investment. “We have big, automated warehouses where costs are, of course, still a factor,” Malik explained.

Most importantly, he argued that businesses should not evaluate automation purely through the lens of the purchase price, emphasising: “You need to see the bigger picture – the complete operation, the full business, the processes…”

Jensen agreed that economics remain central to adoption decisions, but he believes the market is changing rapidly. “First of all, the cost of automation is going down dramatically,” he noted, going on to identify several reasons for this shift. “The Chinese have been coming to Europe in a very big way over the last five years, and that has put a huge price pressure on the robotic market,” he said.

He added that at the same time, rising production volumes are lowering unit costs, explaining: “The more robots you produce, the cheaper they get.” Competition is also intensifying. “In the forklift category, I know of 200 different companies that can provide an automated forklift,” he expanded.

According to Jensen, these trends are steadily improving total cost of ownership: “In the total cost of operations, what you’re left with is the cost of managing the system and running it. And that is now starting to improve.”

He added that ease of deployment is also becoming a major differentiator: “We try to make it really quick to deploy our products, for instance – we’re talking about a day.”

Why automation adoption is still relatively slow

Despite technological progress, adoption rates remain relatively modest. Clarke noted that only around 3 to 5% of forklifts are currently automated, while Bormann believes one reason is that automated systems still struggle to match human adaptability. He explained that many automated systems remain too rigid: “You need a structured environment and structured processes for automated forklifts to run efficiently.”

Humans, by contrast, are remarkably capable problem-solvers. “A typical human forklift driver is super smart when it comes to the work he is doing,” said Bormann. Tasks such as truck loading remain particularly challenging. “Normally you try to avoid collisions with your AMRs or automated forklifts,” he noted. “In this case, you actually seek for collisions, to put pallets next to each other.”

The gap between human and robotic capability is narrowing, however, largely thanks to advances in sensing and artificial intelligence. “AI is now taking up a lot of functions that you saw in the past were not possible,” explained Bormann.

Fraunhofer IPA is researching ways to make robots more intuitive and flexible. “We are researching how to instruct systems in the same manner as you would instruct a human worker,” Bormann said. This includes multimodal interaction. “This means talking to them, pointing to them, showing them something, how it is done. Then the robot has to figure out how to work in a flexible way,” he explained.

Automation will not eliminate people

One of the strongest themes emerging from the discussion was that warehouses of the future will still require people. “There are still many things in the warehouse where people just are better,” Mark stressed. Like Bormann, he pointed specifically to loading and unloading trucks and handling irregular items, noting: “You will always have people involved.” Malik echoed this view, saying: “We want to be a partner for our customers and find the right solutions together.”

For STILL, the answer isn’t simply automation everywhere: “From a manual forklift to a fully automated system… there are many solutions our customers require.” Jensen agreed that flexibility remains critical and recalled visiting an Amazon distribution centre where many processes were still manual. “I was really surprised by the lack of automation because they were doing a lot of things the old way that we know how to automate,” he said. The reason, according to Amazon staff, was straightforward: “It wasn’t good ROI and they were losing flexibility.”

Jensen therefore believes customers are right to remain cautious. “It’s their business after all,” he said. “And we as robot suppliers need to meet that requirement of saying, ‘How can we make it flexible? How can we make it cheap enough?’”

Davidian reinforced this message with an example from a fulfilment business handling CD-ROMs for Mitsumi in the 1990s. “They said, ‘We are more flexible with our workflow as it is at the moment’,” he explained. When the CD-ROM market collapsed, the company shifted into textiles. “That’s the thing,” Davidian said. “If you’re a 3PL or you’re a fulfilment centre, or perhaps like an Amazon, you just need to be as flexible as possible.”