The Business Case for Warehouse Orchestration: Results and ROI

Implementing warehouse orchestration to streamline operations and enhance cost-saving productivity is undoubtedly appealing for manufacturers and shippers. However, does it deliver a significant impact on supply chain ROI?

For AutoScheduler clients PepsiCo and Procter & Gamble (P&G), the answer is a resounding yes. In this article, we lay out the opportunities these companies saw for cost savings in their warehouse management, and share some of the results they’ve experienced so far since launching their warehouse orchestration initiatives.

You can also watch the on-demand webinar to hear directly from Peter Hall, Warehouse Orchestration Senior Manager at PepsiCo on how and why PepsiCo is going all-in on warehouse orchestration.

What are the biggest opportunities for warehouse productivity improvement?

Warehouses are highly complex sites with many moving parts, and this complexity poses numerous challenges that organizations must continually address. However, in every challenge lies an opportunity.

We have found the following challenges to be among the most common that organizations — including PepsiCo and P&G — seek to improve upon year-over-year to achieve cost savings in their warehouse management.

Minimizing operational complexity

From production volatility and product demand fluctuations, to managing inventory and scheduling shipments, keeping warehouse operations running smoothly is a 24/7 task that typically requires significant amounts of manual labor and forecasting guesswork. Sudden production delays, last-minute freight carrier changes, and general human error are among the many factors that can easily nudge plans off course and impact warehouse ROI.

To address this, organizations are increasingly looking to automate their warehouse operations with an intelligent, centralized warehouse orchestration tool that can help them achieve warehouse productivity improvement quickly and efficiently.

Reducing waste

With unoptimized warehouse operations comes a great deal of physical and financial waste that negatively impacts supply chain ROI. Over-production and over-staffing, as well as shipment bring-backs and re-packs, can all contribute to warehouse waste in the form of product loss and increased costs.

By leveraging AI to automate and improve warehouse orchestration, organizations have the opportunity to save money while ensuring more product ends up in the hands of consumers instead of in landfills.

Improving labor allocation

Many warehouses waste hundreds of labor hours every day due to inefficient scheduling — not to mention the hours spent each day on manual workforce planning. There is also the challenge of operational knowledge loss during periods of cut-backs or slow demand, where the absence of experienced personnel can impact warehouse productivity and efficiency.

Savvy organizations are addressing these labor challenges with warehouse orchestration software that provides optimized labor plans in minutes, not hours, and gives all warehouse teams equal access to the same pool of warehouse productivity improvement knowledge.

What’s the ROI of warehouse orchestration?

By implementing an AI-based warehouse orchestration layer, how have organizations been able to improve their warehouse ROI? Here’s what AutoScheduler clients PepsiCo and P&G have experienced so far:

Increased productivity

Overall warehouse productivity improvement is often the primary benefit of warehouse orchestration. To achieve this, PepsiCo is currently undergoing a 2-to-5-year transformation journey targeting around 40 complex warehouses, with the goal of tackling operational challenges to improve supply chain ROI.

So far, PepsiCo has driven a 35% increase in pallet moves with warehouse orchestration — without adding any labor or equipment. This demonstrates the dramatic efficiency boost that can be realized by turning to AI and automation for warehouse productivity improvement.

“With orchestration, we’ve learned to identify gaps and opportunities we hadn’t seen before. Overall, just from a productivity standpoint, we’re seeing double-digit increases, but we’re also building consistency and better data accuracy.”

Peter Hall Warehouse Orchestration Senior Manager, PepsiCo

P&G, which operates a large plant and satellite warehouse network in Ohio, have been able to increase their direct-dock shipments from plant to customer from 57% of shipments to 83% (+46% improvement). This means that AutoScheduler, P&G’s warehouse orchestration platform, has made its plant operations more efficient and reduced the plant’s reliance on satellite warehouse storage, allowing the company to save money by reducing the number of times goods are moved throughout the network.

Greater shipment accuracy

Reducing waste requires better production planning, as well as improving the accuracy of the shipments that go out the door. Regarding the latter, P&G has been able to reduce shipment bring-backs from satellite warehouses to the main plant from 16% to 8.7% — an improvement of nearly 50%. This has allowed the company to cut back significantly on wasted freight and product costs.

Better use of labor

A big part of labor optimization is being able to reduce the amount of time it takes to create each day’s labor plan. With AutoScheduler, P&G has reduced its workforce planning time from 8 hours to just 20 minutes per day. This has freed up the workforce planning team to focus on broader, higher-value initiatives such as holiday forecasting and employee training.

When thinking about labor improvement, PepsiCo has thus far been focused on closing operational knowledge gaps. During the COVID-19 pandemic, the company saw a drop in average labor tenure, resulting in a less experienced workforce and a decrease in warehouse efficiency. With AutoScheduler, PepsiCo has been able to build that deep operational knowledge into its warehouse orchestration system, creating an environment of warehouse productivity improvement that’s less susceptible to the impact of knowledge loss and experience gaps.

“We started thinking about orchestration because we had to rely solely on our dock leads and coordinators to make the right calls on product flow. COVID shifted that when average tenure dropped significantly... Orchestration became our way to embed that expertise into our systems.”

Peter Hall Warehouse Orchestration Senior Manager, PepsiCo

Cost savings

Effective warehouse orchestration leads to substantial cost savings in warehouse management. So far, AutoScheduler has driven savings of more than $4 million for P&G to date. This number continues to increase for P&G every day as they expand their warehouse orchestration program to encompass other sites and operational challenges.

How to start improving your warehouse ROI?

It’s not just large, multi-national corporations who can benefit from warehouse orchestration — even organizations with just a few busy warehouses can start capturing cost savings in their warehouse management. Here’s how to get started: 

1. Identify key pain points: As highlighted in the sections above, warehouse orchestration can address many different supply chain challenges. When starting out, it helps to identify the most problematic areas of your operation and tackle those first before rolling out your warehouse orchestration solution across the board. For example, P&G has so far focused largely on increasing the volume and accuracy of direct-to-customer shipments in order to reduce freight and storage costs.
2. Establish control sites: If you have multiple plant and/or warehouse locations, we recommend launching your warehouse orchestration initiative in a portion of sites to start. This approach better supports early system fine-tuning and cross-site performance comparisons, and allows for the development of internal champions for the initiative.
3. Find your orchestration solution: While it’s possible to develop a warehouse orchestration tool in-house, it can be costly and complicated to do so. That’s why P&G and PepsiCo chose to bring on AutoScheduler as their centralized warehouse orchestration layer, with the sophisticated software development and AI implementation already done and ready-to-go.

Warehouse orchestration provides clear benefits in warehouse productivity improvement and cost savings. It allows manufacturers and shippers of all sizes to cut down on operational complexity and take the best next steps toward greater supply chain ROI.

To learn more about how PepsiCo is doing it, watch AutoScheduler’s recent webinar with Peter Hall, Warehouse Orchestration Senior Manager at PepsiCo.

AutoScheduler is the industry’s leading warehouse orchestration platform.

A best-in-class warehouse orchestration platform can power your operations. 

AutoScheduler’s AI-driven platform focuses on labor planning, inventory workflow, human-robotics interaction, and space utilization, optimizing operations and maximizing OTIF rates and labor efficiency.

With prescriptive analytics, our clients can enhance efficiencies and generate value across their supply chains. Our dynamic warehouse orchestration provides continuous optimization, adapting to changing conditions 24/7. We offer predictive capabilities to prevent operational disruptions and comprehensive real-time visibility for all management levels, ensuring optimal use of labor, resources, and space.