The transformation from manual to smart warehousing: an exploratory study with Swedish retailers

• DOI: https://doi.org/10.1108/IJLM-11-2021-0525
• Published date: 22 June 2022
• Date: 22 June 2022
• Pages: 107-135
• Subject Matter: Management science & operations,Logistics
• Author: Joakim Kembro,Andreas Norrman

The transformation from manual to

smart warehousing: an exploratory

study with Swedish retailers

Joakim Kembro and Andreas Norrman

Division of Engineering Logistics, Lund University, Lund, Sweden

Abstract

Purpose –To meet customers’expectations on shorter lead times, high product availability, flexibility, and

variation in delivery and return options, retailers have turned their attention to warehousing and are making

big investments in technology. Currently, technology providers are pushing for smart warehousing, a new and

under-researched phenomenon. This study aims to conceptualize the term and examine pathways toward

implementing smart warehousing.

Design/methodology/approach –An exploratory survey was administered to 50 leading Swedish retailers

in varying segments. A two-tailed t-test for equality of means was used to detect significant differences

between current and future states.

Findings –The study found that future smart warehouses will be automated, autonomous, digital, and

connected, butthat retailers will follow different paths along this journey, driven by contextual trends, e.g. sales

growth, wider product assortment, shorter lead-time offerings, and integration of brick-and-mortar and online

stores. Interestingly, the study revealed that many of the retailers that aim to create smart warehouses in five

years are not the retailers with the most developed technology today.

Research limitations/implications –The paper operationalizes smart warehousing in two dimensions:

degree of automation and degree of digitalization and connectivity of information platforms. Based on the

findings, 16 theoretical propositions are put forth that, based on contextual factors, explain different pathways

for retailers to implement smart warehousing.

Practical implications –The empirical insights and theoretical discussions provide practically useful

guidance, including outlined trends, for selecting and benchmarking automation and complementary

technologies in warehouse operations.

Originality/value –This paper conceptualizes and operationalizes smart warehousing –an original

approach. It is also one of the first to investigate the technological transformation in retail warehousing

empirically, explaining how and why retailers choose different pathways toward smart warehousing.

Keywords Retail, Logistics, Warehouse, Automation, Technology, Smart, Context, Transformation

Paper type Research paper

1. Introduction

The retail industry has been undergoing a digital transformation coupled with customers’

expectations of shorter lead times (i.e. demanding same-day delivery), high product

availability, flexibility when and where to shop, and varying delivery (e.g. click-and-collect,

pick-up points, home delivery) and return options (Galipoglu et al., 2018;Tokar et al., 2020). To

meet these demands, the logistics network, particularly the warehouse, has been highlighted

as a critical component (Kembro et al., 2018). The warehouse, previously viewed as a

“necessary evil”in the supply chain, now plays a key role in fulfilling customer orders and

significantly influences both logistics costs and service levels (Faber et al., 2018). As

Rouwenhorst et al. (2000, p. 515) put it: “[T]he efficiency and effectiveness in any distribution

From manual

to smart

warehousing

107

© Joakim Kembro and Andreas Norrman. Published by Emerald Publishing Limited. This article is

published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce,

distribute, translate and create derivative works of this article (for both commercial and non-commercial

purposes), subject to full attribution to the original publication and authors. The full terms of this licence

may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Funding: The Swedish Retail and Wholesale Council funded this research study.

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 8 November 2021

Revised 4 February 2022

26 May 2022

Accepted 27 May 2022

The International Journal of

Logistics Management

Vol. 33 No. 5, 2022

pp. 107-135

Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-11-2021-0525

network ...is largely determined by the operation of the nodes in such a network, i.e. the

warehouses.”

To improve warehouse operations, online global giants, e.g. Alibaba and Amazon have

made large investments in automated material-handling technology (Alibaba Cloud, 2019;

Amazon, 2020). With increased competition and more mature and varied technologies, the

automation trend also has spread among retailers and logistics service providers worldwide

(Reiser, 2020;MH&L, 2020). An important driver is that the latest generation of automation

technologies offers flexibility to handle different types of products and adjust to demand

variations, enabling effective and efficient storage, handling, and sorting of large product

flows (Azadeh et al., 2019;Kembro et al., 2022). To improve warehouse operations further,

retailers couple automated material handling with digitalization and connectivity of

information platforms. Examples of new technologies that are relevant for warehouse

operations include artificial intelligence (AI), Internet of things (IoT), cyber-physical system

(CPS), big data, 5G, and intelligent video analysis (IVA) (Kembro et al., 2017;Kamali, 2019;

Taboada and Shee, 2021;Winkelhaus and Grosse, 2020;Chung, 2021).

This combination of technologies sometimes is termed smart warehousing (Mahroof, 2019;

Kamali, 2019), a term that is gaining increased attention, often in connection with Industry

4.0, Logistics 4.0, and IoT (Lee et al., 2018;Winkelhaus and Grosse, 2020;van Geest et al., 2021;

Issaoiu et al., 2021). It is used in tech blogs, industry reports, conference proceedings, and

scientific journal papers. However, extant smart-warehousing research is fragmented when it

comes to its substance (see, e.g. Bolu and Korcak, 2019;Chung, 2021;Zhang et al., 2021).

Previous research has instead listed or developed sub-applications of smart technologies that

could be used. This gap is important to address to bring research together, facilitate joint

discussions, and enable analysis of patterns on a more holistic level, instead of focusing only

on specific applications of certain technologies. Another important research gap is the lack of

clarity on how to implement smart warehousing (Azadeh et al., 2019;Winkelhaus and Grosse,

2020;van Geest et al., 2021). During the journey toward smart warehousing, companies

operate in different contexts and, therefore, are likely to follow different paths (Kembro and

Norrman, 2021). However, extant research does not provide any guidance or explanation for

different pathways on how and why retailers calibrate their timing, technology, and focus to

suit certain operations during their transformation from manual to smart warehousing.

To address these gaps, this study aims to conceptualize smart warehousing and explain

pathways on how to implement it. By administering an empirical exploratory survey to 50

Swedish retailers, we make several contributions. Theoretically, we contribute by

operationalizing smart warehousing in two dimensions –degree of automation and degree

of digitalization and connectivity of information platforms –and by conceptualizing future

smart warehouses as automated, autonomous, digital, and connected. We also contribute by

identifying different pathways to smart warehousing and explaining how retailers calibrate

their timing, technology, a nd focus to suit certain operat ions using 16 theoretical

propositions. For managers, our study outlines pioneering practices that can help other

retailers understand critical issues earlier, as well as how to address them. Our findings

provide insights into technologies that are expected to grow in use and criticality to support

material handling in single warehouses and in increasingly complex and decentralized

networks.

The paper is structured as follows. In Section 2, we present a theoretical background on

warehouse operations in retailing and technology’s role in warehouse management. In

Section 3, we describe our empirical study’s design. In Section 4, the findings are presented

and analyzed, describing how companies intend to transform from manual to smart

warehousing. In Section 5, based on our findings, we submit theoretical propositions, then

conceptualize smart warehousing and explain pathways. Finally, in Section 6, we outline

conclusions and suggestions for future research.

IJLM

33,5

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