Automated storage racks reduce operating costs by 40%: A guide to selection

Automated Storage and Retrieval System (AS/RS) is an integrated storage system combining industrial rack structures with automation technology such as shuttle robots, smart sensors, and warehouse management software (WMS/WCS). In Vietnam, this technology is being widely deployed in 3PL logistics centers, manufacturing plants, and wholesale warehouses to optimize space and reduce labor costs. According to data from real projects, AS/RS helps businesses reduce operating costs by 35-45% compared to traditional manual warehouses.

Problems the Vietnamese logistics industry is facing

Vietnamese logistics and manufacturing enterprises are currently facing high cost pressure due to rising labor wages, a shortage of skilled workers, and limited warehouse space. Manual warehouses not only require a large workforce but are also prone to errors and delays in inbound and outbound operations, affecting delivery speed and overall costs.

⚠ High and continuously increasing labor costs
Regional minimum wages have increased by 10-15% in the last 2 years. A 5,000m² warehouse requires 30-50 shift workers, with salary and benefits accounting for 50-60% of total operating costs.

⚠ Low inbound/outbound efficiency, leading to prolonged inventory
Manual warehouses typically take 15-30 minutes to locate, retrieve, and inspect goods. Automated systems reduce this to 2-5 minutes.

⚠ Errors in record-keeping and lost inventory searches
Manual warehouses rely on handwritten records or simple barcodes, with an error rate of 2-5%. Automated systems achieve accuracy of 99.5%+.

⚠ Wasted warehouse space and difficulty in expansion
Traditional warehouses utilize only 40-50% of floor area efficiently. AS/RS increases storage density to 70-85% within the same footprint.

How does an automated storage rack system work?

The AS/RS system consists of 4 main components: (1) Multi-tier rack structure (20-40m high), (2) Automatic shuttle robot moving on rails, (3) Centralized sensor and control system (WCS), (4) Warehouse Management Software (WMS) integrated with ERP. The operational process starts with receiving commands from WMS, the robot automatically locates and retrieves pallets/cartons, brings them to the input/output point, and then updates the system. The entire process is automated, requiring no manual intervention.

1. Receive command from WMS/ERP
   When an order is placed, the WMS calculates the optimal location and sends a command to the WCS (Warehouse Control System) for the robot to move.
2. Shuttle robot moves on rails
   The robot automatically runs on rails according to designated X, Y, Z coordinates, searching for the pallet/carton containing the required goods within 2-5 minutes.
3. Retrieve goods and bring to output point
   The robot lifts the pallet/carton from the rack and moves to the packing table or warehouse output point, where staff inspect and package the goods.
4. Update inventory in real-time
   After retrieving the goods, the system automatically updates the inventory quantity, new pallet location, and reports to ERP/other management systems.
5. Continuous optimization
   The system learns from historical data (AI/ML) to arrange item locations, reducing search time in subsequent operations.

Specific benefits of automated storage racks

💰

Reduce operating costs by 35-45%
Primarily from labor reduction (40%), space optimization (25%), reduced errors/lost goods (20%), and electricity/maintenance savings (15%).

⚡

Increase inbound/outbound efficiency by 3-5 times
Retrieval time reduced from 20-30 minutes down to 2-5 minutes. A warehouse can process 5-10 times more orders than before.

✓

Accuracy of 99.5%+, reduce errors
The automated system eliminates human errors, lost goods, and incorrect records. Customers receive the right items, in full, quickly.

📈

Optimize storage space by 70-85%
Racks 20-40m high with high storage density allow the same warehouse area to store 2-3 times more goods compared to manual warehouses.

🔄

Easy integration with existing ERP/WMS
The AS/RS system connects via standard API with SAP, Oracle, VietPOS, and popular logistics management software.

📊

Real-time data for continuous optimization
The warehouse management dashboard provides inbound/outbound, inventory, and robot performance data for businesses to make quick decisions.

Criteria for selecting automated warehouse racks suitable for business scale

Not every business needs a full AS/RS. The right choice depends on warehouse size, type of goods, inbound/outbound frequency, and budget. Small businesses (under 2,000m²) should choose smart racks with semi-automated shuttle robot support. Medium businesses (2,000-10,000m²) should choose semi-automated or fully automated AS/RS. Large businesses (over 10,000m²) should consider fully automated AS/RS with multiple robots and AI optimization.

Application of automatic warehouse racking in 3PL logistics

3PL logistics centers in Ho Chi Minh City, Hanoi, and Binh Duong are the most common areas for deploying AS/RS. This system helps 3PL operators manage goods from 50-100 different clients, each with different SKUs, with high accuracy and fast picking times. This allows 3PL providers to increase their service capacity without expanding warehouse space or hiring additional staff. Notable projects: Tan Phat Logistics Center (Binh Duong) deployed an 8,000m² AS/RS in 2022, increasing throughput from 500 orders/day to 2,000 orders/day; La Me 3PL Warehouse (Ho Chi Minh City) uses a smart warehouse system to serve 80+ retail stores, reducing delivery time from 2 days to 1 day.

Application of automatic warehouse racking in manufacturing plants

Manufacturing plants use AS/RS to manage raw material and finished goods warehouses, especially in electronics, textile, and processed food factories. The automation system helps precisely control the amount of raw materials needed for each production line, avoiding shortages or surpluses. Additionally, AS/RS allows the plant to track finished goods quantities in real time, optimizing production schedules based on inventory and orders. A textile factory in Doi Cat (Hanoi) deployed AS/RS in 2023, reducing warehouse management costs by 40% and increasing production productivity by 25% due to reduced waiting time for raw materials.

Calculating ROI When Implementing Automated Storage Racks

The ROI of AS/RS depends on investment costs, annual operating costs, and profits from cost reduction + increased revenue. Basic formula: ROI (%) = (Annual Profit / Investment Cost) × 100. Payback period = Investment Cost / Annual Profit.

Example ROI calculation for a medium warehouse (5,000m²):
• AS/RS investment cost: 12 billion VND
• Annual operating costs (maintenance, electricity, software): 800 million VND
• Profit from labor cost reduction: 3 billion/year (reduction from 50 employees to 15-20 employees)
• Profit from increased revenue (processing 3x orders): 2 billion/year
• Total annual profit: 5 - 0.8 = 4.2 billion VND
• Payback period: 12 / 4.2 ≈ 2.9 years (nearly 3 years)
• ROI in the 4th year: 42%

Are you considering implementing automated storage racks for your business?

Việt Đức Trí Group provides comprehensive AS/RS solutions, from design consulting, equipment selection, software integration, to operational training and maintenance. With 10+ years of experience in industrial logistics, we have successfully deployed 50+ smart warehouse projects in Vietnam.

Contact us now for a free consultation: 0935 295 337 | Email: [email protected]

Common Mistakes When Implementing Automated Storage Racks

Many Vietnamese businesses encounter common mistakes when implementing AS/RS, leading to budget overruns, schedule delays, or systems not operating as efficiently as expected. Below are errors to avoid:

• Not thoroughly assessing actual needs before design. Some businesses choose systems that are too complex or too simple compared to actual needs, leading to waste or failure to meet objectives. Solution: Must have a 2-3 month survey phase, analyzing product flow, SKU types, and inbound/outbound frequency before design.
• Choosing a supplier based solely on the lowest price. Low price often comes with poor quality, weak warranty/maintenance, leading to frequent breakdowns. Solution: Compare 3-5 suppliers based on criteria: experience, customer reference list, warranty/maintenance policy, 24/7 technical support capability.
• Not adequately preparing electrical, network infrastructure, and warehouse space. AS/RS requires stable power (backup generator), stable fiber network, and a minimum warehouse height of 15m. Solution: Check current infrastructure, plan upgrades 3-6 months before implementation.
• Not training employees thoroughly before operation. Employees do not understand how to use the system, do not know how to handle issues, leading to long downtime. Solution: Require the supplier to provide a 2-3 week training course, including theory + practice, for 10-15 key employees (engineers, warehouse managers, IT staff).
• Not integrating with existing management software (ERP/WMS). AS/RS operates independently, not synchronized with the general management system, causing data confusion. Solution: Ensure the supplier supports standard APIs (REST, SOAP) for integration with existing ERP/WMS, or prepare to upgrade the management software.

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