Is your business prepared for the changing Warehouse Automation Industry?

Key Points:

  • The warehouse automation industry is shifting towards more modular, configurable, and standardized systems like AutoStore and OPEX.
  • This shift in the industry will have far-reaching implications on the value chain, eroding margins for system integration and solution design, while benefiting system OEMs.

The traditional model for system integration in the warehouse automation industry has involved vertical integration, with system integrators covering the span from system OEM all the way to after-market service. This was due to the lack of differentiation and slow pace of innovation in traditional fixed warehouse automation hardware. However, the rise of third-party system OEMs developing modular and standardized solutions, based around robotics, is shifting the industry towards a “buy” rather than “build” approach for system integrators.

These novel systems developed by companies like AutoStore and Exotec are highly modular and configurable, unlike legacy systems that are highly customized for each client. This shift from customized to standardized is shifting the value creation from the build phase to the design phase. As a result, the value is shifting from system integration to system design.

As the industry moves towards greater standardization and the integration of more third-party systems, the need for system orchestration and execution becomes increasingly critical. The value chain is also shifting, with system OEMs potentially capturing more of the after-market service revenue, particularly when it comes to spare parts.

This trend of disruptive innovation and value creation shifting downstream to vendors developing innovative systems is not limited to the warehouse automation market. It can also be observed in other sectors experiencing similar disruption, such as the automotive industry.

While the current trend is towards modular and standardized systems, the article predicts that at some point, hardware will become commoditized and the rate of differentiation will slow. At that point, system OEMs may develop integration capabilities and incumbent system integrators may acquire system OEMs, resulting in a shift towards vertically integrated system integrators once again.

To stay ahead of the competition in this changing industry, the article recommends accessing leading research, such as the Warehouse Automation – 2023 report, which provides insight into growth segments and competitive advantages. Additionally, companies can benefit from custom research solutions and access to analysts.