What is smart warehousing?

With rising demand, time pressures, and the push for cost efficiency, warehouses are turning to smart technologies like AI and automation to stay competitive.

This smart technology helps boost productivity, profitability, and allows warehouses to keep pace with the demands of online shopping and modern customer expectations.

So, what is smart warehousing?

Smart warehousing involves using modern tech to digitize and automate how warehouses run. Integrating these leading-edge systems help make things faster, smoother, and more profitable.

Most commonly, smart warehouses employ tools and capabilities including:

• AI to monitor workflow, environmental factors, and inventory.
• Internet of Things (IoT) connectivity to keep disparate systems working harmoniously
• Digital automation to activate and complete tasks.
• Robotics with actions informed by the AI and automation processes for greater efficiency and safety.

In 2023, S&S Insider valued the smart warehousing market at USD 22.7 billion and is projected to hit USD 75.7 billion by 2032, growing at a compound annual growth rate (CAGR) of 14.3%. It’s clear smart warehousing is set to play a major role in the future of logistics.

How does a smart warehouse work?

Smart warehouse technology involves a range of technologies including:

Artificial intelligence (AI)

Using AI in your warehouse management system boosts productivity by bringing all your key data into one platform.

With real-time insights and analytics, you’ll improve forecasting, streamline inventory management, and spot potential hazards early through pattern analysis. This reduces human error and makes operations safer and more efficient.

An example of AI in smart warehousing is Powerfleet’s forklift telematics system, which uses AI-powered Pedestrian Proximity Detection which proactively prevents accidents, bolsters pedestrian safety, and mitigates potential damage to industrial vehicles without the need for a wareable tag.

IoT implementation

IoT lets you monitor and control the disparate parts of your smart warehousing operation through different devices.

For example, with IoT sensors, you can keep an eye on atmospheric conditions such as temperature and moisture, while also keeping track of stock levels and accident numbers thanks to RFID tags.

Wearables

Your staff don’t have to be tethered to a PC in order to use AI and IoT technology. Instead, wearables such as smart watch apps or barcode scanners that can be worn like a glove streamline operations by making them more natural.

Automated Storage and Retrieval systems

Automated storage and retrieval systems (AS/RS) is the use of autonomous robotics in stock management. By automating storage and retrieval, warehouse operations are streamlined and made more efficient.

As it stands, only 20% of warehouses use automation this way, but this is just the start of a huge boost for the technology’s use in smart warehouse infrastructure.

Speaking of growth…

Why have we seen the growth of smart warehousing in the US?

The US has a dominant share of 35% in the global smart warehousing market as of 2024 according to Smart Warehouse Market Outlook & Forecast Report 2025–2030.

It can’t be denied that smart warehousing has grown exponentially over recent years, and it’s mostly fuelled by a continually increasing e-commerce market.

The two go hand in hand.

The rise of e-commerce – driven by growing internet and mobile use – has pushed businesses to be more efficient. That means really having to focus on productivity whilst cutting costs with automation and IoT, keeping operations running 24/7 while reducing human error.

It’s a perfect storm of needs, fulfilment, and optimization that’s seen smart warehousing become more desirable and more widely adopted across the US.

The benefits: Why is smart warehousing technology the future of warehousing?

Smart warehousing has become more essential in order to help fulfill the increasing demands of the e-commerce market. There are a number of key advantages of smart warehousing technology:

More efficient inventory management

Smart warehouse systems provide suppliers with a greater quality of real-time insights. This enables more accurate forecasting, quicker restocking, and fewer instances of overstocking or stockouts. In short, it helps businesses stay agile and responsive.

Error reduction

Warehouses are far from being simple storage spaces; their operations are built on a series of intricate, interwoven processes, any one of which can fall foul of errors.

That’s especially true of manual processes, with human error accounting for 63% of inventory and fulfilment issues alone. With businesses regularly spending 20% of their operational budgets rectifying these mistakes, the cost soon adds up.

The advantage of using smart technology is that AI and robotics don’t flag during a shift. This makes a huge difference especially over the course of 24-hour operations. By automating these processes, smart warehouses quickly start to save money – and increase safety.

Improved warehouse safety

By working collaboratively with AI and robotic technology, employees can hand over some of the dangerous and physically demanding work which reduces the risk of injury or harm.

Alongside this, IoT connectivity and data analytics can constantly monitor workplace conditions, making adjustments to the likes of temperature, while also identifying accident blackspots. With this information, it’s easier to implement changes that have a positive impact on workers’ lives.

Are there any downsides to smart warehousing?

There are several downsides which should also be considered.

Initial Upfront Costs

Implementing AI, IoT, and other smart features is not cheap. Not only is there the cost of the tech, but also integration costs and software.

The efficiencies and ROI on operating a smart warehouse mean you will recoup the implementation costs in fairly short order, though.

Cybersecurity

There’s also a cybersecurity risk. With the right countermeasures and mitigations in place, you can minimize this risk, but the more you rely on IoT and interconnectivity, the greater the risk to operations should there be a security breach.

Communication channels must be kept secure, firmware has to be kept up to date, and your network must be well-segmented to keep any cyber attack at bay.

Human Costs

Wherever AI, automation, and robotics are implemented, it’s likely to lead to job losses. The whole appeal of this technology is that it improves efficiency – and reduces costs. Many employees, though, can be retrained to operate the new systems which does open up other opportunities.

How should we embrace smart warehousing technologies going forward?

The key to embracing smart warehousing technologies is being selective.

Figure out exactly what systems you need and how they will benefit your operation to maximize efficiency and avoid unnecessary spend and upheaval.

While productivity and cost savings are important, smart tech can also play a big role in improving employee safety and wellbeing. From reducing physical strain to minimizing risk in hazardous areas, the right tools can make warehouse environments safer and more supportive.

What smart solutions do Powerfleet offer?

There are several key features in Powerfleet’s Forklift telematics solutions:

The Forklift Gateway – a vehicle asset communicator (VAC) that monitors the condition and performance of your vehicle fleet. Forklift Gateway gives you additional sensors, telematics, and enhanced safety protocols to keep operators accountable while also allowing for more effective pre-maintainance.

Forklift Speed Manager – fitted to your forklifts alongside dedicated sensors, the Speed Manager reacts to conditions and events. Once active, the Speed Manager slows vehicles driving through high-risk areas. The chance of accidents is reduced, while productivity is maintained.

Pedestrian Proximity Detection – Using AI and automatic object detection, the Pedestrian Proximity Detection system keeps employees safe without the need for wearable tags. The vision system is able to identify both people and other industrial vehicles in order to alert operators to hazards before accidents can happen.

Event-triggered Digital Video Recorder – With four cameras and a central DVR for continuous recording, you will always have access to real-time video footage of collisions and other incidents. Using this footage, it’s easier than ever to deconstruct events and put new safety measures in place.

To wrap it up

Smart warehousing is a must for warehouses in 2025 and beyond.

The potential for greater savings, increased efficiency, and an unparalleled level of accurate asset management is critical.

More than all this, though, smart warehousing has the power to create a safer working environment, one where accidents can be prevented or learned from, thanks to high-quality data and monitoring.