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The purpose of the study is to determine whether the presence of risk management in a warehouse requires the implementation of modern warehouse technology. On the basis of the literature analysis, it was possible to determine that there is a correlation between the presence of the highest level of risk management and the use of modern warehouse technology in individual warehousing processes. For this purpose, a statistical analysis was carried out on a sample of companies operating in the Slovenian automotive industry. The results did not reveal a tangible correlation between the presence of risk management with the use of individual modern warehouse technology, the motivation for its use and errors in its use. The results of the study therefore, highlight the problems that are present in the warehousing system of the Slovenian companies in the automotive industry, which are related to substandard technological equipment in the warehouses and to the discrepancy between the level of manufacturing automation and the level of warehousing automation. The results are important for the Slovenian automotive industry in terms of the implementation of modern warehouse technology in the high-tech automotive industry.
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Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333 321
THE IMPORTANCE OF RISK MANAGEMENT
FOR THE INTRODUCTION OF MODERN WAREHOUSE
TECHNOLOGIES
ABSTRACT
The purpose of the study is to determine whether the
presence of risk management in a warehouse requires the
implementation of modern warehouse technology. On
the basis of the literature analysis, it was possible to de-
termine that there is a correlation between the presence
of the highest level of risk management and the use of
modern warehouse technology in individual warehous-
ing processes. For this purpose, a statistical analysis was
carried out on a sample of companies operating in the
Slovenian automotive industry. The results did not reveal
a tangible correlation between the presence of risk man-
agement with the use of individual modern warehouse
technology, the motivation for its use and errors in its
use. The results of the study therefore, highlight the prob-
lems that are present in the warehousing system of the
Slovenian companies in the automotive industry, which
are related to substandard technological equipment in
the warehouses and to the discrepancy between the level
of manufacturing automation and the level of warehous-
ing automation. The results are important for the Slove-
nian automotive industry in terms of the implementation
of modern warehouse technology in the high-tech auto-
motive industry.
KEY WORDS
warehousing; risk management; warehousing
reliability; warehouse technology; methods; case study;
1. INTRODUCTION
Ensuring the reliability of the warehousing system
is one of the basic functions of a company logistics
management. Warehousing reliability depends on
the availability for supply (unloading, receiving and
putting away) and for dispatching goods (retrieving,
replenishing, picking, sorting, consolidation, load-
ing). The quality of logistics services provided by
the warehouse can be considered sufcient if the
number and structure of qualitative errors is low, if
services are provided on time, and if the customer
orders can be sped up or cancelled without any po-
tential errors arising [1].
The warehousing reliability is closely linked to
the use of modern technology, which is designed
to increase productivity and quality of work. Em-
ploying modern warehouse technology ensures a
more rational use of warehouse space, reduced use
of energy and labour, improved control of ware-
housing processes, and fewer manual handling op-
erations, which results in lower operating costs and
fewer work-related accidents [2-4]. The reliability
of warehouse processes has increased signicantly
with the introduction of modern technology, as its
use eliminates the main risks that are inherent to the
operation of a warehouse. Richards [5] identies
two main categories of modern warehouse technol-
ogy. The rst is the storage and handling equipment,
which includes Automated Guided Vehicles with a
navigation system – AGV, and Automated Storage
and Retrieval Systems - AS/RS. The latter catego-
ry refers to modern order-picking solutions, such as
Warehousing Management System (WMS), Radio
Frequency Identication Technology (RFID), Voice
Picking Technology (PbV) and Light Picking Tech-
nology (PbL).
Transport Logistics
Original Scientic Paper
Submitted: 11 Mar. 2019
Accepted: 2 Oct. 2019
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
ROBERT MUHA, Ph.D.1
E-mail: robert.muha@fpp.uni-lj.si
(Corresponding author)
SEBASTJAN ŠKERLIČ, Ph.D.1
E-mail: sebastjan.skerlic@fpp.uni-lj.si
VANJA ERČULJ, M.Sc.2
E-mail: vanja.erculj@fvv.uni-mb.si
1 University of Ljubljana
Faculty of Maritime Studies and Transport
Pot pomorščakov 4, 6320 Portorož, Slovenia
2 University of Maribor
Faculty of Criminal Justice and Security
Kotnikova ulica 8, 1000 Ljubljana, Slovenia
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
322 Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333
industry and represent an important source of in-
formation between industrial practice and academic
research. So far, no research has been carried out
to specically illustrate the impact of risk manage-
ment on introducing modern technological solu-
tions into warehousing. The study thus upgrades
the existing knowledge and provides companies in
the Slovenian automotive industry with the guiding
principles for providing reliable and efcient ware-
housing processes. As the automotive industry is a
generator of technological progress on the global
level, the results of the research can also affect other
industrial sectors in the region.
The paper is structured as follows: the second
Section provides a literature overview, highlighting
the connection between risk management and mod-
ern technology. The paper continues with the analy-
sis and discussion of the results. This part presents a
contribution to the impact of risk management on the
implementation of modern warehouse technolo-
gy. The nal Section outlines the limitations of the
study and provides suggestions for further research.
2. LITERATURE REVIEW
The specic features of warehousing in the auto-
motive industry is a result of the complexity of the
industry operation, as modern cars contain 15,000
separate parts supplied by about 200 to 400 differ-
ent suppliers, who, in turn, have their own sub-sup-
pliers [12]. Managing such quantities of different
products requires a coordinated effort by all ware-
house processes, both on the part of car manufac-
turers and within the supply chain [13]. Over time,
the eld of warehouse management has evolved to
such a level that it has become a reference point for
other industry sectors in terms of managing logistic
processes. In the automotive industry, it is absolute-
ly essential that warehouse processes such as re-
ceiving, pre-packing, put-away, storage, processing
customer orders, packaging, sorting and shipping
are reliable. Warehousing is an area where errors
occur quite often, which makes the implementation
of risk management a fundamental tool for ensur-
ing the safety and reliability of warehouse process-
es. With the introduction of modern technologies,
warehousing has gained new possibilities for de-
velopment. However, according to various authors,
the use of modern technology has led to a reduction
in the physical movement of goods by operators,
which has, in turn, led to a reduction in the number
of such errors. On the other hand, the use of modern
However, the question remains: why is this tech-
nology not more commonly used? Since we are
living in the age of the fourth industrial revolution,
also referred to as Industry 4.0, this question is a
fundamental driving force of the current research,
which explores the issue of employing modern
technological solutions. Tsarouchi et al. [6] found
in their study that during the period from 1980 to
1989, only 67 studies on this subject were pub-
lished, while the number rose to 3,153 in the period
from 2010 to 2015.
Scientic studies on the subject are mainly stud-
ies focusing on the interaction between the ware-
house operator and automation, where the main
reason that prevents the implementation of more
modern technological solutions is associated with
mistrust and lack of knowledge on the part of the
operators [7-10]. Designing, building, managing,
maintaining and controlling various technologies
and systems that are particularly characteristic of
the modern warehouse process, requires greater fo-
cus on risk management, whose main task is to es-
tablish a safety culture in the company. Therefore,
it is particularly important to highlight a culture of
reporting errors and risks within the warehouse,
which in this respect represents the highest level
of development of risk management in companies
[11]. The carriers and users of this kind of risk man-
agement approach are warehouse operators who
directly interact with modern technology. It is pre-
cisely because of this that risk management and the
associated error reporting culture are all the more
important for establishing and using the modern
warehouse technology. This is also a condition that
must be fullled before any issues arising due to
mistrust and lack of knowledge on the part of ware-
house operators can be solved.
Since the studies are strongly oriented towards
the operator-automation interaction, there is a no-
ticeable research gap in the available literature on
the subject, as apparently there are no studies fo-
cusing on the role of risk management in the use
of modern warehouse technology. The use of mod-
ern technology in warehousing is a fundamental
competitive advantage for companies. Thus, the
objective of the study is to determine whether the
development of risk management is heading in the
direction of introducing modern technological solu-
tions in an efcient manner. To this end, a survey
was carried out on a sample of 24 Slovenian com-
panies that operate in the international automotive
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333 323
However, the development of systems for ensur-
ing the reliability of warehousing processes began
in the mid-1950s in Japan. The 5S methodology
was rst implemented in manufacturing under the
Toyota Production System [21]. The main benets
of the 5S method are: a cleaner, tidier and more or-
derly work environment, safer working conditions,
reduction of non-value-adding activities, better
quality and higher productivity, fewer defects and
better availability of equipment, as well as fewer
equipment and tools needed [22]. A review in the
scientic literature shows that the 5S method is still
being used in all the developed industries and is also
addressed by the current research.
An important contribution to the development
of methodological approaches to ensuring ware-
housing reliability was made by the UK Health and
Safety Executive [23], who have published a book
in conjunction with the Warehousing Health and
Safety Forum – a joint committee with representa-
tion from trade unions, trade associations and em-
ployer bodies. It covers many special attention top-
ics, including manual handling and musculoskeletal
disorders; slips and trips; workplace transport; and
falls from the height. It also contains instructions on
handling other hazards in warehouses, such as stor-
age systems, mechanical handling, and electrical
safety. The HSE propose a ve-step risk assessment
method to be used in a warehouse: Step 1 - Identify
the hazard, Step 2 - Decide who may be harmed,
and how, Step 3 - Assess the risks and take action,
Step 4 - Make a record of the ndings, and Step 5 -
Review the risk assessment, which may have to be
updated as needed.
Various authors also explored the ways for im-
proving the reliability of the warehousing process
by introducing different methodological approaches
to preventing errors in warehouse operations. Not
many methods exist, as risk management in ware-
housing is often dealt with within the company sup-
ply chain through SCRM implementation. None-
theless, the methods that do exist have a signicant
impact on improving the reliability of warehousing
within a company. One of the most commonly used
and widely accepted reliability method in the indus-
try practice is Fault Tree Analysis (FTA), developed
by Yan et al. [24]. This method allows for system
failure to be expressed through the interaction of
its components. Moreover, with the aid of FTA, the
probability of system or mission failure can be com-
puted via Boolean logic calculations. This method
warehouse technology has generated a different
type of error that was previously unknown [11, 14,
15]. For the purpose of understanding the connec-
tion between risk management and modern technol-
ogy, both areas will be presented in this part of the
literature review, based on which a scientic ques-
tion will be formulated.
2.1 Use of risk management in a warehouse
Effective risk management carries the benets of
improved warehouse efciency and nancial per-
formance and increases the company competitive
advantage. It enables the warehouse managers to
efciently manage all types of risks and to recover
quickly in case of any disruptions. Since risks can
have a signicant impact on the performance of a
business in the short and long term, companies from
all industry sectors can suffer losses, unless they
treat this subject as a priority and in a systemic man-
ner. Thus, risk management requires continuous at-
tention when planning logistics operations [16].
As the warehousing process is part of a com-
pany supply chain, the overall performance of the
risk management system relates to the concepts of
Supply Chain Risk Management (SCRM). SCRM
is focused on managing risks along the supply chain
through coordination and collaboration between
partner companies for the purpose of generating
protability and continuity [17, 18]. The relevance
of SCRM is presented through the work of Ho et
al. [19], who have reviewed 224 international jour-
nal articles on SCRM published between 2003 and
2013. Among these articles, 208 applied quantita-
tive or qualitative research methods to deal with
the SCRM processes, including risk identication,
risk assessment, risk mitigation, and risk monitor-
ing. The authors identied ve common risk factors
that arise between different types of supply chains,
including macro risk, demand risk, manufacturing
risk, supply risk and infrastructural risk (informa-
tion, transport, and nancial risk). All these risk fac-
tors also have an impact on the warehouse process.
Due to the complex network of companies within
the supply chain, risk management is also dened
by ISO 31000, where this process is divided into
three phases: (i) risk identication, (ii) risk analy-
sis, and (iii) risk evaluation, the aim of which is to
reduce, monitor and control the probability and im-
pact of undesirable events [20].
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
324 Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333
design warehousing systems at various levels of the
company, especially in areas where operators work
with semi-automated processes.
Caputo et al. [28] developed a model to assess
errors probability and errors correction costs in kit
preparation and delivery processes feeding parts
to assembly lines. Error trees and event trees are
adopted to keep track of unwanted events and er-
ror correction opportunities during the entire lo-
gistic process, starting from material picking in
the warehouse to kit delivery at workstations and
parts assembly. A numerical example is presented,
illustrating the use of the method and assessing the
contribution of each potential error to the total cost
of quality in kitting systems. The method is aimed
at quantifying the economic consequences of errors
in the parts feeding the logistic process, and iden-
tifying the major error sources. Jacyna-Gołda and
Lewczuk [1] examined the issues related to the as-
sessment of warehouse performance, quality prob-
lems, and solutions designed to increase the quality
of work. Technical and organizational redundancy
was proposed as a primary factor that increases the
reliability of warehousing operations in the supply
chain, thereby improving the quality of services.
An approach to assessing warehousing reliability is
proposed, based on the technological and organiza-
tional redundancy, related to material ow pile-ups.
The approach is based on the OTIFEF index as the
basis for assessing the reliability of the warehousing
process.
2.2 Connecting risk management using
modern warehouse technology
The study published by the UK Health and Safe-
ty Executive [23] identies the main causes of acci-
dents in the warehouses, which are slips and trips,
manual handling, falls from height, being hit by
moving or falling objects, being hit by a moving
vehicle, being hit by something xed or station-
ary, and other kinds of accidents. Most accidents
are due to slips and trips (26%), manual handling
(18%) and falls from height (16%). With the use of
Automated Guided Vehicles with a navigation sys-
tem - AGV and Automated Storage and Retrieval
Systems - AS/RS, it is possible to reduce the poten-
tial risks of injuries and errors in the warehouse, on
account of the reduction in manual work. This type
of modern technology eliminates the potential risks
has been adopted to evaluate the subsystem level
failures for the AGV system (Automated Guided
Vehicles System). The proposed method is an effec-
tive approach for conducting AGV system mission
reliability assessment, providing the capability to
make informed decisions regarding the acceptabili-
ty of AGV mission performance.
Choy et al. [25] proposed a model for analys-
ing the reliability of the warehousing system, which
focuses on resource capability, under given com-
binations of storage, routing, batching and zoning
process policies. Based on the analysis, an assess-
ment of the effect of different operational combi-
nations on the reliability of the warehouse is then
performed. To better reect the actual order pick-
ing operations in a warehouse, a simulation model
is provided, based on the operating scenarios of a
logistics company in Hong Kong.
Lam et al. [16] developed Knowledge-based
Logistics Operations Planning (K-LOPS), which
provides support to the decision-making process,
especially in terms of planning and controlling the
warehousing operations. K-LOPS uses Radio Fre-
quency Identication Technology (RFID) and Ar-
ticial Intelligence Technology, i.e. the Analytical
Hierarchy Process (AHP) and Case-based Reason-
ing (CBR) to collect real-time warehouse data and
relevant logistical data to support decision-making
in the event of operational problems. The use of
the proposed system eliminates the risks associat-
ed with the process of warehouse operations plan-
ning. Ryu et al. [26] propose a model that focuses
on the interaction between operator and machine.
On this basis, they modelled when the operator can
intervene in the automated system through their
actions. The model’s advantage lies in the fact that
it is able to model more efciently the probability
of human behaviour in decision making, based on
acquiring knowledge and on the choice of actions
based on past experience. This kind of approach is
particularly important in the warehouse process of
a company, where there is often a dilemma about
when it is appropriate for the warehouse operator
to intervene in the operation of an automated ware-
housing system. A similar approach was developed
by Cochran et al. [27], which proposes a systematic
approach to modelling the operator – machine inter-
action. It focuses on the process of controlling the
operation of automated systems and their efcient
employment. The proposed model can be used to
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333 325
The use of modern technological solutions in
the warehousing process starts with the implemen-
tation of WMS, which has a signicant impact on
the optimization of warehousing processes from
inbound logistics, accepting products from manu-
facturing, internal warehouse processes, inventory,
planning and management of warehouse resources,
outbound logistics to optimal stock management
within the available warehouse capacities [34].
RFID is one of the new technologies that enable au-
tomatic identication and data capture in real time.
It is closely connected to the use of WMS. RFID
allows the transfer of data between the transmitter
and the receiver without physical contact between
them. RFID tags are made of an integrated circuit
that stores and processes data and is also used to
modulate/demodulate signals. This technology has
been adopted in various industries to reduce the in-
ventory losses, increase the efciency of processes
and improve information accuracy [16].
The Pick-by-voice system is complementary
with the existing WMS system or with ERP (En-
terprise Resource Planning) in the form of added
value. The information is transmitted from a host
over a wireless network and sent to a control unit
worn around the operator’s waist. The control unit
receives radio waves (RF) and converts data into
audio signals. The received assignments are gen-
erated in audible commands to the operator. After
receiving a command, the operator gives a vocal re-
sponse to the control unit. Using simple communi-
cation, the operator conrms the actions taken, and
the pick-by-voice system responds with the next as-
signment. The response is translated into data and
the host system is updated [35]. Marchet et al. [36]
highlighted the following advantages of PbV tech-
nology: accuracy of inventory and product picking,
increased productivity of warehouse operators, low-
er operating costs, natural communication and in-
creased safety at work.
Light Picking Technology (PbL) or Light-by-
voice system is also complementary with the ex-
isting WMS system, which guides the warehouse
operator using light signals or lights to a particular
location. An illuminated lamp signals the location
of the goods that are part of the order. In addition
to the lights, a button is also implemented, which
is used by the employee to conrm that the picking
procedure was completed at this location, as well as
an LCD screen, which provides the employee with
information about the quantity. Once the procedure
observed during warehouse operations that are as-
sociated with receiving, put-away, storage, packing
and loading.
For intelligent transportation and distribution
of materials in warehouses and/or manufacturing
facilities, there has been an increase in the use of
Automated Guided Vehicles (AGVs) in recent
years. Such vehicles travel along predened routes
to deliver various tasks without the supervision of
an on-board operator [24]. The most state-of-the-
art warehouse equipment also includes an automat-
ed storage and retrieval system (AS/RS), which is
the main category of equipment for material han-
dling. There are two major types: unit load AS/
RS and mini-load AS/RS. AS/RS in most cases is
comprised of conveyors, Storage Racks (SR) and
Automated Storage/Retrieval (S/R) machines [29].
Conventional AS/RS with a single route consists
of a rack structure, a storage/retrieval crane with a
single load handling device (shuttle), which serves
the rack locations, the connection to other systems
in the warehouse via input/output conveyors and
the control system which schedules AS/RS oper-
ations. The increasing number of AS/RS applica-
tions in warehousing has led to various changes to
the conventional AS/RS. The multi-shuttle AS/RS,
containing a number of load-handling devices on a
single crane, demonstrated signicant improvement
in the system performance compared to single-shut-
tle systems [30].
However, in terms of the costs resulting from in-
dividual warehousing operations, Richards [31] sin-
gles out the order-picking process, which accounts
for 35% of the overall warehouse costs structure.
This warehousing process is therefore, the main
focus of several authors [14, 32, 33], as it has the
greatest impact on the customer service. Errors in
the order-picking process cause an increase in costs,
because they require goods to be received a second
time, added labour costs due to manipulation and
checking of goods upon return, acceptance of sub-
stitute goods, repackaging, re-delivery, administra-
tive costs and the possibility of write-off of stocks if
the goods are returned after the acceptable delivery
period or damaged in transit [2]. These risks for er-
rors in the order-picking process can be avoided by
implementing modern technological solutions, such
as Warehousing Management System (WMS), Ra-
dio Frequency Identication Technology (RFID),
Voice Picking Technology (PbV) and Light Picking
Technology (PbL).
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
326 Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333
the implementation of more modern technological
solutions is associated with mistrust and lack of
knowledge [7-10]. By establishing the highest level
of risk management, it is possible to overcome the
potential issues arising from the adoption (or use)
of modern technology in warehousing, through an
error reporting culture. In can be concluded that by
establishing a high level of risk management, the
warehouse operators will effectively participate in
the design, creation, management, maintenance and
control of modern technological solutions.
Since studies are strongly oriented towards the
operator – automation interaction, there is a notice-
able research gap in the available literature on the
subject, as apparently there are no studies focusing
on the role of risk management in the increased use
of modern warehouse technology. On this basis, the
following scientic question is addressed:
Does the presence of risk management in a ware-
house affect the implementation of modern ware-
house technology? Without a clear answer to this
scientic question, any researchers' initiatives con-
nected with studying the attitude towards the intro-
duction of modern technological solutions in ware-
housing may be less effective. In the age of Industry
4.0, this is a eld that needs to be explored, as only
responsive, cost-competitive and exible compa-
nies will be able to succeed. Successful automation
of warehousing plays a key role in this, but only if
the basic levers affecting this process are thorough-
ly investigated.
The scientic question will therefore be veried
by the following hypotheses:
H1: The presence of risk management is conditional
upon an increased use of modern warehouse
technology.
H2: The presence of risk management inuences the
motivation of the company management to intro-
duce modern warehouse technology.
H3: The presence of risk management affects the fre-
quency of errors in the use of modern warehouse
technology.
The hypotheses have been developed in order to
examine the three factors in which risk management
inuences the use of modern warehouse technology:
the type of modern technology used (H1), the moti-
vation for use (H2) and the errors arising during use
(H3). The formulation of the rst hypothesis (H1)
is based on the assumption that the presence of risk
management in the warehouse affects the use of
modern technology. The fundamental guideline of
is completed, the employee can focus on the next
item where the light is on. The positive effects of
this technology are reected in improved perfor-
mance and accuracy of warehouse employees [5].
Because of the introduction of these modern
technological solutions, the warehouse process
changes and a new type of risk emerges; mostly
due to the processing of large amounts of data in
the same warehouse process, which make up the
largest share of warehousing costs incurred by a
company – the order picking process. The ware-
house operators thus interact with information more
than with the physical movement of goods [14].
From this point of view, there is a fundamental
connection between risk management and the in-
troduction of modern technology in warehousing.
Designing, building, managing, maintaining, and
controlling various technologies and management
systems that are particularly characteristic of the
modern warehouse process, requires greater focus
on risk management, whose main task is to estab-
lish a safety culture in the company. This is also the
basic condition for any errors and risks in the work
process to be dealt with strategically, with the goal
of ensuring the long-term stability of the company.
Many authors are aware of this [11, 15, 37], and
have developed various solutions. Hollnagel [37]
emphasized the importance of cooperation among
employees, with the purpose of generating ideas
and transferring mutual knowledge into the busi-
ness process of the company. Dekker [15] singled
out the factors that constitute a strong safety culture:
awareness of the importance of safety and coopera-
tion of top management, commitment and responsi-
bility of employees to ensure safety, safety promo-
tion structures, and reporting systems (efcient ow
of information related to safety). Reason’s [11] con-
tribution is of particular relevance, as he highlight-
ed the importance of creating a culture of error and
risk reporting, which, in this respect, is the highest
level of managerial risk management in companies.
It represents the ideal of how business processes
should work, since the growth and stability of the
organization is a common goal to all employees in
the company.
Risk management and the associated error re-
porting culture can have a signicant effect on
the implementation and use of modern warehouse
technology. There are many studies focusing on the
interaction between the warehouse operator and
automation, where the main reason that prevents
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333 327
Slovenian automotive and automotive supplier in-
dustry is traditionally export-intensive and operates
according to standards, recognized in the EU and
global market, such as QS 9000, VDA, EAQF and
ISO TS 16949 [38].
The research was divided into two parts. The
rst part resulted in a study, which had the objec-
tive of determining the advantages of using modern
technology by suppliers in the Slovenian automo-
tive industry. The aim of the second, current part of
the research, is to determine whether the develop-
ment of risk management is heading in the direc-
tion of introducing modern technological solutions
into warehousing in an efcient manner. Via ACS,
35 suppliers of the international automotive indus-
try were invited to participate in the survey, out of
which 24 accepted the invitation. For this purpose, a
questionnaire was prepared, which was lled out by
the warehouse or logistics managers. First, the man-
agement of each company that provided the contact
information of the persons in charge of completing
the questionnaire was contacted via ACS. After the
online questionnaire was submitted, the contact
persons were contacted once again by telephone to
eliminate any ambiguities that might have arisen
when answering the questions. The rst part of the
questionnaire consisted of questions of general na-
ture about the size of the company, its revenues by
years and the educational structure of the employees
involved in the warehouse operations. The second
part of the questionnaire consisted of questions re-
lated to the management of all warehouse processes
in the companies. For the purposes of analysis, the
respondents were asked about the presence of a risk
management system in the warehouse, the reasons
for the implementation of a risk management sys-
tem in the warehouse, or lack thereof, the frequency
of use of each individual warehouse technology, the
reasons that led management to introduce modern
warehouse technology in the company, and the fre-
quency of errors in the use of a particular modern
warehouse technology.
Modern warehouse technology is categorized
according to Richards [4]. The rst category is
storage and handling equipment, which includes
Automated Guided Vehicles with a navigation sys-
tem (AGV), and Automated Storage and Retrieval
Systems (AS/RS). The second category, modern
order-picking solutions, includes Radio Frequen-
cy Identication Technology (RFID), Warehous-
ing Management System (WMS), Voice Picking
risk management is to strengthen the safety culture,
and the implementation of modern technology can
have a signicant effect on the reduction of work-
place accidents and on the strengthening of other
security elements in the warehouse. The second hy-
pothesis (H2) focuses on the reasons or the motiva-
tion of the company management to use a modern
warehouse technology. Since the company manage-
ment is a generator of improvements from the point
of view of safety and technology, the hypothesis is
focused on determining the impact of the presence
of motivation for the implementation of modern
technology in the warehouse, where risk manage-
ment is present. The third hypothesis (H3) aims to
determine whether the presence of risk management
has an effect on the frequency of errors in the use of
modern warehouse technology. The use of modern
technology reduces the number of manual handling
operations and related workplace accidents, and
therefore, has a signicant impact on risk manage-
ment in the warehouse. However, it is not clear how
it affects other types of errors, as, due to the use
of modern technology, warehouse operators interact
more with information than with the physical move-
ment of goods.
3. METHODOLOGY
The study is part of a larger-scale research, cre-
ated in cooperation with the Slovenian Automo-
tive Cluster (ACS), which is an economic interest
association of the Slovenian suppliers to the auto-
motive industry and motor vehicle manufacturers.
The cluster was created in order to strengthen the
companies competitive ability and to increase the
added value. The ACS is the central communication
point of the automotive cluster, supported by infra-
structure. The ACS supports its members who wish
to enter the global motor vehicle industry market
with joint promotions and with highly technologi-
cally complex products. To this end, it increases the
efciency of members' operations through research
and connecting with professional development and
scientic institutions at home and abroad. The ACS
network connects the automotive component man-
ufacturers operating in the developed metal, elec-
trical and electronic, mechanical, metallurgical,
rubber, chemical and textile industries. The network
also includes the transport industry and providers
of research, development, production and other
services who develop and produce products and
provide services for the automotive industry. The
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
328 Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333
of warehousing processes (10; 55.6%), reduce costs
and achieve greater control over work processes
(both 3, 16.7%). The most common reason given by
companies for not using a warehouse risk manage-
ment system is that warehousing is a less important
process for them, followed by a lack of knowledge
and experience and by the high costs associated
with the introduction of such a system.
The results of testing the rst hypothesis (H1)
by likelihood ratio test are shown in Table 2. The
goal is to determine whether the presence of risk
management is conditional upon an increased use
of modern warehouse technology. Table 2 shows
the number and share of companies that often or
very often use a particular warehouse technology
by group of companies according to the use of a
risk management system. The use of storage and
handling equipment (Automated Guided Vehicles
with navigation system AGV, Automated Storage
and Retrieval System – AS/RS) and order-picking
Technology (PbV) and Light Picking Technolo-
gy (PbL). The validity of the measurement of the
reasons for employing the technology in the work
process was veried by the factor analysis, while
reliability was assessed using the Cronbach alpha
coefcient. The differences in categorical variables
between the companies that have a risk management
system and others were tested by the likelihood ra-
tio test and in continuous variables by an indepen-
dent samples t-test. The hypotheses were tested at
the level of signicance a=0.05.
4. RESULTS
The sample included 2 (8.3%) small, 10 (41.7%)
medium and 12 (50%) large companies. Three quar-
ters of the companies have a risk management sys-
tem in the warehousing process. The most common
reasons for implementing a warehouse risk man-
agement system (Table 1) is to improve the quality
Table 1 – Reasons for implementing a risk management system in the warehouse
We have a risk management system in the warehouse 18 (75%)
Reasons:
Reducing costs 3 (16.7%)
Increasing the quality of processes 10 (55.6%)
Customer needs require continuous improvements 1 (5.6%)
Greater control over work processes 3 (16.7%)
Increased productivity 1 (5.6%
We do not have a risk management system in the warehouse 6 (14.6%)
Reasons:
The nancial investment required for implementing a system is too large 1 (16.7%)
Warehousing is a less important process for our company 3 (50%)
Lack of knowledge and experience for implementing a system 2 (33.3%)
Table 2 – The impact of the use of a risk management system on the use of storage and handling equipment and modern order-
picking solutions (results of the likelihood ratio test)
We do not have a risk
management system
(n = 6)
f
We have a risk
management
system (n = 18)
f
LR p
Storage and handling equipment
Automated Guided Vehicles with a navigation system - AGV 0 (0%) 1 (5.6%) 0.59 0.443
Automated Storage and Retrieval System - AS/RS 0 (0%) 3 (16.7%) 1.86 0.172
Modern order-picking solutions
Radio Frequency Identication Technology - RFID 1 (16.7%) 3 (16.7%) 0 1
Voice Picking Technology 0 (0%) 0 (0%) - -
Light Picking Technology 0 (0%) 0 (0%) - -
Barcode Technology 3 (50%) 16 (88.9%) 3.69 0.055
Warehouse Management System - WMS 1 (16.7%) 8 (44.4%) 1.62 0.203
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333 329
obtained, which are logical, contentwise. The for-
mer factor covers the statements relating to the
reasons for the use of the technology that are re-
lated to employees, and the latter one covers the
statements relating to warehousing. The KMO mea-
sure and the Bartlett's test of specicity indicated that
the reduction of variables in this case was justiable
(KMO=0.68; χ2=160.7; p<0.001). The two factors
explain the 65.3% of the variability of the mea-
sured variables. The statement in grey has high
weights on both factors and is therefore exclud-
ed from further analysis. The reliability of mea-
surement of both measured factors is appropriate
(Cronbach alpha coefcient is greater than 0.70).
Two new variables (calculated composite score)
were created as the average of the statements hav-
ing high weights on each factor. These new vari-
ables were used as dependent variables when test-
ing the second hypothesis, while the presence of a
risk management system was included as an inde-
pendent variable. The objective was to determine
whether the companies that use risk management
systems differ from companies that do not use the
systems in their motivation for introducing mod-
ern warehouse technology.
solutions (Radio Frequency Identication Tech-
nology – RFID, Warehouse Management System
WMS), Voice Picking Technology (PbV), and Light
Picking Technology (PbL) were taken into account.
Since RFID is a modern successor to Barcode tech-
nology, the latter was also analysed. A comparison
between companies regarding the use of storage
and handling equipment did not show statistically
signicant differences. Among the companies that
use modern order-picking solutions, a higher level
of trust can be detected only in the use of Barcode
in companies that have a risk management system
(88.9%), compared to companies that do not have a
risk management system (50%), but the difference
is only marginally statistically signicant.
The results of the second hypothesis (H2) tested
by independent sample t-test are shown in Table 4,
preceded by the validity and reliability assessment
of the measurement of the motivations for employ-
ing technology in the work process (Table 3). The
validity of the measurement was veried by the
factor analysis, despite the small number of com-
panies involved in the survey. It is possible that
the results of the analysis are less stable due to
the small sample. Nevertheless, two factors were
Table 3 – Measurement validity and reliability of motivation of managers for employing technology in the work process of a
company (results of factor analysis - factor weights and Cronbach a)
Employees Warehousing
The company management wishes to…
... increase control over warehouse employees 0.51
... increase the productivity of warehouse employees 0.91
... improve warehouse processes 0.76
... lower warehouse costs 0.74
... improve work time management 0.81
... improve space planning at the exit of goods - dispatch 0.65
... improve space planning at the entrance of goods – takeover 0.67 0.46
... improve the quality of warehouse data 0.93
... improve cooperation between employees 0.81
Cronbach a0.86 0.85
Note: Factor weights are obtained with principal factor axis method and after oblimin factor rotation.
Table 4 – Comparison of groups of companies according to the system for risk management in the two main motivations for
employment of the technology (results of t-test)
Risk management system nM SD t df p
Employees No 6 4.17 0.71 2.13 22.00 0.045
Yes 18 3.44 0.72
Warehousing No 6 4.08 0.80 0.00 22 1
Yes 18 4.08 0.65
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
330 Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333
long-term stability of the company. In addition, the
majority of the companies in the sample believe that
using a risk management system in the warehouse
increases the quality of the processes.
However, the analysis of the results of the rst
hypothesis suggests a different assessment of the ef-
fect of the use of risk management systems on the use
of modern warehouse technology, as it did not show
statistically signicant differences. In 88.9% of com-
panies that have a risk management system, a higher
level of trust in the use of Barcode technology was
detected, but the difference is only marginally sta-
tistically signicant. In addition, Barcode technolo-
gy does not meet the criteria for modern warehouse
technology, as its technological successor is RFID.
Indirectly, it can be inferred that the companies in
the analysed sample use very little modern techno-
logical solutions. Voice Picking Technology (PbV)
and Light Picking Technology (PbL) are not used at
all, which is surprising, given the fact that the com-
panies are part of the international automotive in-
dustry - a generator of technological development in
the world. The presence of risk management is not
conditional upon an increased use of modern ware-
house technology. Thus, the rst hypothesis (H1)
has been rejected.
The purpose of formulating the second hypoth-
esis (H2) was to determine whether the presence of
risk management has an effect on the motivation
of the company management to introduce modern
storage technology. The results showed that they
differ in terms of employee control. Companies that
do not have a risk management system introduce the
technology in order to achieve better control over
the employees more often in a statistically signi-
cant measure, compared to companies that have a
risk management system. The two groups of com-
panies do not differ in terms of other motivations
for the introduction of modern technology. There-
fore, the second hypothesis (H2) has been partially
Table 4 shows the means and standard deviations
for the two key motivations for the introduction
of technology in each of the groups of compa-
nies. Companies that do not have a risk manage-
ment system introduce technology in order to
achieve better control over employees, compared
to companies that have a risk management system
(p=0.045). There are no statistically signicant dif-
ferences between the groups of companies in the
motivations for the introduction of technology re-
lated to warehousing.
The objective of the third hypothesis (H3) is to
determine whether the presence of risk management
has an effect on the frequency of errors in the use
of modern warehouse technology. The results of the
third hypothesis (H3) testing are shown in Table 5.
None of the companies that use RFID (n=4) often or
very often report frequent errors when using RFID.
A lower percentage (33.3%) of companies that use
Barcode technology (n=19) and do not have a risk
management system report frequent errors when
using Barcode technology, compared with compa-
nies that have a risk management system (43.8%).
The difference in percentages is not statistically sig-
nicant (p=0.735). Of the nine companies that use
WMS, none of those without a risk management
system report frequent errors, while 2 companies
that have a risk management system report frequent
errors. The difference is not statistically signicant
(p=0.464).
5. DISCUSSION
The companies in the analysed sample are aware
of the importance of implementing a risk manage-
ment system and thereby strengthening the com-
pany safety culture, as most are using adequate
methodological approaches to ensure the reliabili-
ty of warehousing. Thus, the basic condition is es-
tablished for any errors in the work process to be
dealt with strategically, with the goal of ensuring
Table 5 – Frequent errors when using modern technology, according to the system for risk management (results of likelihood
ratio test)
Frequent errors when using
We do not have a
risk management
system
f
We have a risk
management
system
f
LR p
Radio Frequency Identication Technology – RFID (n=4) 0 (0%) 0 (0%) - -
Barcode Technology (n=19) 1 (33.3%) 7 (43.8%) 0.12 0.735
Warehouse Management System – WMS (n=9) 0 (0%) 2 (25%) 0.54 0.464
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333 331
been rejected lies in the fact that companies in the
Slovenian automotive industry use very little mod-
ern warehousing solutions. This is the reason for
concern, considering the fact that this is an industry,
in which high-tech processes are the norm. On the
other hand, the results have revealed that companies
are aware of the importance of risk management,
since 75% of the companies in the sample have risk
management in place. Despite a relatively small
sample of companies, the results can be generalized
to the Slovenian automotive industry, since all the
Slovenian companies operating in the automotive
industry - about fty companies in total - were in-
vited to participate. All the largest companies in the
sector, which represent more than 50% of all the
companies, have participated in the study. The sam-
ple of the participating companies represents 1.6
billion EUR of generated annual revenues, and the
companies employ over 14,000 employees.
The result obtained mainly gives incentive
to further research, from the point of view of de-
termining the importance of warehousing in the
Slovenian automotive industry, as strengthening
the internal process within the company or man-
aging warehousing through outsourcing. This re-
search focus is all the more relevant, when com-
paring the report of the International Federation
of Robotics [39], where Slovenia was rst ranked
among the countries with a large share of robots
in the automotive industry, which is more than
1,000 robots per 10,000 employees. This is where
a discrepancy is emerging between the level of
automation in manufacturing and the level of ware-
house automation in the Slovenian companies that
are part of the international automotive industry.
Although the results of the research cannot be
generalized to the entire automotive industry, the fol-
lowing conclusions can be extrapolated:
modern technological solutions are underutilized
by companies, which can have a negative impact
on ensuring quality processes for customers in the
automotive industry;
the use of risk management systems only affects
the use of Barcode technology, which is not con-
sidered modern technology in warehousing, as its
technology successor is RFID;
the completed study analyses and synthesizes cur-
rent literature in the eld of risk management in
the warehousing process. In addition to the above,
the paper highlights the theoretical connectedness
between risk management and the use of modern
technology, which is an important guideline for
future empirical studies.
conrmed. Nevertheless, the results indicate an im-
portant direction in the development of warehouse
operations in the companies that have not imple-
mented a risk management system. The latter are
exclusively focused on having greater control over
the warehouse employees, which can be problemat-
ic in the long term, as they are neglecting the fun-
damental competitive advantages of using modern
technology, such as increased productivity and im-
proved working conditions in the warehouse.
The objective of the third hypothesis (H3) was
to determine whether the presence of risk manage-
ment has an effect on the frequency of errors in the
use of modern warehouse technology. An analysis
of this hypothesis has not produced any statistical-
ly signicant differences. Therefore, the third hy-
pothesis (H3) has been rejected. The results have
merely shown that a small percentage of companies
using Barcode technology without a risk manage-
ment system report frequent errors in the use of this
technology.
The study was structured in order to look for a
connection between the presence of risk manage-
ment and the use of modern warehouse technology in
practice, based on the existing gaps in theoretical
knowledge. The hypotheses have been developed
in order to examine the three factors in which risk
management inuences the use of modern ware-
house technology: the type of modern technology
used (H1), the motivation for use (H2) and the er-
rors arising during use (H3). However, the analysis
of the proposed hypotheses has not conrmed the
expected connection. What became clear is that
companies that do not have risk management in
place believe that the implementation of modern
technology only makes sense for the purpose of
supervising their employees. Therefore, the pres-
ence of risk management systems in a warehouse
does not affect the use of modern warehousing
technology.
The central gap in the research was based on
the assumption that the warehousing process in the
Slovenian automotive industry is changing due to
the introduction of RFID, PbV and PbL technolo-
gies. Warehouse operators interact more with infor-
mation than with the physical movement of goods.
The introduction of modern technology requires the
presence of warehouse operators; therefore, it was
essential in this process to look for a connection
with the highest level of development of risk man-
agement - a culture of reporting errors. However,
the main reason why most of the hypotheses have
Muha R, Škerlič S, Erčulj V. The Importance of Risk Management for the Introduction of Modern Warehouse Technologies
332 Promet – Trafc & Transportation, Vol. 32, 2020, No. 3, 321-333
analize literature je bilo mogoče opredeliti povezanost
med prisotnostjo najvišjega nivoja risk managemanta in
uporabo sodobne skladiščne tehnologije pri posameznih
skladiščnih procesih. V ta namen je bila izdelana statis-
tična analiza na vzorcu podjetij iz slovenske avtomobilske
industrije, ki pa ni pokazala konkretne povezanosti med
prisotnostjo risk managemanta z uporabo posamezne
sodobne skladiščne tehnologije, motivacijo za njeno up-
orabo in napakah pri njeni uporabi. Rezultati raziskave
zato izpostavljajo težave, ki so prisotne v skladiščnem
sistemu slovenskih podjetij v avtomobilski industriji, ki
se nanašajo na slabšo tehnološko opremljenost skladišč
in diskrepanco med stopnjo avtomatizacije v proizvodnji
in med stopnjo avtomatizacije skladiščenja. Rezultati so
pomembni za slovensko avtomobilsko industrijo iz vidika
uporabe sodobne tehnologije v visokotehnološkem okolju
mednarodne avtomobilske industrije.
KLJUČNE BESEDE
skladiščenje; upravljanje s tveganji; zanesljivost
skladiščenja; skladiščna tehnologija; metode; študija
primera;
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ROBERT MUHA, Ph.D.1
E-mail: robert.muha@fpp.uni-lj.si
(Corresponding author)
SEBASTJAN ŠKERLIČ, Ph.D.1
E-mail: sebastjan.skerlic@fpp.uni-lj.si
VANJA ERČULJ, M.Sc.2
E-mail: vanja.erculj@fvv.uni-mb.si
1 Univerza v Ljubljani
Fakulteta za pomorstvo in promet
2 Univerza v Mariboru, Fakulteta za varnostne vede
Kotnikova ulica 8, 1000 Ljubljana, Slovenija
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