Retrofitting in intralogistics: The underestimated billion-dollar strategy for sustainable competitiveness – Image: Xpert.Digital
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The billion-dollar dilemma of intralogistics: Why the key to the future lies in the past
A quiet but profound transformation is currently underway in the warehouses and distribution centers of German industry. While the discussion surrounding Industry 4.0 is often dominated by futuristic new buildings and fully autonomous "dark warehouses," the true lever for competitiveness and increased efficiency often lies in a more inconspicuous place: the existing infrastructure. With a massive production volume of around €27.7 billion, the intralogistics sector is at a crucial turning point. Companies face the paradoxical challenge that their basic mechanical structures—the massive steel of high-bay warehouses—often seem built to last forever, while the digital brain of these systems begins to show signs of deterioration after just a few years.
This asynchronous aging of steel and silicon creates enormous investment pressure. However, in times of volatile markets and rising capital costs, the knee-jerk reaction of building new facilities is often economic suicide. The answer for strategically far-sighted decision-makers is therefore increasingly: retrofit.
What was long considered mere maintenance or an "emergency operation" has evolved into a highly attractive management strategy. The figures speak for themselves: cost savings of up to 50 percent compared to new buildings, amortization periods of less than three years, and significant CO₂ reductions make modernization the order of the day. But a retrofit is far more than simply replacing old parts. It's the integration of state-of-the-art AI technology into proven hardware, the answer to the skilled labor shortage through targeted automation, and protection against the risk of sudden obsolescence.
The following in-depth analysis explores why companies that fail to modernize now risk falling behind and how intelligent interventions can transform outdated facilities into state-of-the-art performance centers. Learn why the “architecture of decay” is your greatest risk and how to turn it into your greatest competitive advantage.
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Why companies that fail to modernize now will fall behind tomorrow
The German intralogistics industry is at a strategic turning point. With a production volume of approximately €27.7 billion in 2024 and projected market growth to over US$11 billion by 2033, this sector represents not only a significant economic branch but also an epicenter of technological transformation. The central challenge is not a lack of innovation, but rather the strategic question of how companies can future-proof their existing facilities without depleting their capital reserves through complete new acquisitions. The answer lies in a concept whose economic implications are still underestimated: retrofitting.
Retrofitting, the systematic modernization and upgrading of existing intralogistics systems, has evolved from a niche solution to a strategic imperative in recent years. A recent study by Unitechnik Systems GmbH impressively demonstrates this development: 53 percent of the surveyed companies are already planning a retrofit of their systems, and another 27 percent have already implemented corresponding modernization measures. This trend is far more than a cyclical phenomenon. It reflects a fundamental realignment of industrial investment logic, driven by the understanding that the sustainable maintenance and targeted optimization of existing infrastructures are often more economically rational than their complete replacement.
The reasons for this strategic reorientation are multifaceted, ranging from technological constraints and economic calculations to regulatory requirements. At its core, however, lies the realization that intralogistics systems as a whole exhibit heterogeneous life cycles. While steel structures such as racking systems and basic structures can easily remain functional for 30 to 50 years or even longer with proper maintenance, electronic components, control systems, and software solutions have significantly shorter service lives. The average lifespan of a frequency converter, for example, is only 60 months, which stands in stark contrast to the mechanical longevity of the overall system.
The architecture of decay: Different aging rates as a structural problem
To fully grasp the economic relevance of the retrofit approach, a precise understanding of the aging dynamics within intralogistics systems is essential. These systems consist of a multitude of components that differ fundamentally in terms of their lifespan, obsolescence risks, and modernization needs.
The basic mechanical structures, especially steel constructions such as high-bay warehouses, pallet racks, and conveyor systems, constitute the most durable element of an intralogistics system. High-quality structural steel, treated by hot-dip galvanizing or other corrosion protection measures, can achieve a service life of over 50 years with proper maintenance. This robustness results from the material's physical properties: steel retains its load-bearing capacity and dimensional stability for decades, as long as it is protected from corrosion. The load-bearing capacity of modern heavy-duty racks often reaches several tons per level without any signs of structural fatigue.
In stark contrast are the electronic components and control systems. Automation technology is undergoing rapid technological evolution, leading to ever shorter product lifecycles. A prime example of this is the discontinuation of Siemens Simatic S5 controllers, which were an industry standard for decades and are now no longer in production. Companies still using these controllers face the challenge that spare parts are now difficult to obtain or are only available at significantly increased prices. Migration to current systems such as the Simatic S7 has therefore become a business necessity for many plant operators.
The software level has even shorter lifecycles. Warehouse management systems and material flow computers must be updated regularly to keep pace with new interface standards, security requirements, and functional enhancements. The increasing networking within the framework of Industry 4.0 further intensifies this dynamic, as proprietary systems must increasingly be replaced by open standards to enable the integration of different technology platforms.
These differing rates of aging create a structural dilemma: A system whose basic mechanical structure still offers decades of potential use can become inoperable due to the obsolescence of its electronic components or control software. The result is increasing malfunctions, rising maintenance costs, and, in extreme cases, unplanned production downtimes that can cause significant economic damage.
The economic rationality of retrofitting: A cost-benefit analysis
The economic advantages of retrofitting compared to new acquisitions can be demonstrated using a wealth of empirical data and practical experience. The key cost advantage lies in the fact that a retrofit preserves the cost-intensive basic structures of a system, while only the outdated or obsolete components are replaced.
Quantitative analyses show that a systematic warehouse retrofit is typically 30 to 50 percent cheaper than a comparable new building. This saving results from several factors: Firstly, the considerable costs of dismantling existing structures and disposing of materials are eliminated. Secondly, no new building structures or foundations need to be created, which is particularly relevant in times of rising construction and land costs. Furthermore, retrofit measures can often be carried out during ongoing operations or in phases, thus minimizing costly production interruptions.
The payback period for retrofit investments is typically between two and three years, which is significantly shorter than the typical payback periods for new installations. With a return on investment (ROI) of, for example, 25 percent, the invested capital is fully recouped after four years – a realistic timeframe that underscores the economic attractiveness of this investment strategy.
The economic benefits of a retrofit extend far beyond mere cost savings on the initial purchase. Modernization typically leads to a reduction in unplanned downtime of 10 to 20 percent, an increase in picking performance of up to 25 percent, and lower energy costs through intelligent load management. A targeted retrofit can often increase system availability by more than 20 percent by replacing vulnerable components and implementing more reliable technologies.
Performance and throughput improvements achieved through the use of new technologies during a retrofit can range from 10 to 30 percent. These efficiency gains enable companies to handle growing order volumes and shorten delivery times without having to invest in a completely new infrastructure. Practical examples demonstrate that such measures can improve throughput by around 25 percent and plant availability by over 20 percent.
The strategic dimensions of plant modernization
The decision for or against a retrofit is not solely a matter of short-term cost optimization, but requires a comprehensive strategic analysis. Several dimensions play a central role in this.
The first strategic dimension concerns security of supply. In times of increasingly volatile supply chains and rising customer expectations for delivery speed and reliability, the availability of intralogistics systems is of vital importance. Unplanned outages can lead not only to direct revenue losses, but also to contractual penalties, customer churn, and reputational damage. A retrofit addresses these risks by replacing outdated and failure-prone components with modern, more reliable technologies.
The second dimension encompasses spare parts supply and technical support. As manufacturers discontinue older control systems and components, obtaining spare parts is becoming increasingly difficult and expensive. The Unitechnik study shows that 68 percent of the surveyed companies cite spare parts problems as one of the main reasons for retrofitting. Proactive obsolescence management through timely modernization can significantly reduce these risks and ensure long-term operational reliability.
The third strategic dimension concerns adaptability to changing business requirements. Market dynamics in recent years, particularly the explosive growth of e-commerce, have fundamentally altered the demands placed on intralogistics systems. Companies today must manage smaller batch sizes, shorter delivery times, and a higher order frequency than just a few years ago. A retrofit offers the opportunity to adapt existing systems to these changed requirements without having to make the substantial investments of constructing a new facility.
Finally, the fourth dimension concerns regulatory compliance. Safety regulations, environmental requirements, and industry-specific standards are constantly evolving. Systems installed years ago may no longer meet current requirements. A retrofit allows for adaptation to new standards and regulations without requiring a complete plant reconstruction.
The technological focus of modern retrofit concepts
The specific measures within a retrofit vary depending on the initial situation and objective, but can be categorized into several characteristic areas of action.
Modernizing control technology often forms the core of a retrofit project. Replacing outdated programmable logic controllers (PLCs) with modern systems not only enables improved process control but also creates the prerequisites for integrating modern communication standards and interface technologies. Modern PLC systems offer faster processing speeds, higher accuracy, and extended functionalities such as connectivity to higher-level IT systems.
Drive technology represents another key area of focus. Modern frequency converters and servo motors offer significant advantages over older technologies in terms of energy efficiency, precision, and reliability. Equipping existing storage and retrieval machines with modern drives can lead to energy savings of up to 80 percent. Furthermore, intelligent drive concepts such as energy recuperation during braking enable further optimization of the energy balance.
The integration of modern sensors and data acquisition systems opens up new possibilities for process optimization and predictive maintenance. Continuous monitoring of condition parameters such as temperature, vibration, and power consumption allows potential problems to be detected and resolved early, before they lead to failures. Predictive maintenance, or data-driven proactive maintenance, can reduce downtime by up to 30 percent and lower maintenance costs by 25 percent.
Software modernization encompasses both updating warehouse management systems and migrating to new database and operating system versions. Modern warehouse management systems offer advanced functionalities such as real-time inventory monitoring, dynamic storage location allocation, and AI-supported process optimization. Integration with higher-level ERP systems enables a seamless flow of information along the entire value chain.
LTW Solutions
LTW Intralogistics – Engineers of Flow - Image: LTW Intralogistics GmbH
LTW offers its customers not individual components, but integrated complete solutions. Consulting, planning, mechanical and electrotechnical components, control and automation technology, as well as software and service – everything is networked and precisely coordinated.
In-house production of key components is particularly advantageous. This allows for optimal control of quality, supply chains, and interfaces.
LTW stands for reliability, transparency, and collaborative partnership. Loyalty and honesty are firmly anchored in the company's philosophy – a handshake still means something here.
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Predictive Maintenance and AI: Strategic Interface Optimization for Maximum Delivery Capacity
The role of artificial intelligence in modernized intralogistics
A particularly dynamic area of development in the context of plant modernization is the integration of artificial intelligence and machine learning. These technologies promise significant efficiency gains and open up new possibilities for process optimization.
AI-powered systems analyze large volumes of data in real time and develop optimal inventory strategies based on forecasts. Intelligent warehouse management software recognizes patterns in ordering behavior and automatically adjusts replenishment processes. This allows for shorter delivery times, reduced inventory levels, and cost savings.
The Unitechnik study shows that 38 percent of the surveyed companies consider the possibility of integrating AI solutions and data analysis a primary reason for a retrofit. With its UniWare warehouse management system and the UniWare-AI AI assistant, Unitechnik is already paving the way to a learning logistics center. This modernized technology offers the opportunity to integrate AI solutions into older systems, thereby significantly increasing their performance and efficiency.
Predictive maintenance represents one of the most promising applications of artificial intelligence in intralogistics. Sensors continuously monitor the condition of machines and systems, while intelligent algorithms recognize patterns that indicate impending defects. Maintenance measures are then carried out precisely when they are actually needed, thus optimally utilizing the remaining service life of components and simultaneously minimizing unplanned downtime.
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The sustainability dimension of plant modernization
The environmental relevance of retrofit measures is gaining importance in light of increasing sustainability requirements and ESG criteria. Modernizing existing facilities instead of constructing new ones contributes to reducing the environmental footprint on several levels.
Reusing existing structures avoids the significant resource consumption associated with producing new facilities. According to Starrag, retaining existing foundations and structures can save up to 137 tons of CO2 per project. This saving results from avoiding the energy consumption required for manufacturing new steel components, producing concrete for new foundations, and transporting materials.
Increasing energy efficiency through modern drive technology and intelligent controls further contributes to improving the environmental footprint. The intralogistics industry has comprehensively integrated sustainability and resource efficiency into its range of solutions, which includes recycling and retrofitting, as well as circular systems and energy consumption reduction. Modern components such as the magnetic eddy current brake speed controller operate without a power supply, thus reducing energy consumption to zero for certain applications.
The retrofit approach aligns with the principles of the circular economy by maximizing the lifespan of existing goods and minimizing the need for new resources. This approach is gaining strategic importance in light of increasing regulatory requirements for sustainability reporting and the achievement of climate targets.
The challenge of the skills shortage and the importance of automation
Demographic change and the associated shortage of skilled workers pose significant challenges for the intralogistics industry. The TMG study on automation and digitalization in intralogistics shows that the level of automation in many companies is considerably lower than expected: 63 percent of the companies surveyed have not automated their intralogistics at all or only to a limited extent.
In this context, retrofitting offers a pragmatic approach to gradually increasing the level of automation. Instead of completely redesigning their intralogistics, companies can selectively automate individual processes and supplement existing systems with modern technologies. This evolutionary approach reduces both the required investments and the implementation risks.
The integration of autonomous systems, such as driverless transport systems and autonomous mobile robots, into existing infrastructures is a typical application area for retrofit measures. These systems navigate independently through warehouses, avoid collisions, and continuously optimize their routes. Thanks to the integration of sensor technologies and AI-based controls, they work seamlessly with existing infrastructures and enable dynamic adaptation to changing production and logistics processes.
Automation solutions can immediately increase throughput by 30 to 50 percent by extending run times or adjusting processing parameters. These efficiency gains enable companies to meet growing demands even with stagnant or declining staff availability.
The interface between production and shipping as a strategic focus
Intralogistics systems play a central role as an interface between production and shipping in many companies. This strategic position underscores the particular importance of high system availability and process stability.
The flow of materials from goods receipt through production to shipping forms the backbone of the company's value creation. Materials are recorded at the central goods receipt area and stored in high-bay warehouses and small parts storage areas. The quantities required for production are picked and sequenced before being made available on the conveyor system. The finished goods are then collected, transferred to the stationary conveyor system, and temporarily stored before orders are picked and automatically transported to the shipping buffer.
This integration of various process steps demands a high degree of reliability and precision. Malfunctions in individual components can have cascading effects on the entire material flow and lead to significant disruptions in delivery capacity. A retrofit aimed at stabilizing and optimizing these interfaces therefore contributes significantly to safeguarding core operational processes.
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The practical implementation of retrofit projects
Successfully implementing a retrofit project requires careful planning and a structured approach. According to a study by Unitechnik, companies' biggest concern during modernization is the potential disruption to ongoing business operations. To minimize these risks, smart planning is crucial.
The first step in a successful retrofit is a thorough inventory of the existing equipment. The goal is to define the modernization requirements as precisely as possible and to avoid implementation risks. This analysis encompasses both technical aspects, such as the condition of the components, the availability of spare parts, and compatibility with current standards, as well as economic factors, such as the remaining service life, expected cost savings, and the payback period of the investment.
Another critical success factor is selecting the right partner to carry out the retrofit. The Unitechnik study reveals surprising requirements companies have for retrofit providers: only 25 percent of respondents consider the lowest price to be among their most important selection criteria. Far more decisive are a good understanding of the processes on the part of the provider (57 percent), dedicated contacts (58 percent), transparent communication (41 percent), and the ability to handle the project with the company's own staff (47 percent).
Modernization measures are ideally implemented in stages to minimize disruption to ongoing operations. Vendor-independent service providers are particularly well-suited for this purpose, as they are not tied to a single supplier when selecting new systems. This flexibility allows them to identify and implement the optimal solution for each area.
The market outlook and the strategic implications for companies
Analyzing market data and industry trends reveals clear strategic implications for companies. The German intralogistics market is expected to more than double to over US$11 billion by 2033. This growth is driven by the expanding e-commerce sector, the increasing demand for fast and accurate order fulfillment, and the need for efficient warehouse operations.
At the same time, the industry recorded a 9 percent decline in orders in 2024 compared to the previous year. This tight order situation is continuing into the current year and underscores the need for companies to carefully consider their investments. In this environment, the retrofit approach offers an economically attractive way to strengthen competitiveness without having to commit to the significant capital expenditures of new construction.
The 94 percent of companies that have already invested in automation solutions report positive results. This high level of satisfaction underscores the potential of targeted modernization measures for improving operational efficiency and competitiveness.
Companies that consistently incorporate ROI into their decision-making processes don't invest in technology for its own sake, but in measurable efficiency, sustainability, and competitiveness. This makes every investment in modernizing intralogistics not just a matter of cost, but a clear step towards securing the future.
The decision parameters for strategic direction
Whether a retrofit is the right decision for a company cannot be answered in general terms, but requires an individual assessment of the specific initial situation. However, certain indicators point to an increased need for modernization.
If, despite regular maintenance, the availability of the system decreases, malfunctions occur more frequently, obtaining spare parts becomes increasingly complex and expensive, or maintenance costs rise disproportionately, these are clear signals indicating a need for action. Situations in which the control and inventory management systems are outdated or where changing business requirements place new performance demands on the technology are equally relevant.
Total Cost of Ownership (TCO) provides a suitable framework for the economic evaluation of decision alternatives. In addition to acquisition costs, ongoing costs for maintenance, energy, service contracts, and software updates must also be considered throughout the entire lifecycle. In an international survey, 86 percent of companies cited system reliability and TCO, including maintenance costs, as very important for automation decisions.
The typical service lives of intralogistics systems vary considerably depending on the technology. While the basic mechanical structures can be used for 20 to 30 years or more, the economic service life of control systems is often only 7 to 15 years. A retrofit makes it possible to synchronize these different life cycles and extend the system's lifespan by another 10 to 15 years.
Economic analysis shows that, in most cases, retrofitting is a more economically viable alternative to complete new construction. The combination of lower investment costs, shorter payback periods, and significant efficiency gains makes targeted modernization of existing facilities a strategically attractive option.
Companies that systematically evaluate and utilize this opportunity can sustainably strengthen their competitiveness without overstretching their financial resources. In times of economic uncertainty, rising capital costs, and increasing sustainability requirements, this approach gains even more importance. Retrofitting is therefore far more than a technical maintenance measure. It represents a strategic investment decision that can significantly influence the long-term success of companies.
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