The integration of Autonomous Guided Vehicles (AGVs) into smart factories is transforming modern manufacturing, creating coexistence between humans and robotic systems. In this evolving landscape, one critical aspect is the seamless coordination of AGVs and human workers within factory settings. To achieve this, our research presents a portable indoor localization system that utilizes ESP32 microcontrollers as compact access points. Using Wi-Fi Fine Time Measurement (FTM) with smartphones, the system estimates worker positions through multi-lateration techniques in conjunction with advanced filtering methods. This localization system serves as a pivotal bridge, ensuring that AGVs can interact with and respond to the movements of workers within warehouses. A field study in an actual warehouse environment validates the system’s performance, demonstrating 1.13 m accuracy in lateral movements. Furthermore, its localization capabilities within specific warehouse areas showcase its potential to enhance order picking processes and optimize human-AGV interaction.