Leverage Warehouse Automation to Solve Labor Challenges | FORTNA

Leveraging Automation to Solve Labor Challenges in the Warehouse

Discover how warehouse automation can solve labor challenges, reduce costs and enhance efficiency. Explore our FORTNA blog for practical tips and strategies to future-proof your warehouse operations and learn the latest trends and statistics.

by Darren Jorgenson

In the past, organizations viewed automation, innovative processes and robotic technologies as ways to increase productivity and control inventory. However, with rising labor costs, limited labor availability and retention, and the changing attitudes toward warehouse work, automating even a portion of an operation is now a business necessity to keep pace with customer demand.

The conventional model of relying on a manual workforce supplemented by temporary labor is no longer sustainable in the current labor market. With warehousing operations competing for labor by offering higher wages, sign-on bonuses and flexible schedules, automation presents a practical solution by ensuring your operations stay competitive and efficient, offering a way to navigate the changing labor landscape.

2024 labor statistics and trends

Recent labor statistics mirror how the labor market for the warehouse sector is shrinking and highly transient.

 

Labor Graphic 1

 

Labor Graphic 2

Executive and team presenting a business case to group of decision makers

Market forces, disruptions and customer demands are driving automation and innovation

Automation was once justified solely based on core labor savings. However, a significant shift in customer behavior and expectations has occurred, particularly in online shopping and order fulfillment. This shift has made shipping and returns more demanding, indicating that the warehouse is no longer a cost center or a necessary expense. It has become a key instrument in strengthening customer loyalty, delivering on brand promises, and becoming a vital competitive advantage. The necessity for change in the warehouse’s organizational role should not be underestimated.

When building a business case for automation, easily quantifiable labor, fulfillment and delivery numbers look great on a spreadsheet and are hard to deny. However, applying a holistic approach and understanding that cost savings, return on investment (ROI), capacity requirements and productivity gains can be just as important.

Determining the best fit for your operations

When automating your entire fulfillment operation or a portion of it, you should start with the end in mind. Defining business requirements now and projected into the future can determine what types of solutions are needed, the amount of labor and skill sets needed, and any facility and IT adjustments that will be required. Some important tips to remember when building an automation business case:

  • Use data to make decisions.  It’s easy to see that you need to automate, but what are the key metrics you will be measured on? Understanding your current state and envisioning your future state operation is an important first step.
  • Define opportunities and alternative solutions.  Decision makers and executives want options regarding values, expenses and ROI. Warehouse-ready solutions, robotics and warehouse software must be considered and weighed.
  • Scalability and flexibility.  If the 2020 pandemic taught the supply chain industry anything, it is that pivoting and adjusting to market, geopolitical and societal forces is crucial. Having a solution that can scale up or down easily and adjust to seasonal and promotional pressures will give your operation a competitive advantage.
  • New isn’t always better.  Don’t be swayed by new technology that has just entered the market. Many times, a boring but proven technology that has been tested and exposed to the rigors of a peak season can be exactly what your operation needs.

Automation can bridge the generation gap

The Millennial6 and Gen Z7 generations (people born between 1981 and 2012) represent the largest group in the workforce, comprising close to 62% of all workers. This generation has differing views of employment, workplace/life balance and corporate responsibility than past generations. They are also the first generation that grew up with the internet and its many advanced technologies.

Job hopping has almost become a hallmark of these generations, as they are the most connected to their peer groups by utilizing text, social media and other online applications to share experiences and employment opportunities. Twenty-one percent (21%) of Millennials reported switching jobs within the last year, and 62% were open to a different opportunity.8

However, an interesting trend emerging is that since these generations engage with higher-end technologies and devices in their everyday lives, they are attracted to companies that employ these technologies that they can interface with and will make their tasks less physically demanding yet mentally stimulating. While automation and robotics are sometimes met with resistance and fear from the generations before them, Millennials and Gen Zers have embraced and sought out organizations that use technology and data systems to improve their daily work lives.

Warehouse automation adoption trends

While outside economic factors such as inflation and interest rates impact investment decisions, planning now is critical to be ready as eCommerce continues to grow and labor availability continues to shrink. Understanding greenfield vs. brownfield options, SKU proliferation, capacity limitations, warehouse execution software, and robotics can assist you in creating multiple automation options.

As labor availability and retention remain a challenge, market forces continue to drive automation.

  • Global eCommerce sales are projected to increase by 9.4% in 2024, reaching approximately $6.3 trillion9
  • The United States is leading in eCommerce growth, and projections indicate that sales will double by 202510
  • Automation can lead to labor cost savings between 20% and 50%11
  • Brownfield sites and vertical markets are driving warehouse automation. Warehouse-ready solutions and high-density storage have allowed organizations to remain in their current facility by implementing automation.12
  • Adoption of automated solutions is predicted to rise over 16% in 202413
  • A $250K automation investment can result in $1.5M in positive cash flow over 7-8 years, mostly due to increased efficiency and reduced labor costs14
  • Mobile automation will grow by 38% as industries seek more flexible and scalable solutions15

FORTNA Can Help

FORTNA can help you build a justifiable automation business case using data, proven processes and best-fit solutions. Our team offers a deep bench of industry experience and a history of assisting organizations through the automation process, from business case to operational design to implementation. Building future-proof operations and warehouse designs that decrease the cost of labor while improving productivity and throughput will provide a competitive advantage for your business.

<sup>1</sup> <a href="https://www.bls.gov/news.release/pdf/jolts.pdf">https://www.bls.gov/news.release/pdf/jolts.pdf</a><br /> <sup>2</sup> <a href="https://www.bls.gov/news.release/jolts.t01.htm">https://www.bls.gov/news.release/jolts.t01.htm</a><br /> <sup>3</sup> <a href="https://www.payscale.com/research/US/Job=Warehouse_Worker/Hourly_Rate">https://www.payscale.com/research/US/Job=Warehouse_Worker/Hourly_Rate</a><br /> <sup>4</sup> <a href="https://warehousenews.co.uk/2022/06/why-do-warehouses-have-such-a-high-staff-turnover-rate/">https://warehousenews.co.uk/2022/06/why-do-warehouses-have-such-a-high-staff-turnover-rate/</a><br /> <sup>5</sup> <a href="https://www.indeed.com/hire/c/info/cost-of-hiring-employees">https://www.indeed.com/hire/c/info/cost-of-hiring-employees</a><br /> <sup>6</sup> <a href="https://www.pewresearch.org/short-reads/2018/04/11/millennials-largest-generation-us-labor-force/">https://www.pewresearch.org/short-reads/2018/04/11/millennials-largest-generation-us-labor-force/</a><br /> <sup>7</sup> <a href="https://www.weforum.org/agenda/2021/03/gen-z-unemployment-chart-global-comparisons/">https://www.weforum.org/agenda/2021/03/gen-z-unemployment-chart-global-comparisons/</a><br /> <sup>8</sup> <a href="https://www.gallup.com/workplace/238073/millennials-work-live.aspx">https://www.gallup.com/workplace/238073/millennials-work-live.aspx</a><br /> <sup>9</sup> <a href="https://avada.io/articles/2024-ecommerce-growth-rate">https://avada.io/articles/2024-ecommerce-growth-rate</a><br /> <sup>10</sup> <a href="https://avada.io/articles/2024-ecommerce-growth-rate">https://avada.io/articles/2024-ecommerce-growth-rate</a><br /> <sup>11</sup> <a href="https://www.automate.org/robotics/industry-insights/calculating-your-roi-for-robotic-automation-cost-vs-cash-flow">https://www.automate.org/robotics/industry-insights/calculating-your-roi-for-robotic-automation-cost-vs-cash-flow</a><br /> <sup>12</sup> <a href="https://interactanalysis.com/warehouse-automation-market-to-return-to-growth-in-2024/">https://interactanalysis.com/warehouse-automation-market-to-return-to-growth-in-2024/</a><br /> <sup>13</sup> <a href="https://www.primerobotics.com/navigating-the-future-warehouse-automation-trends-in-2024/">https://www.primerobotics.com/navigating-the-future-warehouse-automation-trends-in-2024/</a><br /> <sup>14</sup> <a href="https://www.automate.org/robotics/industry-insights/calculating-your-roi-for-robotic-automation-cost-vs-cash-flow">https://www.automate.org/robotics/industry-insights/calculating-your-roi-for-robotic-automation-cost-vs-cash-flow</a><br /> <sup>15</sup> <a href="https://interactanalysis.com/warehouse-automation-market-to-return-to-growth-in-2024/">https://interactanalysis.com/warehouse-automation-market-to-return-to-growth-in-2024/</a>

About the author

photo-of-darren-jorgenson-practice-lead-strategy

Darren Jorgenson

Practice Lead, Global Strategy

Darren Jorgenson is the Global Strategy Practice Leader for FORTNA and has been in the industry for 20+ years, serving in multiple industries and consulting roles. Darren is a member of the Council of Supply Chain Management Professionals and has been recognized as a Pro to Know by Supply & Demand Chain Executive magazine.