Leveraging Automation to Solve Labor Challenges in the Warehouse

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.

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.

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