Logistics Automation: Building the Warehouse of the Future

While it’s easy to see automation and technology as job destroyers, every major technology shift throughout history has ultimately led to job creation, not destruction.

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Retailers and e-commerce platforms are still struggling with significant labor shortages and supply chain disruptions. With companies exploring ways to streamline operations in this challenging environment, the need for logistics automation has never been greater and 2022 proved to be a record-breaking year for the robotics industry. We remain optimistic about the potential for this trend to continue – and even accelerate – as only 20% of an estimated 20,000 warehouses in the United States are currently leveraging any type of automation solutions. The stained consumer shift to e-commerce and the extremely tight labor market are key drivers in this race to automate.

Persistent challenges plague retailers

According to a McKinsey & Company report, the COVID-19 pandemic accelerated the adoption of e-commerce by five years. With increasing competition in online shopping, retailers have quickly released that price is no longer the differentiator. Instead, it is how quickly and efficiently e-commerce orders can be fulfilled.

Adding to challenges facing retailers is the tight labor market. In September, the U.S. labor force participation rate edged lower and the transportation and warehousing industry decreased by 8,000 jobs. Further, retailers are experiencing rapid turnover among their core workforce.

Automation is essential to survival

Looking ahead to 2023 and beyond, retailers don’t have much of a choice but to adopt automation technologies; in many ways, it’s key to their survival. From inventory drones to autonomous mobile robots moving palettes, we are well on our way to creating a warehouse of the future. The overhaul of the logistics industry is creating an opportunity that spans the entire scope of the technologies being applied to the supply chain.

One of the trends key to watch in 2023 is that autonomy will redefine mobility. Companies along the entire supply chain are being asked to streamline operations and speed production. Robots and other connected, electric and smart technologies will be key to successfully achieving these goals. Expect to see even more widespread adoption of autonomous systems equipped with sensors, artificial intelligence (AI) and analytical capabilities optimizing supply chain management, doing real-time inventory and fleet management.

Further driving companies toward automation solutions is the marked trend toward reshoring in the post-COVID-19 era. Policy makers and business leaders are paving the way for manufacturing operations – particularly in a number of key industries – to move back to North America. This again increases the potential for robotics adoption. In the second quarter of 2022, robotics orders in North America expanded 25% to a record high of over 12,300 machines after growing by over 28% in the first quarter. By relying on industrial automation technologies, companies can minimize the economic impact of transplanting their operations while maintaining product quality, increasing efficiency and throughput, and again, alleviating labor shortages.

Supply chain professionals and investors need to play close attention to the innovators and leaders in the automation revolution.

While it’s easy to see automation and technology as job destroyers, every major technology shift throughout history has ultimately led to job creation, not destruction. Automation is freeing up human workers to focus on more value-added tasks than the often dull and dangerous work the robots are taking on. Eventually, some jobs may be automated away, but far more jobs will be improved and, in time, millions more will be created—driving future employment up, not down.