The fear of man versus machine is so culturally ubiquitous that it’s spawned tons of dystopian thrillers based on the premise. From Blade Runner to The Matrix, we have a deep-seated collective fear that new technologies could bring about devastating consequences, and warehouse automation is no different. In particular, there’s been increasing concern that automation will translate to widespread job loss.
As robotics become increasingly sophisticated, there’s an accompanying worry that job loss is imminent. No doubt you’ve seen the headlines—automation has killed 70% of jobs! Robots will replace 85 million jobs globally by 2025!
However, when it comes to the rise of e-commerce and rapidly evolving supply chains, assessing the impact of automation on jobs is a little more complex. In fact, warehouse automation isn’t eliminating jobs; it’s creating a better fulfillment paradigm from the top-down.
Automation or not, warehouse jobs are impossible to fill
Just as consumer demand for e-commerce and fast delivery is rising, the availability of warehouse workers is dwindling. This year, 73% of warehouse operators can’t find enough labor to support demand.
When labor is available, it’s not cheap. From January to June of 2021 alone, wages in the warehouse/transportation industry grew by 4.25% and companies have continued boosting pay to entice workers this year to little avail.
The Washington Post recently reported an astounding statistic – Amazon warehouses typically experience a more than 100% turnover rate per year, likely due to strenuous working conditions. Warehouse jobs in general tend to be higher risk than the average vocation, especially since the pandemic ramped up e-commerce demand, making manual order fulfillment even more difficult. In 2020 alone, the average injury rate for warehouse workers was 4 injuries per 100 employees.
Hiring and retaining talent has been difficult in the warehouse industry for some time. Automation is not a cause of job loss so much as a way to fill in gaps in manual labor.
The impact of this labor problem is immense
It’s difficult to understate the impact of the labor problem. We surveyed 200 brands, and 99% had lost sales last year due to insufficient fulfillment capacity. Labor is a huge factor here, with 1 in 3 brands citing ongoing labor shortages as a top threat to their business.
A lack of labor is causing major bottlenecks in order fulfillment, diminishing the customer experience and stymying sales. Due to labor shortages, Costco recently brought back purchase limits on essentials like toilet paper and cleaning supplies for the first time since the pandemic. Warehouses are sometimes unable to get up and running altogether due to insufficient labor, with delays sometimes spanning over nine months, causing lost sales and slow growth for companies.
It’s no surprise retailers are looking for alternatives; according to our survey, 33% of brands said reducing their reliance on manual labor for fulfillment is their #1 priority in the coming year. According to Accenture, three out of five companies are turning to automation in order to scale.
Automation is the only future-proofed solution
The fact is, even without the labor shortage, manual labor alone wouldn’t cut it in the modern supply chain. McKinsey recently called warehouse automation “imperative for sustainable growth,” due in large part to the fact human workers simply cannot keep up with modern demand.
E-commerce famously jumped 10 years in three months during the dawn of the pandemic. Combine this with the insatiable consumer appetite for fast, free shipping and manual labor is ill-equipped to handle the on-demand turnout now expected of e-commerce.
Automation helps brands keep pace, processing orders faster, more efficiently, and with greater accuracy. Automation isn’t taking jobs; it’s filling an intense void that is costing retailers millions and having a huge effect on the supply chain.
Automated warehouses still need workers; some tasks beyond the capacities of modern machines, and you always need someone behind the steering wheel overseeing operations. Automation isn’t eliminating jobs so much as creating new, more fulfilling positions while mitigating risks for workers. An automated warehouse is considerably safer, reducing worker injury and allowing for better social distancing protocol due to the ongoing threat of Covid.
Automation alone isn’t enough: Time to go distributed
If you’re not already leveraging automation, you’re falling behind. According to a survey of warehouse executives conducted by ARC Advisory Group and DC Velocity, 60% of respondents said it was “very likely” that they would invest in automation in the coming years.
However, keep the big picture in mind. Automation is but a single part of a larger package. Beyond the obvious metrics of labor costs and productivity, you need to be sure you’re building for long-term customer satisfaction. Don’t forget Sam Walton’s guiding maxim for retail: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Consumer expectations have shifted rapidly and their demand has nearly outpaced innovation. Eight of the top 10 non-grocery US retailers – which represent a significant chunk of total retail sales – offer free two-day shipping. This has reshaped what shoppers want, with nearly 1 in 4 consumers citing free shipping and fast delivery as a “must-have.”
With a traditional centralized fulfillment strategy, you store inventory hundreds of miles from end-customers in massive warehouses. However, with distributed fulfillment, you keep products in smaller micro-fulfillment centers scattered across target markets closer to where customers live.
And automation and micro-fulfillment? With the right technology, they can go hand-in-hand. Fabric’s proprietary software-led robotic technology stack leverages the entire 3D cube of the real estate, letting you densify storage and tuck warehouses into smaller spaces throughout key markets. This keeps inventory much closer to customers, cutting shipping costs and expediting delivery.
The bottom line: Automation improves the warehouse industry
We’re not staring down the dehumanizing future of The Matrix here. When it comes to warehouse automation, machines improve the human experience by creating safer conditions and more engaging work.
However, if you’re going to successfully leverage automation, it needs to fit holistically into your larger strategy. A future-proofed strategy that prioritizes distributed fulfillment alongside automation is vital.
When searching for a third-party logistics solution, look for a partner with a network of automated fulfillment centers at their disposal. This enables you to scale quickly today while future-proofing against fulfillment challenges of tomorrow.