The effects of e-commerce, tightening labor markets, and higher consumer expectations are accelerating. These are currently the biggest changes affecting warehousing operations. For example, warehouse labor statistics show that North America is experiencing its tightest labor market in years.
In geographies such as the USA and Europe, smaller hubs of warehouses and DCs are being built in urban areas in order to be closer to the final mile and achieve shorter delivery times. The development of e-commerce warehouses is dependent not only on close proximity to urban areas but also on finding increasingly scarce and skilled labor.
Two major reasons for labor shortage in supply chain:
#1 Low unemployment:
Since the unemployment rate is low, it is difficult for companies to fill jobs due to fewer qualified candidates for the job. This forces companies to be more competitive to attract good candidates by offering higher wages, better benefits, and schedules.
#2 Generational difference:
People born between the years 1944-1964 are closing in on retirement without enough people to fill their roles. People and generations born after those years have more access to higher education which has resulted in blue-collar jobs being left unfilled.
Solving the labor shortage problem
Companies and logistics firms can address the warehouse labor shortage in three ways. These tactics are:
- Optimizing workflows
- Flexibility (agile supply chains)
- Warehouse automation
Though effective, automation is not the only way for an operation to deal with the labor shortage; it is also important to have an optimized workflow.
Efficient workflows in warehouses and DCs ensure optimal inventory control and performance. By optimizing the flow of the warehouse, warehouse managers can increase storage and improve order fulfillment rates.
Some of the ways in which workflows can be enhanced and optimized are:
- Laying out the warehouse for optimum space utilization
- Using the proper type of storage systems
- Picking optimization
- Proper management of inventory
- Maintaining Health and Safety Best Practices
Flexibility (agile supply chain)
Companies have to be more agile in terms of supply chain planning to ensure stability and maintain high service levels. Warehouses and DCs must make sure that their supply chains are flexible & agile enough to cope with unexpected problems and disasters as well as the changing availability and costs of raw materials.
According to CBX Software, an Agile Supply Chain basically refers to the use of responsiveness, competency, flexibility, and quickness to manage how well a retail entity manages and operates their private label supply chain. Unlike the lean supply chain, the agile supply chain uses real-time data and updated information, to leverage current operations and real-time data against demand forecast, which helps to improve the overall efficiency and productivity of the given entity or a product’s speed to market.
Supply chain managers can take advantage of the latest supply chain modeling software to make predictions and design supply chain models. This way the best response to disruptions can be well-planned.
The ability to remain flexible and agile enables an order fulfillment operation even in challenging times and in periods of instability.
Warehouse automation offers order fulfillment operations the ability to break free from the constraints of a shrinking labor pool and create a leaner, more efficient, and more profitable operation.
Tasks that are repetitive and are often performed by warehouse workers can be automated using the latest technologies, thus freeing up these valuable human resources for more important tasks. Automation can help reduce overall operating expenditure for warehouse operations.
With automation, an operations team can complete a higher volume of work with fewer resources. Companies that automate have an added advantage over their competitors in terms of efficiency and responsiveness.
While there are many potential options to automate processes in warehouses and DCs, below are some that are commonly adapted:
- Automated Warehouse Picking Systems
- Automated Guided Vehicles (AGVs)
- Automated Storage and Retrieval Systems (AS/RS)
- IoT Sensors
- Autonomous Drones
Innovation is ceaselessly making workers more proficient.
Newer technologies offer flexibility and reliability to meet ever-changing needs. Some can even be scaled up in real-time to enable higher throughputs with minimal disruption to current operations.
One of the easiest and the fastest way to introduce automation in the warehouse is by deploying autonomous drones for inventory scans. Deploying inventory drones require minimum infrastructural changes.
Autonomous inventory drones offer a variety of business benefits:
- Automated inventory counts: Complete stocktaking process is automated, thus eliminating human intervention.
- Cost-effective: Reduction in the use of MHEs (eg. forklifts, scissor lifts) that are used in traditional methods of bulk stocktaking ensures higher productivity of the staff and lower equipment costs.
- Image proof: Live video feeds, auditable bay-wise images, and adjacent use-cases such as empty bay audits and on-demand spot checks for specific SKUs are made possible.
- Visibility: Aerial pictures of each bay increase visibility, helps in optimizing space utilization via consolidation of broken pallets and minimization of honeycombing in bulk storage.
- Safety: Aerial awareness of bulk inventory can help identify unsafe storage practices by forklift operators.
- Scalability: Faster and frequent cycle counts can be performed by deploying multiple drones inside the storage facility.
An important motivator for the adoption of autonomous drones at warehouses and DCs is the reduction of fulfillment errors where the inventory turnover is high and/or the facility has high-value goods.