Labor Shortage: 4 Technologies Warehouses and DCs Can Use to Address the Tightening Labor Pool

With unemployment rates nearing all-time lows (standing at just 3.9% as of July 2018), employers in nearly every industry and sector are finding it more and more difficult to attract workers to fill their open positions.

Warehouses, distribution centers, and order fulfillment operations—which traditionally tend to rely on quite a number of manual workers—have been particularly hard hit by this labor crunch, as it has driven up employment costs, given workers more leverage, and made it more challenging to hold onto skilled workers who find themselves lured to competitors by higher wages.

US unemployment rates over time (Source: Bureau of Labor Statistics)

What is an order fulfillment operation to do? You could wait until the labor market cools off, but doing so would mean forfeiting potential growth and profit in the meantime, which simply doesn’t make sense. But the only other alternative is to swallow the increasing labor costs by hiring skilled workers at a premium (or by hiring unskilled workers, training them, and risking them jumping ship in the future).

That, or find ways to leverage automation technology.

In many cases, warehouses, DCs, and order fulfillment operations can leverage warehouse automation technologies to reduce their dependence on an overheated and tightening labor pool. By automating mindless, repeatable tasks, operations can focus on employing more highly-skilled workers for tasks that add more value to the operation while reducing their overall payroll by employing fewer workers.

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In the long run, this creates a leaner, more efficient, and more profitable operation.

But which automation technologies would be the most beneficial for a warehouse, DC, or order fulfillment operation experiencing a labor shortage? The answer to that question will depend on the specifics of your operation, but some technologies that can help you reduce your labor requirements include:

1. AGVs, AGCs, and AMRs

Automated guided vehicles (AGVs) and automated guided carts (AGCs) are driverless vehicles that can be deployed in a warehouse or distribution center in order to move product, inventory, and material from location to location within a facility without the need for human intervention. They move independently of an operator by following markers, tape, or wires on the floor. This is why they are called “guided” vehicles: They are guided by their marked routes.  They may also use a combination of different sensors (for example, LiDAR and visual cameras) to avoid obstacles in their path.

Autonomous Mobile Robots (AMRs) are similar to AGVs and AGCs in that they, too, can be utilized to move inventory or product around within your facility. But they differ in some pretty important ways. Namely, AMRs are not bound by fixed or preset routes like AGVs and AGCs. By relying on a sophisticated array of onboard sensors, computers, and active maps, autonomous mobile robots are better able to understand and interpret their environment, which allows them to create their own routes and paths.

Manually transporting materials and product from Point A to Point B within a facility can be a time-consuming process that has the potential of disrupting the flow of production if it isn’t properly timed to sync with demand. It is also relatively low-skill work, typically done with a forklift.

By partnering AGVs, AGCs, and AMRs with your warehouse execution software, you can kill two birds with one stone: Ensuring that product/materials are automatically transported wherever they are needed so that production and order fulfillment is continuous, while simultaneously freeing up your employees to do more valuable work, which will, in effect, lessen your dependence on the labor pool.

2. Pick-to-Light and Pick-to-Voice

Walking and manually picking product for orders typically accounts for more than 50% of all of the time associated with picking. This means that an inefficient pick-system has the potential to significantly drag on the productivity of your operation. In the long term, workers inefficiently picking orders translates into wasted time, fewer processed orders, and, often, a need to hire more workers to meet demand.

If you are having difficulty finding reliable, cost-effective, that’s a problem. Pick-to-light and pick-to-voice systems have the potential to reduce your need for additional labor—not by replacing your employees, but by making them more productive.

In fact, it’s been shown in a number of studies that when operations upgrade their pick systems from paper-and-pencil to a more integrated form of order processing, they enjoy on average a 25% gain in overall productivity. They can reduce picking error rates by a whopping 67%. With gains like that, it is incredibly likely that an operation can forgo hiring additional personnel simply by helping their existing workers become more efficient.

3. Goods-to-Person (G2P) and Automated Storage and Retrieval (AS/RS)

Goods-to-person (G2P) and automated storage and retrieval (AS/RS) are two related, but different, technologies that can similarly help operations reduce their reliance on expensive labor.

G2P and AS/RS both work by automating the transportation of product. In addition to traditional long-term storage, AS/RS can be used to provide buffer storage between various stages in an operation’s workflow, as well as to stage orders for shipping. And goods-to-person technology can be deployed in a way that optimizes your pick systems, reducing the amount of time that your employees spend walking from location to location to pick orders.

The effect of these technologies is two-fold: Automating the easily repeatable task of moving product reduces the need for unskilled laborers, while simultaneously increasing productivity, further reducing the need to hire additional workers.

4. Automated Packing and Shipping Systems

If you were to consider the amount of time it takes to pack an order (as a percentage of total order cycle time), you’d find that the cost of readying an order for shipment is about as high as it is to pick the order. Between weighing, cartonization, packing, and final shipment, an order has gone through so many touches that it has a significant impact on the productivity and profitability of an operation.

And, of course, thanks to the ever-expanding reach of ecommerce, these processes must grow ever faster and more efficient to meet customer demand. In order to achieve this, facilities have typically needed to employ more and more personnel to handle packing and shipping.

Automated packing and shipping systems work by automatically weighing, packing, and cartonizing orders, selecting the fastest and cheapest delivery options, labeling the order, and readying it for shipment. This can dramatically reduce the amount of time a worker spends handling each order, while also reducing total order cycle time, making processing the order less expensive and more profitable.

Keeping Cost in Mind

Each of the technologies outlined above has the potential to drive down your employment costs, reduce your dependence on the whims of the labor market, and make your operation more efficient and productive. But it is important to keep in mind that implementing any of these solutions will, of course, require a certain level of investment. While some operations may choose to bite the bullet all at once when pursuing automation, smaller operations may find such a large investment difficult to manage. The good news is that most of these solutions can be implemented modularly, allowing you to recoup some of your costs and realize some benefits before making additional investments. A skilled systems integrator can help you determine the best path forward in automating your facilities.