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How Did Automation Become a Necessity?

Companies once considered proposals for automated warehousing solutions warily, suspicious that the cost justification a system integrator presented was simply a sales pitch. No longer. These days, desperately short-staffed supply chain managers now justify an automation investment by calculating how many days behind they are on filling orders.

But how did we get here? From our perspective, today’s warehouse labor shortage and fulfillment challenges are the culmination of a slowly evolving series of events. They include:

Warehousing’s slow transition to handling individual items. Twenty or so years ago, the majority of people shopped at stores or called an 800 number to order from a catalog. E-commerce was in its infancy. Warehouses mostly handled shipments in pallets, then they increasingly shifted to building store-ready pallets of individual cases. Only in the last 10 years or so have a significant number of DCs started to handle eaches, but still primarily manually.

Shifting customer expectations. Call it the Amazon effect, but as customers increasingly learned they could get whatever item they ordered shipped both fast and free from the retail behemoth, they expected the same from everyone else selling online. That put pressure on other e-commerce operations to do the same in order to compete.

Growth in e-commerce shopping. When people were staying home and canceling vacations due to COVID-19 shutdowns, they instead spent that money shopping online. That’s what drove 10 years’ worth of e-commerce growth to occur in a three-month span. Correspondingly, the number of retailers who sell online and the variety of items available has exploded. Further, smartphones make it even easier to comparison shop from anywhere at any time.

More, larger warehouses with more job openings. Since the end of The Great Recession, the number of warehouses and DCs has grown continuously, year over year. These facilities are also getting bigger. They can hold much more inventory but also require many more associates to fill a respectively higher number of orders.

The decline in available workforce. The U.S. population’s overall growth has stagnated, and its workforce is growing older. COVID-19 prompted many workers to retire early rather than risk exposure to illness.

Workers have more job choices. The shortage of warehouse workers was already occurring prior to the pandemic. With so many more DCs opening, associates who are unhappy with their current employer can easily switch to a different one for a better hourly wage. There’s also competition from other fields for these workers, such as hospitality, restaurants, and retail.

The progression of these trends ultimately intersected with the emergence of COVID-19, which led to today’s current situation. Because of the gradual evolution of these factors, many companies failed to automate, and now find themselves struggling to keep up. That’s why warehouse and DC automation is now a necessity for operational survival.

Ready to implement an automated solution to address your workforce and warehouse challenges? KPI’s team is here to help. Contact us today.

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May 17, 2023