The US job market faces a significant labor shortage, and the warehouse and logistics sectors are bearing the brunt. The warehouse sector is particularly hard-hit as the labor shortage and escalating ecommerce demand have greatly intensified operational pressure.
The warehouse industry hasn’t significantly recovered since the Great Resignation three years ago. Now, labor shortages seem to be the new norm, and stakeholders must find mitigation strategies to alleviate the setbacks.
One of the most reliable workforce management strategies that stakeholders are warming up to is leveraging automation and innovative workforce management technologies. These strategies can help warehouse managers effectively bridge the labor shortage gap.
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The growing labor shortage crisis in warehousing
Warehouses have always had a hard time filling vacant positions. However, the current labor shortage is very challenging. Here are some of the key factors driving this crisis.
The Rise of Online Shopping
The ecommerce sector has been growing at a neck-breaking rate since 2020. Currently, 2.71 billion people shop online, and the number is projected to reach 2.77 billion by 2025. While this is great news for businesses, the increased order volume and complexity mean increased demand for warehouse staff. It comes at a time when labor is already in short supply, which further fuels the crisis.
An Aging Workforce
According to the United Nations, the global share of older citizens (65+ years) will rise from 10% to 16% by 2050. This poses a huge problem for warehouse employers, as it means experienced workers are retiring or approaching retirement.
Meanwhile, the younger generations are reluctant to take on physically demanding warehouse roles, and those who do lack the necessary skills and experience. Thus, beyond the labor shortage, warehouses also face a critical knowledge and experience gap.
Changing Employment Preferences
Due to the rise of tech-driven jobs and increased digital literacy, many potential workers now opt for less physically demanding roles in other sectors. This worsens the labor shortage by increasing turnover rates while simultaneously making it difficult for warehouses to attract talent.
Warehouse operations often rely on limited staff, which hampers productivity and slows order fulfillment processes. This directly affects customer satisfaction.
Moreover, the shortage has inflated labor costs across the board. Existing employees are compelled to take on additional work and extended shifts, translating to higher wage demands and overtime costs. The resulting financial strain erodes profitability and creates a cycle threatening the entire operational structure.
Automation as a solution to labor shortages
Watch the video to discover Logiwa IO Workflows, one way automation increases warehouse productivity.
The current labor shortage is driven by an aging population and shifting generational employment preferences. Thus, old workforce management strategies like increasing compensation alone won’t suffice. To combat it, warehouse managers must adopt innovative approaches such as automation. The following automation technologies can help address the current crisis:
Robotic and automated picking systems
Together, Artificial Intelligence (AI) and robotics are pushing the boundaries of modern fulfillment into a new era.
- Logiwa’s AI-driven warehouse management can increase warehouse productivity by 38% and warehouse efficiency by 58%, ensuring 93% of orders ship within 24 hours.
- AI-powered robotics not only improve operational efficiency but also promote improved safety, order accuracy, scalability, cost-savings, and more.
This results in fewer returns and enhanced customer satisfaction. Furthermore, when cobots take over repetitive and physically demanding tasks, they free human workers to focus on more complex and strategic activities.
Warehouse Management Systems
Modern warehouse management systems (WMS) like Logiwa WMS boast advanced features like predictive analytics and AI. These tools collect and analyze vast amounts of information on metrics like stock levels, order patterns, and robotic performance. They can predict ecommerce demand fluctuations and equip warehouse managers to accurately determine staffing needs ahead of time. Integrating AI in warehouse operations allows a WMS to benchmark human worker productivity based on past patterns. Logiwa IO includes labor standards that allow warehouse managers to estimate how much work their teams can accomplish and compare productivity between warehouse teams and individual workers.
Watch the video to learn about Logiwa IO’s Jobs & Waves, where scheduling meets smart automation.
Innovative workforce management practices
Even with automation in warehouses, human labor is still key to warehouse operations, meaning workforce management is still essential. However, old-school management tactics will no longer cut it given the changing generational working preferences.
To attract and retain employees, warehouse supervisors now need innovative strategies such as:
- Flexible work scheduling: To accommodate diverse workforce needs and improve work-life balance.
- Upskilling and training programs: Workforce development arms existing teams with the necessary skills to work alongside warehouse automation. Upskilling warehouse workers also demonstrates a commitment to employee growth, which motivates them to stick around.
- Positive workplace culture: An engaging work environment promotes job satisfaction and, in turn, reduces warehouse turnover. It also enhances a company’s reputation, which is key in attracting top talent.
Balancing automation with human labor
Automation has the potential to revolutionize warehouse operations completely. It improves facility conditions and the morale of warehouse employees. For instance, automated material handling systems can take on tasks like manual lifting, reducing the risk of musculoskeletal injuries among employees.
Similarly, automation guided vehicles can navigate warehouse environments better than human-operated vehicles and prevent collisions and accidents. AI and automation can optimize warehouse layouts for efficient put-away and picking processes.
Warehouse managers will never replace their entire workforce with robots. Human oversight will always be crucial for complex decision-making and problem-solving. The key is to strike a balance between automation and human labor.
To achieve this balance, warehouse managers should:
- Carefully assess existing processes to identify tasks that are best suited for automation.
- Implement automation gradually to allow employees to adapt to the new systems. Gradual automation can also help warehouse managers identify and address unforeseen challenges or adjustments.
- Provide training to equip employees with the skills needed to work with the new systems.
- Encourage employees to view automation as a tool to enhance their work, not as a threat to their jobs.
- Continuously monitor the performance between human workers and automation systems and make adjustments where necessary.
Automation eases the challenges of warehouse labor shortages
The labor shortage in the warehouse industry is a pressing challenge that requires innovative solutions. Embracing automation allows warehouse operators to overcome this challenge and, more importantly, future-proof their operations.
But you must strategically balance these innovations with human labor. Talk to a Logiwa fulfillment expert today to discuss how to achieve this delicate balance and gain a competitive edge in this fast-growing warehouse and logistics landscape.
FAQs on combating labor shortages
Why is automation necessary to address the warehouse labor shortage?
Also, younger employees who are replacing older workers may not be seeking out warehouse jobs. Automation is necessary, as it provides a necessary advantage for fully addressing this new set of issues.
What is the impact of the warehouse labor shortage?
How can warehouse managers balance automation with human labor?
For seamless adoption and balance of automation with human labor, warehouse supervisors and managers should carefully assess tasks suitable for automation. This targeted approach ensures technology is applied only where it’s most impactful.
What steps should warehouse managers take to future-proof their operations against labor shortages?
Taking these steps ensures warehouses remain operational even with small teams. Warehouse managers should also cultivate a positive work culture to retain employees and attract new talent.
