Labor Scarcity and Automation

Labor Scarcity and Automation

To most people, the idea of automated labor seems like something out of the realm of sci-fi. With visions of Rosie the Robot dancing in our heads, it’s hard to believe we’re living in the future that so long seemed restricted to the realm of fiction.

And yet, these days, automated labor has become more common, and more practical, than ever before—and nowhere is this truer than within the distribution and fulfillment industries.
Automation investment can make sure that your distribution center is prepared for the challenges of operating at peak profitability in the current market landscape.

As employers face issues of employee unreliability, high turnover, and increasing labor shortages through the distribution space, automation is more than just a future fantasy. It’s quickly becoming vital to commercial success in the here and now.

A closer look at labor scarcity

According to a recent report published by The Washington Post, over 43 million Americans quit their jobs over the course of 2021. Commonly called the “great resignation,” this wave of employee departures shows no sign of slowing. In fact, some employers report that resignation is currently at an all-time high.

So what’s the future of the great resignation? Expert predictions vary, with some stating that the trend will continue into 2023 and beyond. Other experts predict that more Americans are getting back to work—but that the attitude towards labor and willingness to walk away from a job that no longer feels rewarding will likely stay the same.

As demand for online shopping surges and e-commerce sales continue to become a preferred retail method for Americans throughout the United States, employees face increased hours and higher stress levels as they try to keep up with the growing demand.

The result? An increasingly unstable labor market that shows no signs of self-correcting, leaving employers facing higher costs and worse results. In fact, according to one study, as many as 73% of warehouse operators struggled to find adequate labor.

We need to face the facts: what was once a trend is quickly becoming a labor market norm, one that disproportionately impacts operators of distribution centers, warehouses, and other third-party logistics professionals, where staffing shortages are worsened by increasingly high turnover rates.

Automation: the wave of the future
Automation may once have seemed like a sci-fi solution to the sector’s labor woes, but these technologies have increasingly become a critical aspect of the manufacturing and logistics world’s real-world operations.
In fact, a study published in the Harvard Business Review indicated that within the next four years, the global warehouse automation market can be expected to double in value, with supply chain leaders describing warehouse automation as, …” One of their top three priorities for digital investment.”
Workers cited by the study also expressed optimism, with many sharing their excitement for the potential of automation technologies to improve safety, increase speed and efficiency, and allow them to produce higher-quality work.
The advantages of automating processes that were once performed by human labor is clear to employers who have struggled to maintain adequate staffing within their warehouses. Automation cuts down on your need to hire, making it easier to increase order accuracy, and productivity, and focus on reducing workplace injury for warehouse employees.
Not only does automation reduce the need for labor, but it also makes work less demanding, reducing the turnover rate and leading to lower stress levels and a more positive work environment that encourages employees to stick around.
These days, there are many forms of warehouse automation in common use. Companies use warehouse management systems to automate manual processes, inventory control, and data capture, supporting data analysis. Using this software in conjunction with technology such as sensors and robotics helps minimize the need for human labor, increasing efficiency and reducing costs.
Making automation practical
It’s no secret that warehouses and the fulfillment industry as a whole continue to be major drivers of change within the American economy. Around 1.5 million American workers are employed in the warehouse and storage sector, many of whom are ambivalent about the impact that the coming automation revolution may have on their careers.
However, when approached correctly, automation can actually be a critical asset in supporting the fulfillment sector for both workers and employers alike. The key to making automation an asset? Communication and training at every step of the way.
Automation can do a lot, but it still requires human intelligence and discernment to perform at its most effective level. Instead of framing automation as a threat to employees, employers should share the way that automation can make their lives better, and their jobs easier.
Done correctly, automation takes the pressure off, handling all the most dangerous, difficult, and repetitively dull tasks, leaving workers free to think more creatively and focus on building their skill sets on a higher operational level.
This need for training is apparent even to workers who are otherwise enthusiastic about the potential automation brings to their workspaces. As 35% of the warehouse workers interviewed in the Harvard study reported, workers fear that inadequate training resources will make it difficult for employees used to the old way of doing things to succeed in the new digitized, automated workspaces of the future.
“I think the more the warehouse is automated, the better we’ll all perform,” said one warehouse supervisor cited by the study. “Robots will greatly diminish our workloads, reduce risks, and increase productivity. But if we don’t know how to handle them, they’re hardly going to do any good.”
To assuage these fears, employers in the distribution and fulfillment space need to place a priority on training, communication, and open conversations with employees as they move forward into the coming automation revolution.
Emphasizing the potential career growth possibilities moving towards automation offers will allow workers to envision their longer term prospects working within the fulfillment sector, helping get them on board to perform the tasks necessary for accessing the full potential of automation technology.
As warehouse work continues to be a mainstay of the global economy, automation technologies can make a major positive impact. When human capital combines with the power of automation, anything is possible.

Three Ways Supply Chain Automation is Transforming the Industry

Three Ways Supply Chain Automation is Transforming the Industry

When it comes to supply chain, every business has its own way of doing things. Old habits – like completing inventory counts, picking, packing, and doing things manually – die hard. As businesses struggle to keep up with companies like Amazon, they may be wondering how supply chain automation – the process of replacing repetitive tasks with automated systems – is affecting an industry that is changing before its eyes. At ABCO Systems, we want to share our knowledge on how supply chain automation is affecting the warehouse, distribution, and fulfillment center industry.

  1. Lowering costs and increasing productivity

For those who work in the warehouse arena, automation is what’s on everyone’s minds. With the current labor shortages, automation is a way to subvert those challenges and meet them head-on. Currently, over 80% of warehouses have no automation at all[1]. That doesn’t mean everything is by hand, it just means that while 15% of warehouses are being mechanized, only 5% use sophisticated automation equipment.

As labor shortages continue, warehouse operators are looking for ways to use automation technology to increase efficiency and reduce the human labor needed to keep a warehouse running smoothly. According to a study, a warehouse spends around 50% to 70% of its warehousing budget on labor. By moving from human labor to automation, experts expect over the next three years to see an increase in productivity by between 25% and 70% and a reduction in logistics costs between 20% and 40%[2].

As warehouses decide to adopt automation systems, they can rest easy knowing that many of these systems are already proven. ABCO Systems believes in the use of conveyors to facilitate most of the operations associated with manufacturing, distribution, and warehousing facilities. Learn more about our  Automation systems here.

2. Eliminating safety risks

Keeping warehouse employees safe is an important task for any company. The US Bureau of Labor Statistics reported an average of 16 fatalities every year and a reported injury and illness rate of 5 out of every 100 warehouse and storage workers[3]. Additionally, worker injuries cost businesses billions of dollars every year.

With the labor shortages, workers can find themselves in even more dangerous situations since teams have to work harder to make up for the job vacancies. Automation can help reduce safety hazards including lifting injuries, falls, and fatigue. The longer a worker is on duty, the larger their risk of injury[4]. Implementing automation techniques that allow workers to take longer breaks or work shorter hours will also help to reduce the number of injuries.

Having machinery do the heavier lifting keeps workers away from some of the more dangerous tasks and also away from the more repetitive tasks that can lead to chronic back or shoulder problems. According to OSHA and the US Bureau of Labor Statistics, in 2019 tools and equipment caused 186,100 injuries that required workers to take days off to recover[5]. Implementing proper systems and technology helps achieve safety goals while also increasing efficiency.

3. Higher customer satisfaction

In the end, companies want happy customers. Achieving that goal means getting the correct products out the door as quickly as possible and to the correct person.

Improved productivity with fewer errors helps keep warehouses competitive. An automated warehouse is more efficient and productive. According to a study by Deloitte which surveyed more than 400 executives in manufacturing, “79 percent of organizations with superior supply chain capabilities achieve revenue growth that is significantly above average”. Implementing automation can help drive down costs and reduce processing times giving businesses an edge against their competitors by delivering faster, more accurate service.

Contact us to see how ABCO Systems can help you increase efficiency in your space and processes with warehouse automation solutions.

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[1] https://www.businesswire.com/news/home/20210621005532/en/Global-Warehouse-Automation-Robots-Technologies-and-Solutions-Market-Report-2021-2030—ResearchAndMarkets.com

[2] https://www.g2.com/articles/warehouse-automation-statistics

[3] https://safetyculture.com/topics/warehouse-safety/

[4] https://pubmed.ncbi.nlm.nih.gov/29064297/

[5] https://www.bls.gov/iif/soii-data.htm

Managing Returns with Automation

Managing Returns with Automation

Merchandise returns are a challenge to eCommerce, yet a necessary part of the process. There is a lot to understand to keep up with customer expectations and the innovations in technology that can help to make the return process more manageable.

As the volume of shipments continues to rise, the rate of the merchandise being returned rises also.  In 2021, the National Retail Federation reported that US shoppers are expected to return more than $761 billion worth of goods purchased in that year. This trend is reflected in the 2021 report from IMRG which found that a quarter of all consumers return between 5% and 15% of items they buy online.

There are a plethora of challenges facing eCommerce in regard to returns.  Not only is the volume of returns rising, but customer expectations continue to evolve, and customers do not want to pay for returns. A 2021 eCommerce survey revealed that many shoppers check the returns policy before placing an order. 40% say they will not order a product unless the return period is at least 30 days. 74% of respondents also stated they would not order at an online store if they had to pay for the return themselves.

Another challenge facing eCommerce in regard to returns is sustainability. Longer return times and issues with storage and infrastructure combined with the fact that it makes no financial sense to return lower-value items are impacting negatively on the sustainability efforts of merchants.

Here is an outline of the return process where we can see the pain points for eCommerce:

  • Generation of return labels
  • Receipt of return and accurate sortation to enter it back into inventory
  • Update of order status
  • Issuance of refund
  • Notification of customer

Reverse Logistics chart

So, what options do eCommerce merchants have for efficient returns?

  • Highlight your return policy upfront.  Clearly state your expectations throughout the purchasing process to ensure that they are understood by the consumer
  • Automate your return label by either including a return label with the shipment or providing a digital option to print one out
  • Get the right technology to manage the receipt of the return and accurate return to inventory. Technology today can set shipping rules and automate processes that save time and money while diminishing costly errors with shipping and managing returns.
  • Automate the order status update with the issuance of the refund and notification of the customer.

ABCO Systems has years of expertise in streamlining reverse logistics with automation, sortation, and storage optimization. Click the ABCO box below to find out how we can help you handle your specific reverse logistics needs.

 

Seth Weisberg discusses ABCO and eCommerce

Seth Weisberg discusses ABCO and eCommerce

In her article, “How Contractors Deliver When Building E-Commerce Fulfillment Centers”, Emily Beyda sits down with Seth Weisberg to discuss the ever-changing world of e-commerce and ABCO System’s place in that world. Seth Weisberg has been the CEO of ABCO Systems since January of 2003. Weisberg studied at Northeastern University, attaining a Bachelor’s degree in Sociology as well as a Master’s Degree in Business Administration.

Weisberg discusses Amazon’s “expansion of the modern logistics industry” in the 1990s that has entirely revamped the world of e-commerce that the world is both acclimated to and dependent on in the modern day. Amazon’s focus centered around building out distribution centers, as Weisberg breaks down, as the company aptly realized that investing more money, in the long run, can be extremely beneficial.

Weisberg took this philosophy into ABCO systems explaining that the best way to operate in this industry is to “draw on the expertise of fulfillment experts who can create more expensive- but more effective solutions that save money over time”. Delving further into the ABCO way, Weisberg elaborated that there is “no established system” that he subscribes to. An ABCO project begins with the team evaluating a warehouse space to begin the design process, from which point actual distribution methodology is defined.

This process can be likened to “a puzzle […]” Weisberg continues in Beyda’s piece, it “depends largely on each individual’s distribution model […]”. Similarly, the world of logistics as a whole is dynamic, which aligns perfectly with ABCO’s flexible and ever-changing approach to space optimization. Much of the company’s work is done for third-party logistics (3PL) companies, which means that all of the customers of the 3PL have distinctive wants and needs within their space. Furthermore, as Weisberg entails, contracts with these 3PLs can be brief, compelling ABCO to create adaptable systems that can meet ever-changing client needs while abiding by local and state safety regulations- to ensure all customers of ABCO Systems are both safe and satisfied.

This article illustrates how the leadership of Seth Weisberg is embodied by the ABCO WolfPack and the complexity of the thought process that is infused into each project they undertake.

Click to see ABCO Systems eCommerce solutions.

Click to read the full article

When it is time to Automate?

When it is time to Automate?

The need for eCommerce had already been growing when the COVID Pandemic hit in 2020, requiring transactions previously performed in person to become virtual.  This trend has continued despite the overall relaxation of Pandemic protocols.  The lasting impact of this push to eCommerce on distribution and fulfillment is the need for the material handling industry to better manage its labor force to increase efficiency and productivity while also lowering costs.

In the aftermath of this rapid growth, automation is key to achieving the efficiencies needed to keep up with the growing demands of eCommerce.  For many businesses, the question remains of when and how to automate.  The ABCO Systems team has addressed these questions and more in our white paper “When is it Time to Automate?” 

Click the “Able Approved” icon for more information and to download “When is it Time to Automate?”

eCommerce Post Pandemic

eCommerce Post Pandemic

The COVID 19 pandemic has resulted in major changes in many aspects of our lives.  In addition to the health concerns of the pandemic, many brands have experienced the impact of COVID 19 on their brands, the industry, and eCommerce overall.

Since the onset of the pandemic, many physical stores have closed doors, as lockdowns kept many potential shoppers quarantined at home.  To obtain essential items, consumers turned to online shopping.  According to data from IBM’s U.S. Retail Index, the pandemic accelerated the pivot from physical stores to digital shopping by roughly five years.

Understanding emerging eCommerce trends has always been important to long-term business success online but has become much more prevalent in the wake of COVID’s unparalleled disruption of all things eCommerce.

Unfortunately, it appears as though COVID still isn’t behind us just yet. Though life may have begun to return to normal, the lasting effects of the pandemic have become the new normal. Looking back at how COVID affected businesses can help us better appreciate why it’s so important to pay attention to eCommerce trends. Should disruptions to everyday life return, this understanding can prepare us for a second round.

Back in 2019, we had no idea what the following year would bring us, but there were people in the eCommerce world who had considered the trends that might emerge. Let’s take a look back at what the state of eCommerce looked like before COVID hit.

Back in 2019, the Amazon Effect was as powerful as ever. Online retailers around the globe felt the pressure to keep pace with the many ways Amazon continued to grow its revenue. Amazon invested billions into offering 1-day shipping to its Prime members at no extra cost. This was after two-day shipping for Prime members helped it rule eCommerce since that offering was implemented back in 2005.

Amazon’s shipping times were already a massive competitive edge, so making them even faster was big news. Not surprisingly, two of Amazon’s biggest competitors, Target and Walmart, countered with similar one-day shipping plans soon after this news was announced.

In hindsight, these developments could not have come at a better time, as many of us would soon depend on these shipping plans once our usual in-person shopping was no longer possible.

Another trend that picked up steam in 2019 – and also just in time for impending lockdowns – was BOPIS (Buy online, pick up in-store). With BOPIS, customers can shop online, make their purchases online, and then go pick up those items without having to troll the aisles and wait in line to check out. The genius of BOPIS is that any local retailer can offer the service. All they need is a website and an in-store pickup extension to convert customers who want their products right away.

Many grocery stores took this a step further and offered curbside pickup, making it even easier for customers to buy from them. On the other hand, many digital brands realized the potential for having a brick-and-mortar presence as well, prior to the global pandemic. Many of these online companies tested the concept with popup shops, while others jumped right in with legitimate brick-and-mortar stores.

By the end of 2019, there were more than 1,700 stores owned by digital brands all over the country. But once again, this is the kind of business decision that no longer needs to be complicated or expensive.

The first step is to understand how eCommerce can increase efficiency and productivity in your business while also reducing costs.  ABCO Systems has years of expertise in the design and development of eCommerce solutions that can make your eCommerce goals to happen.  You know your product – we know distribution design. Let us help you bring your product to the eCommerce market.