The world has watched the rise of automation over a wide range of industries in the past few decades, with machines and digital programs slowly taking up a larger share of the work that used to be done by humans. One obvious reason for this trend is that the technology has slowly come of age, and gotten to the point where it is mature enough to do the jobs and cost effective enough to implement. However, there is a second force driving the push to automation that has become more obvious in recent years—labor. More and more often businesses, including those in warehouse management and distribution, are making decisions due to changes in the labor supply. So let’s take a look at why.
DEMOGRAPHICS
The relationship between demographics and automation really comes down to the labor supply. If you are in a situation where there are an adequate number of available laborers who are willing to work for competitive wages, then automation might not be as appealing. The opposite is also true. A shortage of labor, or increasingly high demand for wages and benefits, means that automation becomes more appealing. We are now in the latter stage of the labor market. December of 2022 marked the average date of retirement for the largest labor force the world has ever seen—the baby boomer generation. As the baby boomers have started to retire, there are a lot of open positions with not as many laborers to fill them. Business Insider recently noted that “between 2008 and 2019, members of the retired population aged 55 and older grew by about 1 million per year, and between 2019 and 2021, the number of retirees aged 55 and older has grown by 3.5 million, according to Pew Research Center.” The businesses that we work with at DMW&H are feeling this labor shortage more and more, and automation continues to be one of the best strategies.
RESPONDING
The data are continuing to show that warehouse management firms believe automation is the answer to our labor conundrum. In a recent survey conducted by ABB and Guidance Automation, leaders in the supply chain industry gave some pretty startling answers. 62% of those surveyed said they expect their distribution centers to become fully automated in the next three years. About the same number of respondents said they expect the value of automation to outstrip the initial investment in five years time. It is hard to imagine that these numbers would be nearly as high before we hit the peak of baby-boomer retirement and the current labor shortage. On our DMW&H blog we outline a lot of the specific ways that automation can improve efficiency across your supply chain network, but this is more of a big picture question about the viability of human labor moving forward. Clearly, those in the industry see automation as an investment that should be made as soon as possible, and will pay off long into the future.