The logistics industry faces a rapidly evolving marketplace that’s coping with the Amazon effect, booming e-commerce sales and an unprecedented capacity crunch in transportation. From my perspective, the biggest change and challenge we face is the price and scarcity of labor and warehouse space.
In the past two years, in our market of Northern California, to meet warehouse staffing needs in a high-employment economy, we’ve increased labor wages 12 percent — and we still can’t find enough workers. We’ve also seen the price of prime warehouse space go up 40 percent. And we’re not alone.
To compete and succeed, we must get better at utilizing and maximizing our two most important assets: people and buildings. If not, the customer will seek a lower unit-per-cost solution elsewhere.
What’s the solution: Drive increased productivity and lower costs through automation and robotics.
And it’s not about replacing people with machines. For example, three-story-tall vertical lift machines we use in our distribution centers allow more inventory in the same footprint of square feet, maximizing space utilization. They also improve the productivity and work life quality for our people, since the machine brings the product to the picker, instead of the picker walking from bin to bin on the floor.
It’s the same with robots. We use them strategically, where they relieve our human assets from more physically demanding, tedious work, such as pushing a cart from a pick location to shipping. We gain efficiencies, and the ability to redeploy our human assets for more value-added, and more enjoyable and mentally stimulating work.
Technology also has a positive impact on recruitment as well. Today’s employees like being engaged with new and interesting technologies. They want to work for a company that’s forward-thinking, open to investing in new ideas, and helping them learn and improve or add new skills.
So the key to success is two-fold: creating an environment that’s stimulating and rewarding, where people are valued and respected; and creatively applying technology and automation to drive the most productive and efficient use of people and space possible.