Finding labor and budget to efficiently manage warehouse and distribution (DC) operations have fulfillment professionals looking for solutions that support cost-efficient and agile 2023 supply chain strategies.
So how is the fulfillment industry dealing with these concerns? We look at the top market trends that we see in fulfillment for 2023.
Finding and retaining labor remains the primary concern across industries, but perhaps even more so among those in fulfillment. In the “Warehouse Operations & Trends Survey,” 48% of respondents cited finding and retaining workers as a top business challenge. But more than just a labor shortage, the labor challenges are also magnified by increasing labor costs.
“Finding and retaining labor is still the No. 1 driving concern for everyone that we are working with. Labor availability remains a critical concern, and a key driver for automation,” says Norm Saenz, Jr., managing director and a partner with St. Onge.
Those companies not able to add automation are finding that they need to be creative in finding labor, including an increasing use of “gig worker” platforms, temp agencies, and staffing agencies. In 2022, the average percentage of the workforce who were temps during peak volume reached 20%, up from 18.3% in 2021.
Even as consumers are returning to brick-and-mortar shopping to a certain extent, e-commerce sales are expected to soar from about 5 trillion US dollars to just over 8 trillion dollars by 2026. U.S. e-commerce sales have demonstrated this growth thus far in 2022, up 8.3% year-over-year from the first three quarters of 2021.
Along with the continuing growth of e-commerce, customer expectations continue to grow as well. Data shows that 60% of 3PLs fulfill orders less than 90 minutes after receipt, up from 53% last year, and nearly a third fulfill orders in less than 30 minutes, up from 22% last year. Flexible fulfillment remains a requirement even for brick-and-mortar retailers, as ship-to-store, ship-from-store, and buy-online-pickup-in-store (BOPIS) options are ruling the retail space.
Labor costs, warehouse space and equipment, and parcel shipping typically make up the bulk of fulfillment costs – and these are only exacerbated by the growth of ecommerce and the increasingly high rate of inflation.
Meeting the demands of modern fulfillment with legacy technology and systems is a challenge made even more difficult in the current labor climate. To meet increased demand, highly fluctuating e-commerce volume, global staffing changes, and rising labor costs, the use of automation is crucial.
Supply chain leaders are also finding that investing in technologies and training helps to retain labor and increase worker satisfaction. Re-skilling and up-skilling supply chain workers allows them to adapt and evolve their skills for a more hybrid, flexible, and technologically-enabled workplace. In fact, the World Economic Forum estimates that, by 2025, 50% of all employees will need reskilling due to adopting new technology.
Global supply chains face a future of continued economic uncertainty, labor shortages, and a skills gap, along with an on-demand world with growing consumer expectations. With labor and warehouse space at a premium, every second of order fulfillment counts. It is a risky, complex and constantly-changing environment that leaves businesses questioning how to boost capacity and do more with less.
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With IAM Robotics, the future is bright.