Efficient order fulfillment is the pre-condition to satisfy customers and expand a business in today’s rapidly moving eCommerce environment. Central to this process is the warehouse, where a hard-working (and dare we say, stretched) team is concerned with receiving, storing, selecting, packing, and shipping products. From receiving shipments of goods from carefully planned inventories to ensuring timely deliveries, staffing levels and quality directly impact the effectiveness of warehouse operations and the ability to meet service level agreements (SLAs). However, the current business setting faces significant difficulties regarding staffing.
In a recent survey conducted by Descartes of 1,000 supply chain and logistics leaders in Europe—including 150 from the UK and North America—it was revealed that 37% of organizations faced workforce shortages that were intensive, while 76%, in general, reported a significant shortage in their operations.
The article will analyze how staffing influences warehouse operations and order fulfillment. It will consider emerging staffing challenges like labor shortages, increased workforce costs, and predicted changes in regulations. The article then looks at the consequences of such challenges on key order fulfillment SLAs. Finally, it suggests that automation technologies represent a strategic response to help businesses overcome obstacles and maintain optimal performance in the fulfillment processes.
Staffing Challenges in Warehouses
Recruitment Difficulties
Warehouse recruitment faces challenges due to the work’s demanding nature as well as perceptions of safety risks. The role entails strenuous physical activities, long hours, and exposure to hazardous conditions. Forbes research places warehouse work as the third most dangerous job, next to firefighting and law enforcement, with roughly 35 fatalities and 18,000 injuries documented yearly. This deters prospective employees, especially given other industries offer less physically demanding roles with comparable or enhanced compensation packages.
High Costs of Salaries and Benefits
Escalating costs for attracting and retaining warehouse personnel introduce extra complexity because companies are forced to walk a tightrope. Cost pressures make it necessary to consider operating under trimmed (and sub-optimal) team sizes. On the other hand, in the struggle to attract limited talent, firms have to plan wage hikes, overtime pay, and incentives to remain competitive. From June to September 2024, the Bureau of Labor Statistics (BLS) noted a 0.8% wage, salary, and benefits inflation, spotlighting mounting expenses for sustaining a workforce. Ignoring base pay, hefty benefits like health coverage and paid time off swell operational budgets.
Time and Cost of Training
Hiring workers and training them to meet operational standards in warehouses is a lengthy, costly process. Warehouse jobs typically require expertise in systems, processes, and compliance standards, necessitating months of training. Industry estimates show onboarding and skill development for a warehouse employee can take roughly 1 to 3 months. When combined with high staff turnover, this engenders a constant cycle of hiring and retraining. The phrase “time is money” accurately reflects this situation, as extended training periods affect productivity and put pressure on current staff.
Anticipated Regulatory Challenges Post January 2025
Increasing Wages Without Closing Staffing Gaps
Raising wages hasn’t solved warehouse worker shortages. Many companies, more than one-third, upped pay in the last year, nearly 37% boosting wages by $1 per hour or more. Nonetheless, gaps remain. As pay hikes are less viewed by business leaders as a retention tactic, flexible scheduling is gaining prominence as an alternative. This movement highlights the requirement for wider-ranging workforce management innovations to tackle continuing labor issues.
Stricter Visa Requirements and Their Implications
Adjustments to immigration policy might exacerbate difficulties in staffing warehouses. The US Department of Homeland Security (DHS) aims to issue an additional 64,716 H-2B visas for FY 2025, over and above the yearly limit of 66,000. Though beneficial in the immediate term, overreliance on temporary visas exposes warehouses to fluctuations, postponements, or more rigorous enforcement.
Stricter Enforcement of Work-Hour Regulations
Stricter work-hour rules impacting warehouse efficiency are an issue. Regulations capping daily shifts at 8 hours and weekly work at 40 hours can limit needed adaptability during high-demand times. Such restrictions might necessitate increased staffing or depend on expensive overtime.
Impact on Order Fulfillment SLAs
Operational Strain
Warehouse operations face immense stress due to labor shortages and stringent regulations, causing delays in vital steps like picking, packing, and dispatch. This escalates during peak times when staff expansion is constrained, complicating efforts to fulfill SLAs and ensure consistent performance.
Customer Dissatisfaction
SLA non-fulfillments lead to delayed deliveries and inconsistent customer service, gradually undermining trust and loyalty. In a marketplace prioritizing quick shipping, such lapses often result in customers shifting to competitors, negatively impacting brand image and future business opportunities.
Financial Repercussions
When SLAs are missed often, businesses may incur penalties, provide refunds, and lose contracts. Efforts to alleviate these delays by means like extra pay for overtime or quicker shipping end up increasing costs. Over time, such inefficiencies decrease profitability and endanger market position, outlining the necessity for sustainable strategies.
Overcoming Staffing Challenges with Automation
Faster Order Processing
Automation noticeably expedites order fulfillment speed, empowering warehouses to manage a greater volume of orders in less time. Contrastingly, a typical manual picker can efficiently handle between 60 to 80 picks per hour, whereas sophisticated systems comprising sorters and conveyors are capable of achieving pick rates soaring up to 300 per hour. The dramatic upsurge in operational efficacy aids warehouses in managing demand spikes, especially during high-demand periods, without necessitating extra staff.
Improved Accuracy and Reduced Errors
Automated systems lessen the probability of human error, guaranteeing more precise order fulfillment. Technologies such as pick-to-light, RFID, and pick-to-voice have been demonstrated to reduce error rates by a staggering 67% when compared to manual approaches. Sophisticated solutions like automated storage and retrieval systems (AS/RS) can elevate order accuracy rates to an amazing 99.99%, significantly diminishing returns and enhancing customer satisfaction.
Enhanced Workplace Safety
Automation also promotes a safer work environment by reducing the need for human involvement in hazardous tasks. Studies showcase that enhancing robot utilization lessens workplace accidents by approximately 1.2 incidents per every 100 workforce members. Engaging automated systems in arduous or recurrent tasks shields employees from injuries, fostering overall workplace safety.
Reduced Dependence on Labor Market Fluctuations
Automation of pivotal procedures enables warehouses to counter balance labor scarcity and variable labor market conditions. Frequent shortages and fluctuating conditions do not affect warehouse operations substantially, ensuring adherence to SLAs and continuity in productivity without overreliance on human labor.
Long-Term Cost Savings
Labor costs, which account for around 65% of a warehouse’s operating budget, can be significantly reduced through automation. Research indicates up to a 60% decrease in labor expenses and a 30% reduction in overall operational costs through automation. Despite significant upfront expenses, long-term savings and enhanced efficiency justify this investment.
Conclusion
Automation continues to be one of the key drivers for efficiency, cost savings, and standards of order fulfillment amidst warehouse staffing challenges. By applying flexible automation, a warehouse will be able to simplify operations, reduce reliance on manual labor, and alleviate labor shortages while improving accuracy and safety.
Is your warehouse ready for these challenges? Introducing Carte+, a flexible automation solution that seamlessly integrates with your existing systems. Carte+ helps you overcome staffing shortages, improves speed and accuracy, reduces costs, and meets customer demands consistently.
With Carte+, you can:
- Streamline order processing and reduce errors
- Minimize reliance on fluctuating labor markets
- Achieve long-term cost savings
Ready to transform your warehouse operations? Contact us today to explore how Carte+ can help optimize your fulfillment strategy and keep your warehouse agile and efficient.
