How automation can ease labor shortage in logistics sector

The supply chain is under pressure. According to the UWV, this is due to international developments such as the war in Ukraine, problems in transit on the Red Sea, but perhaps most of all to the tight labor market in which the shortage of personnel due to an aging population will only increase. As a result, the need for organizations to automate their supply chain and logistics processes as much as possible is becoming greater and greater.

As a result of this ongoing imbalance between supply and demand for staff, organizations are struggling to find the workforce, knowledge workers and leaders they need to thrive - and logistics and supply chain-focused companies are particularly struggling. According to recent research by Descartes, 76% of supply chain and logistics leaders experience a significant workforce shortage in their operations, with 37% of respondents characterizing the workforce shortage as high to extreme.

Although competition for resources is a company-wide problem, the severity of staff shortages varies by organization. According to the survey data, transportation operations (61%) and warehouse operations (56%) were hit hardest by staffing shortages, from truck drivers to the fulfillment team on the warehouse floor. Knowledge workers, increasingly important as supply chain and logistics operations become more technology- and data-driven, are also hard to recruit, with 55% of respondents struggling. 

Only 9% of logistics and supply chain leaders indicated that staffing shortages did not affect performance during the holiday season at some level. And not only does staff shortage affect business performance during the holiday season, finances and the performance of logistics partners, but it also takes a toll on customer service, with 58% of respondents indicating that staff shortages negatively impacted their service levels.

With a severe staff shortage looming, logistics-oriented organizations are focusing their operational strategies on automation and technology solutions to alleviate staffing burdens. Another recent survey that examined what strategies and tactics companies are employing to deal with the current workforce shortage found that 54% of supply chain and logistics leaders surveyed are focusing on automating repetitive tasks and services that add little value - a logical step in reducing the resource footprint to perform at a higher level with fewer employees.

The survey also found that 50% of the logistics-focused organizations surveyed are focusing on centralizing operations (e.g., centralized transportation planning). This strategic approach, typically implemented through cloud-based solutions deployed as shared services within the company, helps increase operational efficiency without increasing headcount.

How does the goal of automating repetitive, low-value tasks and using technology to increase efficiency translate to the warehouse floor or transportation operations? Self-driving vehicles, robotics, drones and soft and hard automation in the warehouse are all on the table for supply chain and logistics decision makers, but there are some clear productivity-enhancing technology winners in the effort to alleviate current labor challenges in these areas. Respondents particularly focus on solutions for delivery route optimization (54%) and mobile driver productivity (45%). To mitigate the impact of the knowledge worker shortage, automated real-time tracking of shipments (53%) emerges as the best technology choice. 

Strategic route planning solutions, for example, increase route density while reducing planning time and resources needed to deliver maximum efficiency. Another example is intelligent dispatch and tracking software that uses real-time GPS to ensure faster and more consistent deliveries on time, keeping customer service standards high. In the warehouse, some companies are using robotics and automated guided vehicles (AGVs) to eliminate the need for manual labor.   

On the back end, warehouse management systems (WMS) with barcode-based pick and pack workflows, automated multi-carrier parcel/LTL shipping and real-time order path visibility capabilities help companies minimize labor costs and fulfill more orders while improving the customer experience. Perhaps more importantly, automated logistics and supply chain technology solutions not only increase productivity but also play a role in staff retention by simplifying and improving daily workflows for warehouse staff, planners, dispatchers and drivers.

AI enables acceleration of automation
In the wake of ChatGPT's launch, interest in artificial intelligence (AI) has surged and generative AI has increased expectations regarding AI technologies as well as opportunities to bring new solutions to market. Supply chain and logistics leaders are also looking to AI to help improve operational efficiency and employee productivity. According to the survey, nearly 30% of respondents are exploring AI technology, while 53% plan to deploy AI.

As logistics becomes increasingly data-driven, AI's ability to analyze vast amounts of data in an instant will continue to drive technological innovations. While AI-based capabilities such as prediction and event detection in the context of route planning and transportation management have been embedded in logistics technology for years, AI's ability to continuously evaluate tens of thousands of data points and variables and make learned adjustments will help to further automate and accelerate logistics processes, eliminate redundancy and inefficiencies, and increase worker productivity.

For supply chain and logistics leaders facing the challenge of keeping their operations profitable with fewer resources, technology is changing their strategies, tactics and best practices. For employees stuck with repetitive and time-consuming low-value tasks and for knowledge workers who spend an inordinate amount of time manually preparing data, compiling reports or tracking shipments, automation is a game changer.

When technology tools do most of the heavy lifting, employees can free up valuable productive time to focus on more meaningful tasks, while enjoying more simplified and streamlined workflows that improve their daily work experience and, ultimately, help improve retention rates. From the C-suite's perspective, the combined power of automating low-value, repetitive tasks and adopting technology-driven solutions leads to increased productivity, better supply chain visibility and improved performance, while enhancing positive employee, partner and customer experiences.