Public Policy | Workforce and Labor | Ten Across
Following the demand: the ins and outs of warehouse automation
Photo by Ruchindra Gunasekara on Unsplash
Editor’s note: This article is part of a collaboration between APM Research Lab and the Ten Across initiative, housed at Arizona State University.
by EMILY SCHMIDT | Dec. 20, 2022
Last month, Amazon announced a major milestone in warehouse automation – the introduction of “Sparrow,” a robotic system that can recognize and handle distinct objects.
After the corporation doubled its warehouse capacity with the e-commerce boom of the early pandemic, this exciting new technology could help Amazon make better use of the space they’ve deemed as excessive.
Amazon wasn’t the only company to invest in warehousing; it’s now become a scarcity because companies are buying up storage facilities double the size of what their inventory demands. To best utilize that additional space, automation comes into play.
“Warehousing capacity has essentially been stretched to the limit for the last two and a half years, so we’re increasingly seeing automation in a way where you can fill up more of a warehouse with goods” said Dr. Zac Rogers, assistant professor of operations and supply chain management at Colorado State University.
With recent strides in automation like those made by Amazon, will warehouse automation have a role in the growing supply chain? Like any technology, warehouse automation has its critics, who question its efficiency, safety and impact on workers.
EFFICIENCY
In 2012, there were about 15,500 private warehouses according to the U.S. Bureau of Labor Statistics (BLS). Over the course of a decade, that number jumped 36% to about 21,000 by mid-2022. Similarly, warehouse employment skyrocketed by 140% between 2012 and 2021. The e-commerce boom is also evident in the 33% increase in workers employed from 2019 to 2021.
Technological advancement has paralleled this continual growth in warehouse demand. A recent report projects the warehouse robotics market to be valued at $9.1 billion by 2026.
“[In] the last five or 10 [years] on the operational side, progress has mostly come from applying tech that is very well understood, but just stitching it together much more effectively,” said Dr. Matt Beane, assistant professor in the Technology Management Program at the University of California, Santa Barbara.
From online supermarket Ocado to furniture giant IKEA, companies are ramping up their automation efforts to optimize their warehouse output. There are numerous factors that impact warehouse efficiency, and choosing the right technology is a crucial one. Among these technologies are automated storage and retrieval systems, which handle tasks like sorting inventory and transporting it across warehouses.
While utilizing robotic systems increases productivity in the long run, implementing new technologies like Amazon’s “Sparrow” is a process of trial and many errors. Both Rogers and Beane spoke to the numerous examples of failure they could provide.
“There is at least 90 years of very solid research that decisively shows…the first 20 to 40 years of deploying [new automated] technology involves dramatic, excessive and widespread waste,” Beane said.
However, automation can help mitigate other types of waste, like motion waste – the existence of unnecessary movements within a warehouse. This can include simple actions like retrieving a fallen item or even walking back and forth regularly to use a piece of equipment.
A McKinsey study reported that companies can save 20% to 50% in warehousing costs and up to 40% in transportation costs if they adopt “lean” techniques that avoid these unnecessary movements.
By reducing motion waste, automation may also improve worker injury rates depending on the technology employed.
SAFETY
In 2021, the BLS tallied 46 fatal injuries in the warehousing and storage industry, the highest number coming from contact with objects and equipment. According to the Occupational Safety and Health Administration (OSHA), the rate of fatal injury in the warehousing industry is higher than the national average across all other industries. Among the most frequent hazards for warehouse workers are unsafe use of forklifts and improper stacking of products.
“Automation is volatile and unstable for workers,” said a spokesperson from the Warehouse Worker Resource Center, citing higher injury rates for Amazon workers and the quick closure of a highly automated delivery station in Bloomington, California.
In fact, a Washington Post analysis of OSHA data showed serious injury rates at Amazon’s facilities are nearly double those of warehouse workers at other companies.
However, both Beane and Rogers said automation helps workers avoid the repetitive, dangerous tasks that can lead to injury.
Forklifts, for example, didn’t have a lot of safeguards that let people know when they were moving or that it was in gear when the driver stepped away. Now, technological advancement has pushed the development of these safeguards and many others forward. Beane said there’s even new technologies that use computer vision to detect when a worker is doing something unsafe, but it’s not yet been implemented to scale.
JOB SECURITY
Even as automation improves and warehouse employment grows, there’s still concern for job loss.
Sheheryar Kaoosji, executive director of the Warehouse Worker Resource Center, said, “The conversation about automation, across all industries, is very lopsided. Companies make promises to shareholders and keep workers in the dark.”
He added that workers need to have a voice in what affects them, whether that’s wages, safety or automation.
In October, the BLS reported the average hourly wage for warehouse workers was $22.48, and the turnover rate in 2021 a whopping 49% (although that is lower than the 59% turnover rate in 2020). Additionally, a large percentage of these workers are Black or Hispanic.
Warehouse workers have mixed feelings about working with new automated technologies, according to a study conducted by the Harvard Business Review. Generally, workers worried about job loss, lack of proper training and downtime from malfunctioning machinery. In contrast, workers hoped that automation would increase job safety, productivity and work quality.
Rogers said some people worry about dark warehouses where there are no workers at all, but the current state of automation isn’t close to that becoming a reality in near the future. Instead, he sees it becoming a more white-collar sector with the creation of a whole new class of jobs.
“If you look at the amount of folks employed in warehousing as an industry, it's higher now than it's ever been. And partly that's because automation speeds up everything and creates demand,” he said.
The reality is that warehouse automation will continue to catalyze expansion in the industry. Rogers said warehouses are beginning to pop up in the most unlikely of places, using much less land by building up rather than out.
And as warehouse automation becomes more advanced, Beane hopes impact on workers will be considered more deeply, just as Kaoosji wants.
“My hope is that we, technologists and business managers, change the way we design, sell and use [robotic and automation technologies], so that workers end up better off in pay and skill.”