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2021 Warehouse/DC Operations Trends

What operational challenges and solutions emerged in the pandemic's second year?

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automated warehouse system

Each year, the Warehouse Operations & Trends Survey asks logistics and warehouse directors and managers about their current business climate and the challenges they’ve faced. The 2021 edition of this survey reflects both growth and strains that industrial operations face as the continued ascent of e-commerce and labor shortages have combined to create a nearly unprecedented environment.

Coming out of such a unique (to put it kindly) year like 2020, the wave that warehouse, distribution and manufacturing facilities was rising. While Covid set a “new normal” for worker distance and protection, facilities discovered new ways to remain productive. Online orders for goods were constantly increasing, supply chains were humming and the need for space, capacity and labor rose. But then…

2021 brought unique challenges

Supply chain disruptions make headlines

shipping portEven people that don’t work in the industry are aware of supply chain disruptions. Simply put, there’s not enough inventory to satisfy needs. The buzz around chip shortages, shortages of items on store shelves and toy supplies dwindling is not lost on anyone—especially those in warehousing and distribution. Shipping/lead times in disarray, but good information is hard to manage.

Supply chain instability created a rise in inventory storage and management. Ongoing supply disruption has caused many operations to refocus on a smaller number of SKUs that represent their fastest movers, with a tendency to hold inventories at higher levels. Companies are looking to ease the pain through future expansion; this year’s survey shows 35% said that they plan on an increase in square footage in the next 12 months—11% higher than 2020. With peak warehouse utilization increasing 5% (up to 85%) from last year, operations are stretched to the max.

With commercial real estate prices showing no signs of slowing, operations are scrambling on ways to maximize  the space of their existing facility. The options for optimization already in use are increasing, from traditional mezzanines to adding vertical storage options for more elevated use.

See: Supply chain challenges

Labor shortages get worse

worker in warehouseNot to be overshadowed by the supply chain, labor issues spilled over from Covid-related 2020 disruptions. With wage demands and shortages affecting all types of labor, it’s no surprise that 59% of respondents named it the top concern, up from 53% last year, and the highest in the past four years. While we can possibly see an end (or at least a lower pain point) to the supply chain disruptions over the progress of time, future labor market availability looks to be even more of an issue than present.

See: Attracting potential workers to your facility

Solutions are out there

As with any strain on operations, the labor shortage is offering chances for many forward-thinking companies to adopt automation. With the projection of respondents showing an increase in CAPEX from $1.45M in 2021 to $1.64M in 2022 (and the median CAPEX rising by $70k year over year), many who responded mentioned utilizing automated solutions as something they’re considering.

The available solutions are growing. Efficient storage, picking and shipping are goals for all facilities—and the options to increase all are within reach. Only time will tell, but automation’s ability to increase throughput and reduce manual processes makes sense in this current labor-intensive environment.

See: When is an AS/RS system a good fit?

These are unprecedented times (I get to say that for yet another year), and many companies are discovering they need to apply the best material handling solutions to combat these pain points. Many will find new ways to increase throughput, drive efficiency, all while keeping their workers safe. 2022 is shaping up to show increased demand and more ways to meet it.

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