Posted: 30 Nov. 2022 10 min. read

Warehouse Automation Implications on Workforce Planning

Future of Lights Out Manufacturing & Warehouse Robotization

The implications of robotization on human workforce planning

In the age of warehouse automation, there is an impetus to rethink workforce planning, cross-skilling, and employee development.

Introduction

Evolving global economic conditions, combined with changing expectations of workers further accelerated the need for robotization in warehouses. Between 2019 and 2021, the COVID-19 pandemic had a major impact on consumer and worker behavior alike. During the pandemic, online shopping spiked, while the recruiting pool for warehouse workers shrunk significantly. Prior to the pandemic, purchasing services online constituted a large percentage of online shopping. The imposition of restrictions and the enforcement of social distancing directives and regulations accelerated the shift in consumer behavior from purchasing mostly services online to ordering physical products, including everyday necessities.

At the same time, the labor pool decreased due to a variety of factors including concerns for contacting COVID-19 at work and the offset of income through multiple rounds of economic stimulus packages. This combination of factors accelerated the pace at which companies planned to implement automation in warehouses. Companies that already had robotization initiatives planned prior to the pandemic accelerated their implementation, and many other companies realized the necessity of warehouse automation and responded to the challenging conditions by planning and investing in warehouse robotization initiatives.

A look at safety

The development and integration of new technologies that enhance the safety protocols in autonomous robotic vehicles, along with the decrease in procurement and implementation costs of robotics systems, set the conditions for a wave of warehouse automation plans, with an increasing number of companies working toward a “future where humans and robots work in harmony. Where robots can be trained by their human co-workers to perform tasks that are dull, dangerous, or for which they are stronger or better equipped to carry out.”1

As engineering controls evolved and more data regarding the safety of automated operations became known, the previous hesitation to implement automation platforms faded. The automotive and high-tech industries were early adopters of automation; however, until approximately 2010, automation did not find a good value case within the distribution setting.

Companies and safety executives became more comfortable with the idea of introducing robots in the work environment where humans traditionally made up nearly 100% of the workforce. While data from the Occupational Safety and Health Administration (OSHA) is not showing specific incidents involving robots, it is fair to compare robotics-enabled operations with traditional, forklift, or powered industrial truck operations. According to the National Safety Council, between 2011 and 2020, there was an annual average of 7,242 non-fatal forklift incidents in all industries in the United States. Of those incidents, in 2020, the transportation and warehousing industry accounted for 1,680 incidents (figure 1).

Figure 1. Annual trend of non-fatal forklift safety incidents in the transportation and warehousing industry2

 

In late-generation robots, advanced technologies, such as the triple-check safety feature, trigger robots to automatically shut down before contacting a person or object. In addition to shutting down prior to making contact and causing a struck-by injury, robots can also mitigate other categories of risk, such as reducing lifting injuries, minimizing the incidence of falls from high levels, and managing worker fatigue issues.3 With the proven safety record of robots compared to other traditional material handling equipment in warehouses, one of the next steps in the decision to implement automation is the integration of humans and robots in the same work environment.

A new way of workforce planning and development

Warehouse automation and the way of the future with Autonomous Guided Vehicles and humans working together to enable and manage the workflows in warehouses will inevitably bring a shift in workforce development. In a tight labor environment, warehouse operators would be better positioned to implement automation and robotization technologies if they began developing employees with promising potential who currently work as material moving workers and upskill them to maintenance and repair technicians. 

Beginning in the early stages of automation (in the middle of the 20th century), organizational psychologists explored the impact of automation on organizational design. Leaders at all levels planned to mitigate the negative impact of employee concerns as robots became a viable option for certain roles and tasks previously assigned to humans. Displacement was the main employee concern, as some low-skilled and semi-skilled occupational groups felt threatened by the possibility of robots taking over their jobs, resulting in layoffs.4 It is the responsibility of leaders at all levels to drive employee engagement and explain the goals of robotization in warehouses. While reduced human headcount can be a consequence of automation, the primary goal of transitioning to robotics-enabled warehouse operations is to employ robots by automating repetitive, rules-based processes and free up the human workers to focus on more complex tasks that require cognitive decisions. To alleviate anxiety, get employee buy-in, and overcome resistance to organizational change, this message should be communicated frequently and consistently at all levels of the organization.

A more recent study suggests five principles to optimize collaboration between humans and robots. The principles are (1) reimagine business processes; (2) embrace experimentation/employee involvement; (3) actively direct automation strategy; (4) responsibly collect data; and (5) redesign work to incorporate automation and cultivate related employee skills.5 A survey of more than 1,000 companies found a correlation between the number of principles adopted and the speed, cost savings, and other operational measures of automation implementation initiatives. The following chart shows the correlation between the number of principles adopted and the performance of the enterprise after implementing automation.

 

Expanding on the principle of redesigning work to incorporate automation and cultivate related employee skills, companies are best served to look at workforce planning and development in the light of coming changes resulting from implementing robotics process automation.

Adapting to the new operational conditions will require upskilling workers and shifting from a primarily low-skilled workforce in warehouses to semi-skilled or highly skilled workers. This transition will have an impact on the compensation costs because wages for semi-skilled or highly skilled workers are significantly different than those for low-skilled workers. Data from the Bureau of Labor Statistics indicates that in 2020, the median hourly wage for material moving workers in the United States was $19.88.6 In 2021, the mean hourly wages for installation, maintenance, and technical occupations were $25.66.7 Companies should expect an increase of approximately 29% in compensation for the employees who bring the required skills to operate successfully in a robotics-enabled distribution center environment. While upskilling results in a net increase in hourly compensation, the required headcount to operate a robotics-enabled warehouse is lower than a traditional warehouse.

To offset the 29% increase in compensation costs, robotization will require fewer yet more skilled workers, but companies should use their existing workforce as the primary recruiting pool to identify, train, develop, and retain the ideal candidates for the jobs that require higher, more technical skills. The newly trained workers have intimate familiarity with the processes; they are familiar with company culture, and they have proven themselves as valuable teammates who can integrate their activities with other workers and robots.

The selection and training of workers for the upskilling program should be formal and structured, with clearly defined goals and competencies expected from each candidate. Recruiting from internal candidate pools and investing in upskilling and training programs are great ways to showcase a positive company culture, display good corporate citizenship, and reduce attrition.

Low-skilled workers will still be required in warehouses, albeit in smaller numbers. Between 2017 and 2019, the annual total separations for transportation, warehousing, and utilities were between 40.9% and 45.9%, which then spiked to 59.1% in 2020 (most likely due to the COVID-19 pandemic).8 If these attrition rates persist in coming years, they will likely bring the headcount of low-skilled workers to the optimal levels, minimizing the need for layoffs.

Conclusion

The safety features of robots have evolved to a point where robotics-enabled warehouses, with correctly implemented engineering controls, are safer than traditional warehouses. With the pressures of the labor market and the changes in the socioeconomic landscape, it will be increasingly difficult to find, hire, and develop adequate workers in warehouses, driving the impetus to implement robotics process automation where feasible.

To achieve optimal results, companies should consider new ways of workforce planning that consider longer horizons and allow for the deliberate implementation of formal upskilling programs.

There is a labor-cost impact stemming from transitioning from low-skilled labor to semi-skilled or highly skilled workers able to operate successfully in warehouses that implement robotics. However, the efficiencies gained from employing robots for repetitive, rules-based tasks will offset the incremental increase in labor cost for highly skilled workers. Deploying robots to automate parts of the processes in the smart warehouses of tomorrow will lead to more efficient and safer operations.

Authors

Chris Riemann
Director
Deloitte Consulting LLP

Wanda Johnson
Specialist Leader
Deloitte Consulting LLP

Endnotes

Siemens, “Working with robots: The future of collaboration,” accessed May 16, 2022. 

2 National Safety Council Injury Facts, “Forklifts,” accessed May 8, 2022. 

3 Kayla Matthews, “How warehouse robotics reduce worker injuries,” EHS Today, August 15, 2022.

4 Oded Shenkar, “Robotics: A challenge for occupational psychology,” Journal of Occupational Psychology 61, no. 1 (March 1988): pp. 103–12. 

5 H. James Wilson and Paul R. Daugherty, “Collaborative intelligence: Humans and AI are joining forces,” Harvard Business Review, July–August 2018. 

6 US Bureau of Labor Statistics (BLS), “Occupational Employment and Wages, May 2021: 53-0000 Transportation and Material Moving Occupations (Major Group),” last updated March 31, 2022. 

7 BLS, “Occupational Employment and Wages, May 2021: 49-0000 Installation, Maintenance, and Repair Occupations (Major Group),” last updated March 31, 2022. 

8 BLS, “Annual total separations rates by industry and region, not seasonally adjusted,” last updated March 10, 2022.

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