Smart Warehouses And The Laborers That Can Run Them

It’s a dream of some, running warehouses without manual labor. Not surprising given that hiring for just about any job is tough.

“The key to those properties and operations are the robotics inside the facilities,” Peter Lewis, founder and chairman of Wharton Industrial, which develops and invests in industrial properties, including warehouses, tells GlobeSt.com.

He speaks of micro fulfillment centers that run 15,000 to 45,000 square feet, with a beta facility in Brooklyn. “The facility is probably 95 percent automated,” he says, with manual labor putting product in bags for delivery. “I think we’ll start seeing a shift over the next couple of years to more automation,” pushing out people other than some software engineers, “and there has to be a businessperson sitting on top of this, obviously.”

But while that would solve problems getting workers, many other people, including those at companies that develop robotics and consult on warehouse design, operation, and automation, say the goal is far trickier—and further off. Instead, there will be workers in ever more complex facilities, and they will need training to gain the necessary skills and understanding of logistics warehouse jobs will demand.

THE CURRENT STATE OF THE WAREHOUSE

Warehouses have been stuck in the past for too many years, mired in old workflows and methods, leaving it vulnerable without enough help.

“What has happened in the last 24 to 30 months is we were in a model in manufacturing and warehousing that was all about just-in-time, minimizing inventories, reducing cycle times, getting everything tight,” says Mark Stevens, a principal as well as the manufacturing and distribution lead at accounting firm Wipfli. “What we found was that it was a huge tragedy.”

Everything fell apart in one supply chain after another because there was no room for problems and, with low unemployment rates, getting enough help on short notice to manually work around hiccoughs wasn’t possible. And now? There were 0.6 jobs per unemployed person in February 2022, the lowest figure since at least 2007. Forget picking and choosing for the most qualified; employers must fight for workers.

Technology has promised greater efficiencies, reducing the need for manual help. But the view of the lights-out warehouse is still a long time off.

“Big companies, these deep-pocketed companies—Home Depot, Costco, Amazon—they’re building warehouses around new technology functionality,” says Aviva Sonenreich, managing broker at the Warehouse Hotline in Denver. “That is more efficient, to build a property from the ground up, by building the warehouse that suits their direct need rather than occupying a warehouse and adding it. I do have national tenants, but in my experience our tenants are on the smaller business side. They’re just happy to get a space with a garage door.”

Even the large ones may not be doing enough at a sufficiently fast pace because the capabilities are still not there.

“I think you could do corner cases probably now,” Mark Messina, CEO of robotics firm Addverb America, says. “But it certainly doesn’t move the needle at all. When we start to see something that is scalable or that other companies could adopt, personally, I would guess minimally eight years out. It’s not just the technology. There are regulations around packaging and safety concerns. It’s a complex problem to solve for an industry that’s slow to change because they don’t want to add costs and they’re worried about the moment.”

But change there will be because there won’t be a realistic choice. The future will need a specially-trained staff, which means much more than learning how to follow directions from a mobile device on what to pick.

WHAT THE WAREHOUSE WILL NEED TO BE

To understand what skills warehouse workers will need and how companies will have to attract and retain them, it’s necessary to start envisioning the likely and practical future of warehouse facilities.

Why not automate everything? Because it’s not feasible yet. “We’ve managed the low-hanging fruit,” Messina says. “Even stacking boxes in a truck is low-hanging fruit. But the harder stuff that requires more tact is not yet solved. How do you decant those boxes that come in to get singular items? If you’ve got a box of 12 candles, [automation of] shipping one isn’t solved yet. Opening a box, that’s not easy to do. If you think about the returns process, reverse logistics, that’s a whole other ball of wax.”

Automation is often a second level of problem solving that needs other groundwork done first.

“As a consultant, we get asked a lot to come in and do the analysis of putting automation in the facilities,” Kirk Waldrop, managing director for the operational transformation and sourcing and supply chain practice at Grant Thornton, says. “We find nine times out of 10 it’s going to be solved with improving processes, better processes, improving process discipline. At a minimum they need a good warehousing system.”

In addition, it’s easy to let assumptions run away. More complex robotic materials handling is possible, but they aren’t by themselves solutions. “If you don’t take people, process, and technology and put them together, it may not be cost effective,” Waldrop says. “I’ve had customers over-automate their facilities to the extent they didn’t have flexibility. If something went wrong, they were stuck and couldn’t get product out the door.”

The opposite mistake is also possible. Smaller companies might think that automation and robotics are only for large companies.

“The smaller companies, it depends on their business model and where they see themselves amongst their peers,” says Messina. “If they’re looking for a competitive edge, generally things that are small and diverse, of a particular geometric size and high diversity, are really good at automation. If you need to maximize your space, automation is great.” A warehouse can more easily change its pick rate or scale up and down during the year. “I’ve had discussions with players out there who took a look at automation. Even though the ROI is only 18 months and can give them a big improvement on their bottom line, they don’t have a lot of competition and are fat, dumb, and happy. Sure, I could make more money, but that means I have to do this and what if it doesn’t work?”

The need for people who can work in more highly automated warehouses will only grow because even smaller companies will increasingly find already automated warehouses they can rent. Lewis recently invested in a 1.5 million-square-foot industrial park in Mesa, Arizona. “They’re latching on to new age companies and these warehouses with offices as well are being created to serve them,” he says.

Increasingly, serving smaller companies will mean providing capabilities they need to remain competitive. “There is a trend towards, and I’ve seen it lately, some real estate firms that are partnering with technology companies, automation technology as well as equipment and software providers, to build spec warehouses that are largely if not fully automated,” Waldrop says. Bespoke for each company? It needn’t be when many companies have similar materials handling needs—things on shelves that must be placed, picked, gathered for orders, and sent out.

THE WORKERS NEW WAREHOUSES NEED

That raises the question of how to get the employees with the skills warehouses need. According to experts, there needs to be a fundamental shift from thinking that people in warehouses are only meant to follow orders flashing on a screen and that they have no technical sophistication.

“The idea that we don’t have tech savvy people is crazy,” Stevens says, pointing to how most will be comfortable using a smartphone, which is a powerful mobile computer. “The technical side of this is the easy part. Companies recognize they can train anyone on technology. You need to find the people with the right competencies.” That is integrity and self-initiative; communications and active listening; the conceptual competency of someone solving their own problems; customer orientation; and the ability to work with others.

“One of the things the industry has not done so well is that the entry-level jobs are positioned as jobs, not a career path,” Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management, says. What companies need people to do in warehouses is far more complex than just following orders. “Somebody’s got to be figuring out at the shift level what are the outgoing requirements, how I get the constrained resources of materials, labor, equipment to line up with the expected demand. These are learned skills. Somebody’s got to be able to understand how incoming demand is represented, the volatility and predictability of the demand, and how to plan to meet customer expectations.”

That also touches on keeping employees. “If I’m not making people feel like they’re getting an education that’s important to them and providing usable skill sets, it’s going to be job in, job out,” Kent says.

In other words, let people see the important context of what they do. “They have a higher cause,” says Stevens. “You’re picking medical devices to save lives. There’s a higher cause and higher purpose.”

And make the positions palatable beyond a given wage rate. “There is more of a push even at the hourly wage level for more work-life balance,” says Waldrop, who recalls a manufacturer that had a “huge” absentee rate in the warehouse, until management asked employees what they wanted. “They wanted to move to a four-day workweek or even some shifts on the weekends.” The result, “the absentee rate just tanked, and productivity went up. Companies need to get creative and not be afraid to talk to people and see what they want.”

Help people get the specific skills, treat them with respect, and you may solve your labor and warehouse issues at the same time.