For many companies, trying to recruit and retain hourly workers is one of their biggest supply chain challenges. Automated warehouse robots have evolved dramatically in the past three to five years. In many solutions, the cost of technology has decreased below that of the average worker.
This is especially true when you consider the fully loaded labor costs for benefits, taxes, training and recruitment. This is discussed later in this article.

Utilizing various technologies allows warehouse operations to retain, develop and train their core staff that will continue to support the long-term growth. While these technologies do decrease the dependency on human labor, there still must be a strong core of workers to manage the processes. As your company considers evaluating and selecting the right automated warehouse robots for your business, here are four important considerations.

1. Automated Warehouse Robots vs Available and Reliable Labor

Most markets throughout the United States are suffering from a shortage of reliable and quality hourly labor. Competition from other companies is making it difficult to attract sufficient employees to meet today’s as well as future labor needs.

As a result, this is quickly driving up the fulfillment cost per order as companies compete for a dwindling labor pool. At the end of summer 2022, there were over 10 million available jobs in the country. These were across the retail, service, and construction sectors. With the unemployment hovering near 4%, there is no sign that the available labor in many markets is going to improve any time soon.

The data suggests that wage rates will be pushed higher in competition with other businesses. In addition, wages may have to rise significantly to bring people off the sidelines to meet local market needs and grow businesses in the future.

2. Automated Warehouse Robot and Human Collaboration

Currently, most warehouse automation and mobile robots are deployed in the picking of orders. The predominant technologies being goods to person and collaborative robotic solutions. The major benefit is the reduction in travel time and distances walked by pickers throughout the day.
Studies show that pickers in medium to large warehouses often walk as much as five to eight miles per day. About 75% of their time is lost in travel time.

Robots do the traveling between zones in the warehouse in a picking solution. Employees remain stationary or within a short distance within a pick zone. With goods to person technologies, the worker is stationary with either conveyors or robots transporting order to the next zone, or to packing.

In the most productive environments, picking rates can easily double those of manual operations, to as high as 400 picks per hour per picker. This is the kind of increased efficiency driving these types of decisions.

3. Automated Warehouse Robot Cost Justification

In many fulfillment environments, labor is more than 50% of the cost per order excluding inbound and outbound shipping. With a national average for warehouse labor averaging almost $17 per hour (source: Indeed.com), the fully-loaded hourly wage projects to $26 per hour when recruiting, training, benefits, voided overtime and other employee costs are factored in.

If your company is growing, future demand, anticipated labor costs and recruitment challenges makes automated warehouse robots more attractive.

It’s not uncommon for collaborative automated warehouse robots to be implemented at a ratio of 2 to 3 robots per picker. Different manufacturers offer automated systems where the 2 to 3 robots come at a lower cost than that of a full-time employee with benefits. This becomes a very attractive option, especially for an automated warehouse picking robot solution.

With goods-to-person technologies, these can provide some of the highest picking rates from an automated warehouse picking perspective. These also have a slightly higher cost with an ROI from 9 to 12 months, to as high as 24 to 36 months. This varies based on the selected technology. However, once the ROI is achieved, these investments continue to deliver significant annualized savings without wage rate or benefit increases employees expect.

These technologies also provide companies with reliable throughput performance. Automation also allows for increased operating hours with fewer employees as companies scale to peak.

With robotics, the most common acquisition approach is Robots as a Service (RaaS). In general, this means there is an annual renewal fee based on the number of bots deployed. With goods-to-person technologies, these are typically equipment purchases with annual maintenance and support costs.

4. Automated Warehouse Robots in Complex Fulfillment Environments

Small to moderate-sized warehouses are able to cost-justify autonomous mobile robots at the present hourly wage cost structure, eliminating heavily manual processes.

To achieve growth, companies often add large SKU assortments which often adds distance to the pick path with an expanded warehouse footprint. Certain merchandise types such as apparel or shoes greatly add many color and size SKUs that look similar. Robots and automation reduce errors in manual picking from mis-picks of wrong colors and sizes for similar products.

Businesses such as third-party logistics (3PL) which store and fulfill large customer assortments for multiple businesses have been the earlier adopters. These assortments often have a wide variety of product SKUs.

Newer picking technologies allow companies to onboard new workers, and to make them highly productive in a shorter period of time compared to manual picking environments.

Summary

Customer satisfaction is driving order fulfillment companies to plan and achieve much higher order fulfillment levels. These technologies become the best tactic for supporting the process long term while controlling and reducing costs. These technologies become more cost-effective especially with the high cost of labor and unavailability of labor when compared to conventional materials handling.

One automation approach doesn’t fit every company. It is imperative to compare various technologies and options against your needs and operations to determine the right course of action. When applied appropriately, robotics and automation will reduce costs, improve productivity and customer service with greater order accuracy.

Consider a warehouse automation assessment to evaluate all potential options for your company. An automation assessment will also help you to understand how much warehouse automation costs, as well as ongoing maintenance costs and determining the warehouse automation ROI.