Warehouse Automation Trends & Key Statistics for 2024

From conveyors and automatic storage and retrieval systems (AS/AR) to automated guided vehicles (AGVs) and robots, the future is here in the warehousing and distribution industry. Today, more and more warehouses are adopting automation technology as several factors are driving the need for innovation.

Most warehouses have been slow to adopt automation technology — it’s an expensive upfront investment and can be time-consuming to integrate into current SOPs, depending on the system being implemented. However, there is a compelling case to be made for warehouses big and small to shift to at least partial automation gradually.

With the accessibility of online shopping driving the rates of consumer demand and labor costs squeezing the bottom line, warehouses require a solution that will speed up order-picking, improving picking accuracy and maximize overall productivity. More companies are choosing to open up multiple distribution centers, and automation may be the key to successfully scaling operations.

5 Factors Driving Warehouse Automation

Warehouse automation is being driven by a clear combination of several economic and social factors. Ultimately, warehouses are adopting and refining their warehouse automation practices to respond more efficiently to increasing customer demand. They’re also improving their productivity rates and optimizing the profitability of their operation.

Unique to the warehousing and logistics industry are these key factors that are driving automation at a rapid pace:

• Increasing consumer demand and changing fulfillment expectations
• Bigger warehouses and multiple distribution centers
• Rising labor costs and stagnant productivity rates
• Improving workplace safety standards
• Increasing rate of automation adoption

Below are 25 warehouse automation statistics you can’t ignore. These stats shed light on why warehouse automation is expanding and how it’s paying off in warehouses around the world.

1. Consumer Demand

Warehouses are in the business of serving customers, so when consumer demand makes any kind of shift — subtle or extreme — warehouses must respond to remain competitive. There’s no greater example of how significantly consumer demand can overhaul an industry than the “Amazon Effect” — the bar-setting promise of two-day delivery that has drastically altered consumer expectations.

Here are some key statistics that illustrate how consumer demand is driving automation, which produces faster, more streamlined delivery:

• By 2021, it’s expected that 2.14 billion people worldwide will be online shoppers, up from 1.32 billion in 2014. 
• In 2019, more than half of all U.S. households held an Amazon Prime account, giving them access to free two-day shipping on select goods.
• Consumers are relying on digital shopping more frequently, with 15% of online shoppers in 2016 saying they were buying online every week.
• For the cold-storage industry, which typically has thin profit margins, automation can help drive profitability by improving energy consumption, allowing this niche market to capitalize on the growing demand for online grocery shopping, which will account for 13% of all grocery sales by 2022.

As consumers get more comfortable with online shopping, warehouses will need to develop processes that allow them to continue to meet such high expectations, giving automation a clear role to play. Automation can reduce pick times and increase picking accuracy, delivering better, faster service.

2. Warehouse Expansion

When consumer demand changes, so does the overall warehouse operation. More shipments processed at a faster rate means that businesses are rethinking their distribution process. Many companies are now opting to expand their existing warehouse space and/or establish multiple distribution outlets for a wider reach.

The below statistics make a case for why companies are increasing their reliance on automation to help manage the inevitable warehouse expansion:

• Since the early 2000s, the average size of a warehouse has increased by 143%, with the average warehouse being 184,693 square feet in 2017, resulting in significantly more inventory to manage.
• Warehouse rental costs rose over 28% between 2011 and 2015, meaning warehouse managers must increase productivity to justify rising expenses. 
• According to a survey from Logistics Management, more and more companies say they’re operating with three or more distribution buildings.

Managing multiple large warehouses requires streamlined efficiency. Partial to full automation can help companies continue to maintain the profitability of their ever-growing distribution network.

3. Labor Costs

Labor accounts for the majority of any business’s overhead expenditures, and warehousing is no exception. Because productivity can make or break a warehouse’s profit, managers want all advantages at their disposal to maximize labor. Automation can be a touchy subject, with many people assuming it will replace workers entirely. On the contrary, automation can enhance the role of existing workers, allowing them to focus on higher-skill work that will improve the overall quality of the operation.

Let’s look at some stats that demonstrate how labor concerns are bolstering automation and robotics technology in the warehouse:

• According to the Bureau of Labor Statistics, labor costs are increasing. In November 2019, the average hourly wage for a warehouse worker was $20.60, compared to $17.11 per hour in November 2009.
• It’s estimated that on average, half of a picker’s time is spent on manual picking by walking through warehouse aisles.
• One survey found that 60% of respondents felt that productivity and labor efficiency were key challenges driving the adoption of automation technology.
• A 2015 report from Boston Consulting Group predicts that warehouses will cut labor costs by 18 to 25% by 2025 thanks to robots.

With such a massive investment in human capital, it’s no wonder warehouses want to leverage automation to derive more valuable work from their employees. Improvements in automation technology will only continue to make warehouse employees more valuable, as they can now move into the essential role of driving continuous improvement. 

4. Warehouse Safety 

Reducing the rates of workplace injuries continues to be a theme of major importance in the warehousing sector. Workplace incidents reduce productivity, increase labor costs and impact employee morale. With a growing expectation of the employer to respond to workplace incidents and develop better, more refined safety policies, many warehouses view automation as an integral solution in accomplishing this goal.

Here are some shocking statistics on warehouse workplace safety:

• Warehouse employee fatality rates are increasing — in 2015, there were 11 fatalities, and in 2018, there were 26 (in three years, fatalities rose 136% while the number of employees in the same time frame increased only 50%).
• In 2018, the warehouse industry experienced an injury/illness rate of 5.1 for every 100 full-time workers.
• In 2016, there were 10,660 cases of musculoskeletal disorder injuries among employees in the freight, stock and material handling sectors, with 43% of those cases being attributed to back injuries. Workers also experienced high rates of arm and shoulder injuries.

While warehouse automation won’t be the remedy against workplace injuries and fatalities, it does address one of the key areas of concern in warehouse work — ergonomics. Repetitive motions lead to tissue and joint wear-and-tear, which causes stress and injury. Automation speeds up simple tasks so that workers spend less time performing them, and it reduces the amount of bending, lifting, stretching and reaching workers have to do. It also reduces the risk of accidents, such as from forklifts and other material handling equipment.

5. Automation Adoption Rates

There’s a clear snowball effect happening — the current rate of automation adoption is driving further automation adoption. Companies keep a close eye on their competitors, and when they see the results their competitors gain by investing in technology, it compels others in the market to adopt automated processes too.

When it comes to new technology, there will always be innovators and early-adopters who are ahead of the curve. Eventually, their successful implementation of technology will give way to the early majority who adopt technology after its success has been proven and the initial kinks have been worked out. The more automation becomes commonplace in warehouses, the more it drives other operations to adopt automation as well.

Here are some key stats highlighting just how popular warehouse automation is becoming:

• In 2016, more than 10% of warehouses said they were already using automation in the form of goods-to-person picking.
• Investment in warehouse automation technology is increasing at an astonishing rate, accounting for $1.9 billion in global sales in 2016 with an expected expenditure of $22.4 billion by end-of-year 2021.
• Demand for warehouse robotics specifically is also growing rapidly, with unit shipments expected to increase from 40,000 worldwide in 2016 to 620,000 units annually in 2021.

The increased demand for warehouse automation solutions will also drive further technological innovation. Warehouse automation will become more and more sophisticated to keep up with the needs of the evolving warehouse. Remember that what was once considered new technology is now widespread.

Warehouse Automation Results

With a good understanding of what’s driving warehouses to adopt automation solutions, we can understand why advancing technology is appealing over traditionally laborious work. Since automation has become more commonplace, it’s produced results no one can argue with.

Here is a look at why warehouse automation is a good investment and how it enhances overall warehouse performance.

1. Improves Picking Accuracy

Customer service is critical in this age of ever-increasing connectivity. That’s why warehouses emphasize the importance of picking accuracy. When it comes to processing hundreds or thousands of orders daily, there will be an expected margin of error — humans make mistakes. Items get doubled up or forgotten, and incorrect orders get assembled all together. Keeping picking errors to a minimum will help warehouses deliver excellent customer service and address loss prevention.

Warehouse automation, among its many benefits, is considered a solution to reducing or mitigating picking errors. Here are some statistics that address the relationship between picking accuracy and automation:

• Best-in-class warehouse operations have a picking accuracy rate of 98.4%, and the industry average picking error rate is one to three percent.
• Automation systems, such as automatic storage and retrieval systems, can increase picking accuracy by 99.99%, effectively eliminating picking errors.

2. Increases Productivity Rates

Productivity in a warehouse is a vital metric to monitor, as the company’s profit depends on the efficient use of labor resources. Inefficient processes reduce productive time, making labor costs rise. Order-picking is a basic warehouse process that can make or break productivity, particularly when there’s a lot of travel time involved for the picker. Certain automation solutions are designed to increase picking time, such as the goods-to-person solution and digital programs that intelligently plan warehouse routes.

Here are some statistics that show how important warehouse automation is for increasing productivity:

• Order-picking accounts for roughly 55% of all warehouse activity.
• Traveling can take up over half of a picker’s time.
• Automated storage and retrieval systems can improve order-picking and storage productivity by 85%.

3. Quick Payback Period

Though warehouse automation can require a significant upfront investment depending on its scale, it has a relatively quick payback period considering that it’s a long-term solution. Here are some of the average payback period results that companies are seeing with various levels of automation:

• Simple warehouse automation, such as WMS and pick-to-light systems, can cost between $500,000 and $2 million to implement and have an estimated payback period of 0.5 to two years.
• For automation solutions like conveyors and AS/AR, companies can expect to spend between $5 million and $15 million on implementation with an estimated payback period of two to four years.
• For more sophisticated automation systems, like automated guided vehicles and robotics, the investment can be more than $50 million and require a payback period of five years or more.

Warehouse automation is a long-term investment that pays off in increased productivity, reduced shipment errors and improved employee safety. Cherry’s Industrial Equipment can help you streamline your warehouse processes with our warehouse automation solutions. From freezer spacer and pallet retrieval systems to robotic stretch wrapping machines to automatic pallet washers, Cherry’s Industrial provides high-quality warehouse automation and material handling products to improve your productivity and maximize profitability.

Call us today at 1-800-350-0011 to learn more about the right solution for you.