Cost concerns dominate distribution sector strategy says survey
Driving down operational costs the top investment driver, as 86% of executives say controlling overheads a key challenge
Keeping costs under control is the top priority for the distribution and warehousing sector, with business leaders zeroing in on cheap productivity tools and in-warehouse automation to help deal with workforce shortages finds an industry survey.
The top two drivers of investment are the need to drive down operational costs and, contrastingly, boosting workforce productivity according to the 2024 State of Smart Distribution Study: The Age of Efficiency and Resilience report. These were cited by 78% and 76% of the 134 manufacturing, logistics and retail executives questioned for the research, respectively.
Furthermore, 86% noted that they were struggling with keeping costs under control and to manage their workforces, making them the joint second largest challenges after supply chain disruptions (96%)
Executives in the sector are pinning their hopes on cheaper technologies to try and counter these issues.
The research found that the most popular technologies that have been adopted or are in the process of being deployed are mobile devices for workers (81%), inventory tracking through RFID or IoT (49%), picking and packing robots (45%) and AI image recognition for quality control, packing and returns (37%).
The drive for technologies with low initial investments, such as mobile devices, likely lies behind the difference between the just 19% of executives who said they had already installed picking and packing robots and the 25% who said that they would within the next 24 months.
Autonomous systems have relatively higher initial costs, making them less attractive in the current environment. In the survey, 78% noted that the main barrier for installing autonomous systems into distribution networks is the high initial investment. Sixty-eight percent also said that they struggled to justify the return on investment when running cost-benefit analysis.
Even so, executives expect the share of tasks that are automated to at least some degree to rise from 31% to 54% over the next 24 months, underlining that there is a perception that autonomous and automated systems will be key in combatting issues surrounding warehouse labour.
However, a further barrier is connectivity, as three quarters agree that network connectivity in facilities needs to improve and 65% admitted that their current network will not be up to the task of supporting requirements over the medium term.