Introduction and Personal Observations

I have made some conclusions during these strange times—no scientific research, just my opinions, so you have to take it for what it is.

Labor Shortages and Automation in Europe

The logistics business has different challenges depending on where in Europe you work. In eastern and southern Europe, the biggest challenge is the lack of labor. In some parts of Europe, such as Poland, Belgium, and the Netherlands, which have become logistics hubs, it is a big problem to find labor. Actually, the lack of labor is the main driver for automating the warehouses in these areas.

In Scandinavia, where I live and work, the main driver for automating warehouses is labor costs. There is quite a big difference in labor costs between eastern and southern Europe compared to northern Europe. To be competitive, automation of various kinds is interesting for many warehouses.

Increasing Costs for Land and Facilities

Another important driver for automation is increasing costs for land and facilities. It is increasingly important that we are volume efficient in our intralogistics. Automation can be of great help to be volume efficient. The importance of increased volume efficiency is something that companies globally have begun to focus on.

Conclusions on Automation Drivers

My first conclusion is that large parts of warehouse logistics are interested in automation for two main reasons: labor (lack of labor or expensive labor) and increased volume efficiency.

Need for Agility and Scalability in Automation Solutions

The next challenge is the increasing need for agility and, at the same time, a lack of automation solutions that support agility and scalability. There have been major changes in logistics at a very fast pace. E-commerce and omnichannel have completely exploded during these times; the problem with this is that technological developments have not kept up with the same pace. We remain in the same old automation solutions that we did when the warehouse logistics were more static. There is a lot of development in this area with different solutions establishing in the logistics business. I believe most of you know about AutoStore, which is a popular solution, but another new solution that is very interesting and worth looking at is Exotec Skypod.

Differences in B2B and B2C Automation Needs

I have also noticed that B2B more often invests in cranes or shuttle systems. They have a more balanced flow that they can handle, including peaks in their automation. These companies have a much more “smooth” flow and a more even and predictable growth. When it comes to B2C with e-commerce and omnichannel, it is much more difficult. With peaks like Black Friday and Christmas with sometimes more than 10 times higher order flow, for example, it is impossible to build an automation solution that can handle that. There is also great uncertainty regarding the future because it is an immature market.

Challenges for 3PL Companies

3PL companies often have difficulties investing in automation because of short contracts that make it difficult to plan and invest in the long term. Traditional automation is expensive with long depreciation. At the same time, these solutions are often rigid in their flows. It is difficult to rebuild or change these solutions. This makes it difficult to adapt to the needs of new customers.

Demand for Agile, Flexible, and Scalable Automation

My second conclusion is that warehouse logistics have a strong demand for new automation that is agile, flexible, and scalable. Fewer companies need expensive big bang solutions that are rigid in workflow because more warehouses handle B2C with large fluctuations in order flows with huge peaks. There is a lot of development going on, and there are new modern solutions in the market, but remember, according to Modern Material Handling’s survey from May, 90% of customers of automation rank durability and uptime as their highest priority. That means new companies in the automation business need to have strong and well-developed service organizations to attract new customers.

Importance of WMS and Optimization

My third conclusion is that many companies could come a long way in optimization and efficiency with the help of a good WMS and the right skills to configure it. Many companies are stuck focusing only on picking processes. Two of the most labor-intensive areas in a warehouse are goods receiving and outbound packaging. In my opinion, there is often much to do in these areas to decrease the number of man-hours in the warehouse. Remember, AI already has a very important role in WMS. There have been great results with AI in some features. There is a differentiation in the market regarding WMS. Those vendors who have the financial muscles to invest in development to meet customers’ increased demands are, for example, with the help of AI. These vendors also have a very customer-driven development, which you can see by new features in several new releases per year. Then there are the smaller vendors who instead attract with much-customized solutions but instead get few releases and a small amount of new features. Because of this, the choice of WMS is a hugely important strategic decision for the future.

Exciting Future in Logistics

Finally, I see an exciting future in logistics. We will see what new upcoming automation solutions become popular and how software like WMS/WCS will control hardware and interact to enhance agility and flexibility in the warehouse.

Roberth Karlsson