Right now many things are up in the air. We don't know how long the COVID-19 pandemic will last or how the end will come. However, there are a few trends that we can identify that may follow through into 2021.
In 2019, the eMarketer estimated that global ecommerce would reach $5 trillion by 2021. That, of course, was before a global pandemic caused extended lockdowns and accelerated the trend of moving from brick and mortar stores to online. It's possible that some of this trend will reverse as the pandemic ends and people starved for human contact return to malls. However, those malls may be somewhat empty for a while; major brick and mortar retailers are declaring bankruptcy and some may not survive. Smaller stores may have even less resilience.
The increase in demand will put pressure on warehouse technology. We've already seen shipping times grow at major ecommerce retailers, and the postal service burdened as smaller retailers try to pivot to online. Meeting these higher levels of demand will result in more and more warehouses turning to full automation, including picking robots, not to replace human staff but to supplement. This is particularly the case for online grocery retail, where deliveries are time-sensitive and accuracy is important. Additionally, this will result in an increased demand for warehouse space that will likely result in more refurbishment of older buildings as well as new facilities that are designed to leverage technology and automation from the start.
Another likely trend is a return to urban warehouses. People who are used to being able to walk into a store and buy something will be pushing for brick and mortar retail where possible, but will also demand quick fulfillment and fast shipping. In some cases more and smaller fulfillment centers, controlled by a central ordering and inventory system may prove more efficient, reversing the trend for large centralized warehouses. These smaller warehouses may even take over the site of failed malls.
Sustainability has gone past being a mere buzzword. Eco-friendly smart warehouses are already being built. Smart building systems can adjust the thermostat automatically when nobody is in the building, closely monitor the use of electricity, heat, water and gas. 2021 may not quite be the year of the electric truck, but it's certainly moving that way.
In general, supply chain planning will take sustainability more and more into account. It's very likely that circular supply chains, where the majority of a product is returned to the manufacturer for reuse or recycling, are going to become important. COVID-19 may slow this process, as people are temporarily more concerned with safety than the environment. Afterwards people may well realize that higher manufacturer involvement in recycling will help ensure that they are able to recycle most of their waste.
On June 23, in Shakopee, an Amazon warehouse experienced a large outbreak. Attracting workers was a problem for warehouse and fulfillment operations before the crisis. With a number of high-profile outbreaks, it may be even harder for managers to get enough employees.
As with the increase in demand, this is likely to accelerate automation and increase the use of robots on the warehouse floor. With modern technology and real time tracking systems, the need for human supervision is slowly decreasing. A report released in March revealed that in 2019, about 65% of supply chain professionals said one of their biggest problems was hiring and retention.
Younger workers are more likely to be attracted to an automated workplace where they can learn about high technology. Automation also reduces workplace injuries.
However, the shortage of warehouse workers may be mitigated by a global recession following the pandemic, making people desperate and more likely to take jobs they would not otherwise consider. This might reduce the shortage in the short term, although the trends are likely to return to normal as the economy improves. Also, there is not yet an emerging technology that will significantly reduce the overall need for human workers, and fully automated warehouses are unlikely to show up for several years yet, although there are some major steps in that direction in China. Economics may push things in other directions, however.
Digital twin technology promises to disrupt many industries; and warehouses aren't immune. The technology allows accurate virtual copies of facilities to be constructed that can then be used to test the impact of layout changes, equipment, and workforce changes without any risk or the need to put things back the way they were.
This kind of virtual technology can be used to assess the impact of social distancing on work practices, which may accelerate the adoption, but it's unlikely to be truly ready for primetime for a little while yet.
This kind of modeling will save a lot of time and money and will eventually be used to design new smart warehouses with setups that architects already know work before any construction starts. It can also be used to plan the refurbishment of old or repurposed buildings.
The need to monitor and enforce social distancing has caused an uptick in the adoption of wearable technology for workers. For example, Amazon has been testing a wearable device that notifies people when they get within six feet of another worker.
Amazon is already using wearables to monitor productivity (although the social distancing alert appears to be optional). Many workers are wary of the technology, which is seen as a potential privacy violation and a way to micromanage workers. This is understandable when technology is used to measure and simplify processes.
However, employers are unlikely to listen to many of these concerns. Wearables that direct a worker by the most efficient route can reduce the time taken to pick in a large warehouse. Mobile computing has already greatly increased efficiency by making it unnecessary to ever return to an offer. While AR glasses have been on the horizon for several years, wearable scanners that operate hands-free are starting to become common. This trend is only likely to continue, at least in situations where picking is not being taken over by robots. Wearables can also improve employee safety by alerting to hidden forklifts and similar obstacles.
The need to protect workers and enforce social distancing, giving a direct safety incentive, may help employees overcome their wariness of these kinds of systems, especially if minute-by-minute productivity monitoring is avoided.
Overall, the trends we're expecting to see in 2021 will be accelerated by higher e-commerce demand and a possible shortage of warehouse workers as people are reluctant to work in fulfillment centers that are seen as unsafe. Those trends are likely to include increased automation, new or refurbished smart warehouse space, and a growing use of real-time tracking of both inventory and employees. There are still a lot of uncertainties about the extent and direction of economic recovery after the pandemic, but the economic downtown is also likely to push warehouses and fulfillment centers towards increased automation, especially things which can be done relatively cheaply, such as wearables.
Eniture Technology specializes in helping e-Commerce merchants grow by providing useful information, digital marketing services, off-the-shelf apps that solve common problems, and custom programming services. Please contact us if you need help growing your online business or implementing the concepts presented in this blog post.
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