Business

The Automation Investment Landscape 

Last year, many companies struggled with global supply chain constraints and issues, with additional pressure on input costs from the war in Ukraine. This year promises to be no less challenging, with the combined threats of inflation, recession concerns, sustainability mandates, and ever-increasing customer expectations.

Industries in Europe, North America, and Asia have increased their investments into warehouse automation to work around and overcome these challenges. In 2022, we spoke to more than 300 of these companies, including healthcare, industrial, and retail organizations, to find out why they’re betting so heavily on automation. 

They told us many of the same things talked about in trade magazines and market studies throughout the year. Interest rate spikes during the second half of the year made it more difficult than ever to forecast customer demand. High financing costs were particularly tough at a time when operating costs like rent and energy were increasing.

If analysts’ predictions come true, owners’ worries could linger throughout 2023.

In their latest market updates, the investment bank, Jefferies, cited labor shortages and economic uncertainty as the two biggest challenges faced by warehouse tenants. Earlier in 2022, their research showed worker wages in the United States grew by approximately 30% in the last seven years versus the inflation of 10%.

More recently, in December, Jefferies predicted inflation would settle in 2023 to more historical levels (low single digits). However, analysts warned labor shortages and high rent will persist through 2023, continuing to cause imbalance; labor shortages will continue across all industries, driving up wages and sustaining inflation.  

Across the United States and Europe, business owners have already faced a historically tight labor market. Based on Jefferies’ assessments, things might get even tighter, especially in the United States. For business owners, this means they should focus on finding new ways of increasing productivity with their existing workforces and operations.

Our analysts recently conducted a deep-dive, quantitative study of over 300 companies to better gauge the marketplace. We found some amazing data we’re excited to share in our soon-to-be-released "State of the Market" report.

Modern Material Handling and Peerless Research Group’s 2022 Automation Survey questioned warehouse and supply chain managers about what they’re looking to improve the most in the next two years, and here’s what they said:

  1. Throughput 
  2. Picking efficiency 
  3. Warehouse capacity utilization 
  4. Labor reduction 

Several companies we spoke to said they’re continuing to invest in automation because they’ve realized how effective it is in solving all four of these operational hurdles.  

Among these companies, some common themes emerged when asked what they’re looking for in an automated solution: 

  • Reliability and Ease-of-Use: Systems with high uptime and no single point-of-failure risk are crucial. Equipment that’s easy to use for warehouse operators was equally important, as many warehouse managers hire temporary personnel whom they need to train quickly during peaks. 
  • Scalability: As the current macro environment continues to be uncertain, scalability and the option to expand your system without impacting your ability to meet customer demand is critical. Cubic storage systems like AutoStore or AMRs are the best technologies, while installing a shuttle system was found to be very costly to expand. 
  • Return on Investment: Business owners stressed ROI is more important than ever as financing costs have increased. What’s troubling is figuring out the ROI calculation. Generally, it’s a complicated process because there are so many factors to consider. It’s important to understand all cost savings related to the investment. Typical savings are related to labor, energy, and real estate (e.g. consolidating warehouses). Installing an AutoStore, you can save as much as 75% of your current warehouse space. 
  • Payback period: According to business owners we interviewed, depending on the type of warehouse automation technology, capital expenditures can be anywhere from $0.5 million to several million dollars. Regardless of cost, there are plenty of options out there and the ones with the quickest payback periods (e.g. AutoStore general Customer Payback period is between 1-3 years) are always the most attractive. See "The Complete Guide to Warehouse Automation" for more details.

This is just a preview of what our research uncovered in 2022. Our analysts recently conducted a deep-dive, quantitative study of over 300 companies to better gauge the marketplace. We found some amazing data we’re excited to share in our new "State of the Market" report.  

In the meantime, if you’re evaluating an investment in warehouse automation, understand up front that it can be a difficult and time-consuming process. There are several important data points required to make an informed decision and several ways to start your assessment. Some customers start by speaking to other companies in their network that have implemented automation and by reading case studies to learn about the implementation process, benefits, and ROI.  

Others visit trade shows or contact a subject matter specialist. What is true for the majority of the respondents that have not yet automated their warehouse or part of it, is they are stating clearly they will take action within the next months. 

If you want to have a first discussion regarding your company’s needs, we have a global team of experts with extensive knowledge and experience in warehouse automation in all types of industries.

General Inquiries
+47 52 76 35 00

Want to learn more ?

Talk to your local expert.

Let's talk
Business

The Automation Investment Landscape 

Last year, many companies struggled with global supply chain constraints and issues, with additional pressure on input costs from the war in Ukraine. This year promises to be no less challenging, with the combined threats of inflation, recession concerns, sustainability mandates, and ever-increasing customer expectations.

Industries in Europe, North America, and Asia have increased their investments into warehouse automation to work around and overcome these challenges. In 2022, we spoke to more than 300 of these companies, including healthcare, industrial, and retail organizations, to find out why they’re betting so heavily on automation. 

They told us many of the same things talked about in trade magazines and market studies throughout the year. Interest rate spikes during the second half of the year made it more difficult than ever to forecast customer demand. High financing costs were particularly tough at a time when operating costs like rent and energy were increasing.

If analysts’ predictions come true, owners’ worries could linger throughout 2023.

In their latest market updates, the investment bank, Jefferies, cited labor shortages and economic uncertainty as the two biggest challenges faced by warehouse tenants. Earlier in 2022, their research showed worker wages in the United States grew by approximately 30% in the last seven years versus the inflation of 10%.

More recently, in December, Jefferies predicted inflation would settle in 2023 to more historical levels (low single digits). However, analysts warned labor shortages and high rent will persist through 2023, continuing to cause imbalance; labor shortages will continue across all industries, driving up wages and sustaining inflation.  

Across the United States and Europe, business owners have already faced a historically tight labor market. Based on Jefferies’ assessments, things might get even tighter, especially in the United States. For business owners, this means they should focus on finding new ways of increasing productivity with their existing workforces and operations.

Our analysts recently conducted a deep-dive, quantitative study of over 300 companies to better gauge the marketplace. We found some amazing data we’re excited to share in our soon-to-be-released "State of the Market" report.

Modern Material Handling and Peerless Research Group’s 2022 Automation Survey questioned warehouse and supply chain managers about what they’re looking to improve the most in the next two years, and here’s what they said:

  1. Throughput 
  2. Picking efficiency 
  3. Warehouse capacity utilization 
  4. Labor reduction 

Several companies we spoke to said they’re continuing to invest in automation because they’ve realized how effective it is in solving all four of these operational hurdles.  

Among these companies, some common themes emerged when asked what they’re looking for in an automated solution: 

  • Reliability and Ease-of-Use: Systems with high uptime and no single point-of-failure risk are crucial. Equipment that’s easy to use for warehouse operators was equally important, as many warehouse managers hire temporary personnel whom they need to train quickly during peaks. 
  • Scalability: As the current macro environment continues to be uncertain, scalability and the option to expand your system without impacting your ability to meet customer demand is critical. Cubic storage systems like AutoStore or AMRs are the best technologies, while installing a shuttle system was found to be very costly to expand. 
  • Return on Investment: Business owners stressed ROI is more important than ever as financing costs have increased. What’s troubling is figuring out the ROI calculation. Generally, it’s a complicated process because there are so many factors to consider. It’s important to understand all cost savings related to the investment. Typical savings are related to labor, energy, and real estate (e.g. consolidating warehouses). Installing an AutoStore, you can save as much as 75% of your current warehouse space. 
  • Payback period: According to business owners we interviewed, depending on the type of warehouse automation technology, capital expenditures can be anywhere from $0.5 million to several million dollars. Regardless of cost, there are plenty of options out there and the ones with the quickest payback periods (e.g. AutoStore general Customer Payback period is between 1-3 years) are always the most attractive. See "The Complete Guide to Warehouse Automation" for more details.

This is just a preview of what our research uncovered in 2022. Our analysts recently conducted a deep-dive, quantitative study of over 300 companies to better gauge the marketplace. We found some amazing data we’re excited to share in our new "State of the Market" report.  

In the meantime, if you’re evaluating an investment in warehouse automation, understand up front that it can be a difficult and time-consuming process. There are several important data points required to make an informed decision and several ways to start your assessment. Some customers start by speaking to other companies in their network that have implemented automation and by reading case studies to learn about the implementation process, benefits, and ROI.  

Others visit trade shows or contact a subject matter specialist. What is true for the majority of the respondents that have not yet automated their warehouse or part of it, is they are stating clearly they will take action within the next months. 

If you want to have a first discussion regarding your company’s needs, we have a global team of experts with extensive knowledge and experience in warehouse automation in all types of industries.

General Inquiries
+47 52 76 35 00

Want to learn more?

Talk to your local expert.

Let's talk

Get your complimentary copy

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