Rising costs are a challenge.

Read on to learn what organizations are saying and doing to address rising energy, labor and real estate costs.

How to tackle rising costs.

We've gathered the thoughts, opinions, and experiences of over 300 senior leaders and decision makers — from CEOs and COOs to order fulfillment and logistics directors — to gauge how they’re approaching the next 12 months. We identified their top 5 challenges, and rising costs was one of them.

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Unpacking the costs

When it comes to 2023 challenges, it’s little wonder that our respondents are most concerned about rising costs — energy (32%) and labor costs (27%) occupied the top two spots. The labor market has been volatile over the past three years and the supply chain industry has a huge task to either attract new people or look to automation as an alternative solution.

A bit further down the list is the rising cost of real estate (15%). Traditional warehouse space is costing companies more, and there are clearly big decisions to make around warehousing and fulfillment centers that can help companies operate efficiently while meeting consumer demand and expectations.

So how are companies tackling this issue?

It’s great to see that, despite the macro-economic challenges, our respondents still have a clear view of what matters most — the customer. Through the warehouse lens, customer experience means meeting increasing customer demands around availability, delivery, and returns.

  • Improving customer satisfaction levels (34%) is the top development area for businesses over the next 12 months
  • Equal second are automation and technology (31%) and workforce efficiency/productivity (31%)
  • In this landscape, being close to the consumer in dense urban areas becomes more important. But that also means higher real-estate costs. Space efficiency becomes vital for balancing speed, efficiency, and customer expectations

The expert's view

"As with everything as connected as a supply chain, you can’t pull one lever without it having an impact on other crucial areas.

Take real estate costs, for instance. Sure, you could move operations into the middle of nowhere and save vast sums on ground rent. But what impact does that have on the customer experience? Or the cost of transportation?

Organizations are rightly worried about rising costs, but the solutions need to have minimum impact on the end customer.”

Jon Schechter, Business Development Manager, AutoStore, North America

cited energy costs as their biggest challenge
cited labor costs as their biggest challenge
say rising real estate costs to be biggest challenge
> 4 in 10
> 4 in 10
say space saving/utilization will be mission-critical to their business

Download the full report now

This is one of the five key learnings from our benchmark survey. Download the full report to read more on ESG initiatives, AS/RS Necessity, Space Utilization and Balancing the Macro & Micro.