24 April 2024

Look to almost any corner of the economy, and there is a high probability that labour shortages are a defining factor shaping the landscape.

From hospitality and retail to aviation and agriculture, organisations across the economic spectrum are having to compete in a ferociously competitive market to fulfil their workforce requirements.

This is difficult to comprehend given the global population has already surpassed the eight billion mark, with the United Nations forecasting an increase to 8.5 billion by 2030. However, the fact is that labour shortages are being felt across both mature and developing economies at every level of technological advancement, and the implications for the global economy are deeply serious.

The supply chain and logistics sector is, unfortunately, among the most challenged out there when it comes to filling vacancies.

According to a study that CILT UK conducted in June 2022, more than 80% of organisations are experiencing staff shortages in the warehouse, with 60% experiencing a shortage of drivers.

The problem has not abated since. Staying in the warehousing domain, an analysis of UK Office for National Statistics (ONS) data by Indeed Flex, published in March 2023, shows that the demand for warehouse workers has risen by 40% since 2019, with some regions seeing more than double the number of job postings.

In the transportation domain, there is an acute shortage of heavy goods vehicle (HGV) drivers that intensified during 2023. According to a report by the International Road Transport Union (IRU), over three million truck driver positions are currently unfilled in the 36 countries it studied, with shortages set to double in severity over the next five years.

Technology’s role in navigating labour shortfalls

In this regard, the pandemic has served as an accelerant of change. Companies had to adapt to new ways of working – warehouses and distribution centres adopted distancing measures that reduced the number of staff on site, while travel restrictions limited the amount of work for crucial parts of the logistics workforce. Many left the sector and have not returned.

Technology, including a suite of automation and AI-based solutions, has emerged as critical part of the toolkit to help supply chains handle labour crunches, chiefly by allowing more to be achieved with less human input. The pandemic period highlighted the critical nature of the supply chain function, giving it a voice at the top table. In tandem, much-needed investments in technical capabilities have grown.

So, what kinds of technologies are organisations turning to, and what impact are they having?

In short, there is a huge variety of tech being used across key functions of the supply chain – from planning and sourcing through to manufacturing and the delivery of goods.

These solutions are helping to automate crucial functions, and thus relieve pressure on strained labour forces. At the same time, they are also making workplaces more attractive for prospective and current employees, especially digitally savvy younger generations of worker. In an ultra-competitive labour market, the ability to offer forward thinking, digitally advanced roles could have a game-changing impact.

Let’s look at a few specific technologies which are already making a difference.

In the warehousing space, robotics and automated guided vehicles (AGVs) are increasingly being used to handle tasks such as picking, packing and transporting goods. These systems can operate on a 24/7 basis without the need for breaks, reducing the reliance on human labour for repetitive tasks.

Warehouse operators are also turning to automated sorting systems that can handle large volumes of items with minimal human intervention, leveraging technologies such as conveyor belts, sensors and computer vision to sort packages and goods efficiently.

Meanwhile, in the back-office, warehouse management systems (WMS) and inventory management software leverage automation to fulfil tasks such as inventory tracking, order processing and shipment scheduling. This helps to streamline processes and reduce the need for manual labour, particularly in tasks related to inventory management and order fulfilment.

On the delivery side, autonomous trucks and HGVs can transport goods between distribution centres, warehouses and other locations, reducing the need for human drivers, especially on long-haul transportation routes where driver shortages may be more severe. In addition, last-mile delivery robots and drones are emerging as viable alternatives for transporting goods directly to end users’ doorsteps.

A big opportunity, if exploited

Technologies such these have the potential to unlock a plethora of benefits in addition to helping navigate labour shortages.

However, while investments in supply chain technology are increasing, there is still a sense of risk aversion among supply chain leaders that could prevent the leap from being fully taken. This is according to a 2023 report by PwC, which found that “despite the abundance and potential of technologies, few executives say their companies are using or planning to use them to automate and enhance the execution of different areas of the supply chain over the next 24 months.”

Upskilling also needs to become a higher priority. The same PwC report states that, compared to 2022, a greater proportion of supply chain executives say they will retain employees for different jobs, with fewer saying they need to add more employees to their overall workforce. This reflects the trend towards adopting automation technologies to fill gaps opened up by labour shortages.

Further to this, more than two-thirds of respondents to the PwC survey acknowledge that digitising their supply chain will require some upskilling of employees. However, just 7% reported it as being their top priority.

To take full advantage of the technological benefits on offer, organisations need to back up their supply chain solution spend with appropriate investment into ensuring their workforce is digitally ready. This is a pre-requisite if technology is to be the answer to labour market challenges.