The supply chain is under pressure. This is due to international developments such as the war in Ukraine, problems with transit through the Red Sea, but perhaps most of all to the tight labor market, where staff shortages will only increase due to an ageing population. The need for companies to automate their supply chain and logistics processes as much as possible is therefore increasing.

76% of logistics companies suffer from significant staff shortages

Because of this ongoing imbalance between labor supply and demand, companies are struggling to find the talent, knowledge workers and leaders they need to succeed—and companies focused on logistics and supply chain are particularly hard hit. According to a recent study by Descartes, 76% of supply chain and logistics leaders are experiencing significant staffing shortages in their operations, with 37% of respondents describing staffing shortages as high to extreme.

While competition for resources is a company-wide problem, the severity of labor shortages varies by company. According to the survey data, transportation operations (61%) and warehousing operations (56%) were most affected by labor shortages, from truck drivers to warehouse fulfillment teams. Knowledge workers, who are becoming increasingly important as supply chain and logistics operations become more technology and data-driven, are also difficult to recruit: 55% of respondents struggle with this.

Only 9% of logistics and supply chain executives said that peak season labor shortages had no impact on performance. And labor shortages not only affect companies’ peak season performance, finances, and logistics partners’ performance, but they also put a strain on customer service: 58% of respondents say labor shortages have had a negative impact on their service level.

How technology can help turn the tide

With severe labor shortages looming, logistics-focused companies are focusing their operational strategies on automation and technology solutions to reduce labor burdens. Another recent study examining the strategies and tactics companies are using to address the current labor shortage found that 54% of supply chain and logistics leaders surveyed are focusing on automating repetitive tasks and low-value-added services—a logical step to reduce resource footprint and deliver higher performance with fewer employees.

Self-driving vehicles, robotics, drones and soft and hard warehouse automation are on the agenda

Albert van Roekel, Director Solutions Consultancy at Descartes

The survey also found that 50% of logistics-focused companies surveyed are focusing on centralizing operations (e.g. centralized transportation planning). This strategic approach, typically implemented through cloud-based solutions deployed as shared services across the enterprise, helps increase operational efficiency without increasing headcount.

How does the goal of automating repetitive, low-value tasks and using technology to improve efficiency translate to the warehouse or transportation operation? Self-driving vehicles, robotics, drones, and soft and hard warehouse automation are on the agenda for supply chain and logistics decision makers, but there are some clear winners of productivity-enhancing technologies when looking to solve today’s labor challenges in these areas. Respondents are particularly focused on solutions to optimize delivery routes (54%) and mobile driver productivity (45%). To limit the impact of the skills shortage, automated real-time shipment tracking (53%) is proving to be the best technology choice.

For example, strategic route planning solutions increase route density while reducing planning time and resource requirements to achieve maximum efficiency. Another example is intelligent shipping and tracking software that uses real-time GPS to ensure faster and more consistent on-time deliveries while maintaining high service standards for customers. In the warehouse, some companies use robotics and automated guided vehicles (AGVs) to eliminate the need for manual labor.

On the backend, warehouse management systems (WMS) with barcode-based pick-and-pack workflows, automated multi-carrier parcel/LTL shipping, and real-time order path visibility capabilities help companies minimize labor costs and process more orders while improving the customer experience. Perhaps more importantly, automated logistics and supply chain technology solutions not only increase productivity, but also play a role in employee retention by simplifying and improving daily workflows for warehouse associates, planners, dispatchers, and drivers.

AI enables acceleration of automation

With the launch of ChatGPT, interest in artificial intelligence (AI) has increased significantly, and generative AI has increased expectations for AI technologies and opportunities to bring new solutions to market. Supply chain and logistics leaders are also turning to AI to improve operational efficiency and employee productivity. According to the survey, nearly 30% of respondents are exploring AI technology, while 53% plan to use AI.

When technology tools do most of the work, employees can free up valuable productive time to focus on more meaningful tasks

Albert van Roekel, Director Solutions Consultancy at Descartes

As logistics becomes increasingly data-driven, AI’s ability to analyze massive amounts of data in an instant will continue to drive technological innovation. While AI-based capabilities such as prediction and event detection in the context of route planning and transportation management have been ingrained in logistics technology for years, AI’s ability to continuously evaluate tens of thousands of data points and variables and make learned adjustments will help further advances in automating and accelerating logistics processes, eliminating redundancy and inefficiency, and increasing worker productivity.

Increased productivity and greater job satisfaction

For supply chain and logistics leaders challenged to keep their operations profitable with fewer resources, technology is transforming their strategy, tactics and best practices. For employees engaged in repetitive, time-consuming, low-value tasks and for knowledge workers who spend excessive amounts of time manually preparing data, creating reports or tracking shipments, automation is a game changer.

When technology tools do most of the heavy lifting, employees can free up valuable productive time to focus on more meaningful tasks while benefiting from simplified and streamlined workflows that enhance their daily work experience and ultimately improve retention rates. From a C-suite perspective, the combined power of automating low-value, repetitive tasks and adopting technology-driven solutions leads to increased productivity, better supply chain visibility and better performance while making employee, partner and customer experiences more positive.

This is a contribution from Albert van Roekel, Director Solutions Consultancy at Descartes. You can find more information about their solutions here.