Five Trends Materials Handling Operations Will Encounter in the Months to Come

Prediction 1: Materials Handling Will Be A C-Suite Concern

Materials handling is now a business imperative for the boardroom and the C-suite. We will continue to see that realization embraced throughout industries as the pace of business in everything from manufacturing to retail demands a stable supply chain not only to support top-line and bottom-line growth, but to strengthen customer relationships and increase sales.

In particular, boardrooms will increasingly appreciate the importance and impact of fulfillment operations that can be the difference between positive margins and losses, especially given the varying factors like labor and inflation that can radically impact how much it costs to get products into customers’ and consumers’ hands.

Prediction 2: 2022 Was A Year Of Quick Fixes; This One Will Be A Year Of Long-Term Solutions

In 2022, retailers implemented numerous quick fixes to address the still lingering effects of the pandemic and the significant supply chain disruption that ensued. In the months to come they will shift their focus to more comprehensive, long-term solutions that deliver the flexibility required to excel in a rapidly changing and at times unpredictable business landscape. These more extensive efforts will require thoughtful planning to make sure the systems can address myriad scenarios. Notably, the most successful organizations will build their plans around real-world operational insights from those who build automated systems.

Prediction 3: Scarcity Was The Name Of The Game And Will Continue Through The End Of 2023

The war in Ukraine, broad-based inflation and dramatic increases in transportation costs dramatically impacted supply chains in 2022 and will continue to create a domino effect throughout 2023. Specifically, the resulting scarcity in raw materials, and in many cases parts and components – including semiconductors – will continue to impact many industries. More than half, 54%, of respondents in the 2023 MHI Annual Industry Report categorized supply chain disruptions and shortages as extremely or very challenging (page 2).

Notably, for those making large capital investments in new facilities and infrastructure, this scarcity will necessitate increasingly advanced planning to ensure that the required materials are on hand, while a potential recession and fears of decreased consumer spending will prompt some organizations to postpone growth projects. How to address these competing realities, while accounting for the significant time it takes to fundamentally transform supply chain and fulfillment processes, will be an imperative strategic question for many organizations in the months to come.

Prediction 4: The Pandemic-Induced Labor Crisis Accelerated The Adoption Of Automation – Neither Will End Soon

Retailers and other businesses that must deal with peak fulfillment periods saw their labor challenges increase during the pandemic, with many organizations’ materials handling operations recruiting and training half or more of their employees on an annual basis in 2022. Indeed, more than half, 57%, of respondents in the same MHI report deemed the hiring and retaining of qualified workers to be extremely or very challenging (page 14).

This reality accelerated the adoption of automation and demonstrated on a large-scale how the deployment of integrated systems and robotics helps alleviate the reliance on labor for many highly-repetitive tasks. According to the 2023 MHI survey, expected investment in robotics and automation remains high suggesting that it has become “table stakes for operations to remain competitive” with just under 80% saying they will do so in the next five years (page 12). This will create significant new career opportunities and new roles for those who understand fulfillment workflows and want to acquire the skills needed to operate and maintain automated systems.

Prediction 5: The Lack Of Space Will Push Supply Chain Investments Higher

Similar to what already occurred in Europe, a rapidly changing commercial real estate market and a scarcity of space in many metro areas in the U.S. will incentivize many retailers and other businesses to build up rather than out in order to realize the full potential of automated systems, keep the same footprint, increase storage densities and accelerate operations.

California’s “Inland Empire,” the warehousing epicenter east of Los Angeles, offers but one example. Its suspension of new warehouse projects in August of 2022 will likely result in similar steps in other metro areas through the remainder of this year.

If my predictions are accurate, materials handling managers, directors and corporate officers will need to take deliberate action. To be successful, they must gain strategic capabilities that empower flexibility while addressing new throughput requirements, fluctuating availability of labor, parts and components, and altered supply chains shaped by geopolitical events. Adaptability, always essential when facing change, will remain a key focus and contributor to success.