Businesses are set to invest over their annual warehousing costs into automation to boost productivity

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This article is brought to you by Retail Technology Review: Businesses are set to invest over their annual warehousing costs into automation to boost productivity.

Two fifths (42%) of businesses across manufacturing, retail and 3PLs are planning to invest equal to or more than their annual warehousing costs on automation over the next five years, according to new research.

In SCALA’s new report looking at the rise of robotics and automation in the supply chain, significantly, 6% of respondents said they are planning on spending more than double their annual warehousing costs on automation, over the same period.

A third of businesses (33%) surveyed are planning to spend between £1m and £5m in automation in the foreseeable future. Whilst 13% of businesses are committed to spending between £5m and £20m, and almost a quarter (23%) are willing to invest more than £20m. 

Scepticism appears relatively low with just 12% of respondents stating that they were not planning to invest in automation at all in the foreseeable future. 

The reasons given for future investment in automation include three key drivers; warehouse staff availability/costs, increasing operational efficiency and increasing capability to meet future growth. All three challenges were cited by over 80% of respondents.

These plans are despite the majority of respondents being in the early stages of automation with 37% having invested less than £1m in automation to date.

John Perry, managing director at SCALA, commented: “More than ever, historical thinking and ways of working are no longer fit for purpose for future supply chains. Flexibility and resilience have become business critical. 

“Considering the ongoing geopolitical and financial challenges facing global supply chains stemming from the crisis in Ukraine, Brexit, the pandemic and inflationary prices, it may seem surprising that companies are looking at serious investment into warehouse robotics and automation. However, the need to meet the changing marketplace without remaining at the mercy of ongoing staff shortages, high costs and reduced productivity are big drivers.

“The level of potential investment is staggering for an industry that is often criticised for being late to technological developments. With the total annual warehouse operations cost of those surveyed being £520m, and the expectation that the equivalent of £470m will be invested in automation over the next five years, if replicated across the industry, this represents a huge and evidently necessary investment.”

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