2024 Automation Study: How automation is transforming the warehousing landscape

Focused on improving capacity utilization, speeding up order cycle times and picking more lines per hour, companies are investing in technology that helps them achieve these goals—and more. As the labor shortage drags on, the number of companies taking this route continues to increase—all with an eye on balancing human workforces with the power of warehouse automation.

To learn more about these trends, Peerless Research Group and Modern Materials Handling assessed usage and purchase intentions for the automation systems and solutions that have been adopted in warehouse and distribution center operations.

This survey of Modern’s readers explores the factors and features considered important when evaluating automation systems and solutions; how automation has been deployed in the warehouse; and what areas readers want to improve over the next two years. Other questions explored usage and implementation/upgrade plans for equipment used in facilities and just how much investment companies plan to funnel into warehouse automation this year.

The basics

Modern Materials Handling’s “2024 Automation Solutions Study” was in the field during November 2023 and garnered 155 usable responses from professionals involved in materials handling and fulfillment operations.

This year’s survey respondents represent a variety of industries including food, beverage and tobacco (12%), industrial machinery (12%), electrical equipment (9%), and plastics and rubber (9%). Forty-four percent of respondents work in a warehouse or distribution center, while 20% work in manufacturing, 16% represent corporate headquarters, and 15% work in warehouses supporting manufacturing.

In terms of space, 38% of respondents work in warehouses that span 250,000 square feet and 24% have facilities smaller than 50,000 square feet. The average square footage is 152,206. Most of the facilities (42%) have fewer than 100 employees; 31% have 100 to 499 employees and 9% have 500 to 999 employees. The average number of employees working in the respondents’ facilities is 1,032—up from 748 in 2023.

On average, these facilities report $856 million in annual revenues. Breaking the numbers down further, most companies posted 2023 revenues of less than $10 million (24%), $10 million to $49.9 million (17%), or $100 million to $249 million (9%). At the higher end of the scale, 6% of respondents work for companies with anywhere from $1 billion to $4.9 billion in annual revenues.

Evaluating new solutions

When evaluating automation systems and solutions for possible purchase, 92% of respondents say durability, reliability and uptime are all very important, while 82% say total cost of ownership, return on investment (ROI) and maintenance costs play important roles in the decision-making process.

Other key criteria that respondents factor into the evaluation process include support and service response time (81%), parts availability and risk of obsolescence (74%), and integration and compatibility with existing equipment (64%). Others consider purchase price (59%), scalability (56%), warranty program (55%), and turnkey solutions (48%) when evaluating automation systems.

Companies planning to evaluate or purchase automated materials handling equipment, technology or software in the next two years want to be able to fulfill orders faster and meet customer service level agreements (SLAs) and expectations.

Other drivers include the need to increase piece picking and packing to meet the demands of e-commerce; fill in when human labor isn’t available to manage specific tasks or projects; keep up with the competition; and support new go-to-market strategies.

Shifting from manual to automation

Asked which processes are fully automated within their current operations, 26% of respondents say conveyance, 19% say reporting (down from 29% last year), and 17% have automated the labeling function (compared to 22% last year).

Another 11% say packaging is fully automated (up from only 4% in 2023) and 10% say retrieval (up from 5% last year). Nine percent of companies have fully automated the storage function and the same percentage say replenishment is fully automated (down from 15% last year).

Many warehouses still handle some or all of their core tasks manually. According to the survey, 32% of them have mostly or fully manual storage functions and no plans to automate those activities in the future. Thirty percent are still using manual packaging processes and 30% say the same about their retrieval processes. Twenty-five percent of respondents say their replenishment function is manual, and 25% also say the same for their picking process—with no plans to automate these activities in the near future.

Specific to their order fulfillment operations, 43% of respondents say these processes are mostly or all manual, while 42% say they are a mix of automated and manual processes, and 10% say they are highly automated.

Looking for improvements

Companies invest in warehouse automation for various reasons. Over the next two years, for example, the majority (66%) of survey respondents want to improve warehouse capacity utilization (up from 60% last year), 58% are looking to improve picking efficiency, and 57% want to improve utilization and reduce turnover. In addition, 52% of companies want to improve throughput, 52% have their sights set on improved order accuracy, and 42% are hoping to improve order cycle time (down from 60% last year).

Asked to share their future purchasing plans, 16% of companies plan to change their purchasing plans for warehouse and DC solutions, 51% will stick to their current plans, and 33% are unsure of what the future holds in this realm. Of those respondents who do expect purchasing changes in the future, 25% say those shifts will be made immediately, 25% say it will take 6 to 12 months, and 19% say the changes won’t happen for another year.

How orders are fulfilled

Looking ahead, 45% of respondents plan to implement or improve individual pick, pack and ship wholesale distribution fulfillment (up from 28% last year), while 45% want to improve individual pick, pack and ship e-commerce fulfillment. Others plan to implement or improve full and mixed pallet load fulfillment (41%); case and mixed case fulfillment (37%); order customization, repacking, and value-added service (37%); or warehousing and storage (29%).

Conventional vs. automated equipment

Conventional equipment continues to play a key role in the typical warehouse’s operations. According to the survey, 74% of companies are using lift trucks, 74% use dock equipment and 70% use rack and shelving to store goods. Other companies use palletizers, pallets, totes, bins, and containers (66%); and hoists, cranes and monorails (51%).

On the automated side, 53% of companies use weighing, cubing and dimensioning equipment (45% plan to upgrade or implement this equipment in the next 24 months). Also, 49% are using conveyor and sortation systems, with 52% of those users planning to implement or upgrade this equipment over the next 24 months.

A majority of respondents (79%) plan to upgrade or implement mobile collaborative robotics in the next 24 months. During the same timeframe, 76% will upgrade or implement A-frame picking technologies, 74% will upgrade or implement picking robotics, and 70% plan to upgrade or implement palletizing robotics.

For data collection technologies, 66% of companies use bar code scanners, and 34% want to upgrade or implement those solutions within the next two years. Over half (58%) of respondents are currently using mobile or wireless technologies, and 42% plan to upgrade or implement these technologies in the next two years. Thirty-seven percent of companies surveyed are using voice-directed picking technologies, and 46% want to upgrade or implement those applications within the next two years.

Supply chain software usage

Asked about the supply chain execution (SCE) software solutions they’re using, 59% say they currently use a warehouse management system (WMS), 50% use a transportation management system (TMS), and 52% currently use a warehouse control system (WCS).

Other popular SCE applications currently in use include warehouse execution systems (48%), computerized maintenance management systems (48%), parcel rating systems (45%), slotting software (42%) and yard management systems (41%).

In terms of supply chain management (SCM) solutions, the most popular applications currently include order management systems (82%), enterprise resource planning (72%), customer relationship management systems (71%), and network design and optimization software (65%). Other companies are using supply chain planning (SCP) applications (63%) and distributed order management software (49%).

Spending in 2023 vs. 2024

On average, survey participants estimate they spent $1.67 million on all materials handling equipment and solutions in 2023—up from $1.57 million the prior year. The majority of companies (20%) spent less than $100,000; 19% spent somewhere between $100,000 and $499,999; 17% allocated $2.5-$4.9 million to materials handling equipment and solutions; and 16% spent more than $5 million.

When making these purchases, 64% of companies buy their fulfillment solutions directly from the manufacturer and others work with a distributor/dealer (63%) or a systems integrator (54%). In the future, 45% of survey respondents expect to work with systems integrators, while others prefer to work with a distributor/dealer (35%) or the manufacturer itself (34%).