It is now clear that increased levels of productivity in distribution centres (DC) are required, with the advent of the National Living Wage (NLW) in April and the growing concerns about the UK labour pool’s future after the June 23 Brexit vote. A warehousing automation specialist has claimed so.

Business Solutions Sales Director for Dematic Northern Europe, Matt Hatson said: “UK businesses are under tremendous pressure to perform – and the challenges are becoming tougher.”

He added: “Customers are ever more demanding, wanting later and later cut-off times for next-day deliveries; margins are becoming tighter as competitive positions harden; and labour costs are on the rise.”

Hatson also said that the NLW hiked the labour rates for workers aged 25 and above to a minimum of £7.20 an hour, yet it has added to labour-intensive DC operations’ cost burden.

Hutson lamented: “And now Brexit has cast a shadow over the future availability of abundant labour resources from Europe.”

Shorter Processing Durations

Hatson argued that although pushing back cut times for the following day’s deliveries can gain a competitive edge, it is a solution that comes at the expense of shorter processing times for fulfillment operations. According to him, businesses should tackle the problem of low productivity as an alternative.

He further noted that there was a huge disparity between productivity levels in the UK and those of other G7 advanced economies.  “According to the Office for National Statistics, international estimates of productivity in 2014 revealed that output per hour in the UK was now 36 percentage points behind Germany, 30 points below the US and is trailing France by 31 points”, he said.

Hatson claimed that since labour has been too cheap until pretty recently, several businesses have argued that investing in productivity enhancing technology was unnecessary. But he said the situation had now changed.

Hatson posed the question: “High availability of flexible, low-cost labour has allowed low-productivity business models to survive in the UK – but for how much longer?”

Increased Levels of Automation

Hatson went on with his argument: “If retailers and manufacturers are to grow their businesses, and still offer customers what they demand in terms of service, then productivity must be significantly improved”.  He added: “And that comes down to introducing higher levels of automation to boost the productivity levels of those individuals working in the distribution centre.”

He further said that flexible and scalable automation systems that offered fast payback were currently available from companies, including his own company.

Hatson referred to Coop Denmark as an example to prove how flexible automation can considerably enhance productivity. Productivity has significantly increased from 140 to 450 items picked per hour, as a result of linking Dematic’s Multishuttle technology to its RapidPick intelligence to generate a speedy, reliable and scalable goods-to-man picking operation.

Hatson claimed that using technology in a wise and proportionate manner can provide the outcomes required to tackle the productivity issue.

He ended by saying: “Importantly, automation not only boosts productivity, but it also reduces error rates too, so costs and actions associated with rectifying mis-picks and dealing with disappointed customers are reduced”.