It has been widely publicized that inflation rates are now higher than in the last four decades. There are several reasons for this, including the supply chain disruptions that started with the COVID-19 pandemic and related labor shortages, global energy challenges and the ongoing conflict in Ukraine.
While the pandemic created an overall demand for digitization, the supply chain has had to play catch up due to more pressing needs like simply fulfilling basic product demand. When added to labor challenges that have many employers fighting a wage war to attract and retain staff, it’s no wonder there is persistent inflation.
There is a silver lining on this otherwise dark cloud of an economy in the form of new technology that has the potential to help businesses reduce inflationary pressures and protect the bottom line. Specifically, automation helps address widespread performance issues while avoiding the price pressures inherent with near full employment.
It is widely believed automation improves workforce competencies, enabling companies to lower wage inflation. This is in addition to the performance, cost and accuracy benefits. In general, wages become inflated when there are too few workers for the number of job openings. Automation helps businesses fill those vacancies while addressing many of the reasons the jobs go unfilled in the first place, like physical difficulties and environment issues (think cold storage). Simply put, automation helps to produce more and even better quality products with more consistency while reducing inflation by better matching demand and supply.
Automation also enables people to explore new career paths, enabling reskilling or upskilling. Staff members who previously worked as selectors or lift truck drivers can learn how to operate and maintain the robots and other systems managing the material handling activities of the warehouse or manufacturing facility. These new positions often mean higher pay and more transferable skills than their previous positions, leading to greater opportunities.
Finally, automation is critical for many long-term environmental sustainability strategies that target process efficiencies. Robots, conveyors and lifts all help move product from the point of production to the point of consumer more productively and with less waste than their manual counterpart systems.
Inflation has been impacting consumer goods more than industrial ones, and the supply chain disruptions affecting the delivery of equipment during the height of the pandemic are mostly over. This means investing in automation has far fewer impediments than even a few months ago. Companies hoping to address inflation and other challenges now can expect to see benefits from their automation deployment within months.
Executives must manage their businesses differently during inflationary times as compared to periods with few price changes. They need to adjust procurement tactics and base decisions on more risky assumptions. By investing in a more automated work environment for trading partners and employees, especially in the warehousing and logistics areas, companies can drive performance, give the workforce new opportunities and address current and future inflation risks, all while building a more environment-friendly future.
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