The Hidden Costs of Labor

It’s time to rethink robot-labor groupthink

A readily available workforce rendered the cost of legacy AGV technology unreachable for most in material handling. Today, the calculus has changed. Modern AMR technology is being matched by persistent labor shortages and a nearly 50% cost premium that is largely unaccounted for. Do you know your hidden labor costs?

Hidden cost: Labour Availability

The workers you can’t hire are costing you

Existing and newly entering people into the workforce have choices. The more fluid nature of today’s workforce, reliability, cost and retention of readily-available labor will only continue to get worse.

  • Rising wages and hiring costs
  • Lower reliability, quality
  • Poor worker retention

73%

of warehouses can’t hire enough workers

575k

unfilled warehousing jobs in the U.S.

LaborAvaliablity
Hidden cost: Turnover

You lose money when you lose people

The high turnover rates in material handling coupled with the costs to replace a departed worker, is a recipe for disaster. The average warehouse with 100 FTE spends more than $365k per year on turnover costs alone!

  • Higher turnover costs
  • Increase facility disruption

43%

industry turnover rate

20%

cost of salary to replace a worker

Turnover
Hidden cost: Training

Workers need to get up to speed

Training is one of those expenses that many operations take for granted. On average, 43% of your staff will need to be trained each year resulting in recurring cost and lost productivity. 

  • Increase time to ramp
  • Reduction in overall productivity
  • Lost supervisor time and bandwidth

$1500

training cost per worker

7%

productivity hit due to onboarding new employees

Training
Hidden cost: Understaffing

The drag of your missing worker

Understaffing has a significant impact on throughput and carries both additional costs and lost revenues. And the cost of these absences translates into a productivity hit to your existing workers who have to pick up the slack.

  • Lower throughput and productivity
  • Lost revenues
  • Increased worker attrition

2x

more likely to quit due to understaffing

37%

understaffing in warehousing

Understaffing
Hidden cost: Lost Productivity

The labor-only double whammy

Along with persistent understaffing, the average U.S. worker is LESS productive today than they were in 2010. So even if you can fill those roles, you have an uphill battle to keep them at work and more productive.

  • Reduced output
  • Increased throughput cost

20%

or more in lost output due to understaffing and productivity losses

4%

decrease in average worker productivity since 2010

LostProductivity
Hidden cost: Inflation

Wage increases that defy gravity

Labor costs will continue to rise. And all of the factors mentioned above combined with external inflationary pressure means that cost of your workers is only going one way. Up.

  • Increased wage floor
  • Increase in all other hidden costs
  • Lower profit margins

10-15%

wage increases in the last two years

Inflation
Hidden cost: Safety

The cost of safety is material

Workers can become quite skilled at highly repetitive tasks but accidents will happen from time to time. Even minor incidents cost tens of thousands, and happen more frequently than you might expect.

  • Less experienced workers = more safety costs
  • More safety impacts productivity

1/10

manned forklift will be
involved in an accident
each year

$250k

average cost of
injuries per
warehouse/year

Safety
THE ANSWER

Automation to the rescue for the workers you can’t hire

Automation provides a stable, reliable supplement to unavailable and understaffed labor and can help manage the hidden costs of labor.

Think ​workers + robots​ instead of ​ workers vs. robots​

Automation supports worker retention​

Delaying automation will only drive costs higher​

Automation creates competitive differentiation​

IDC White paper

Making the business case for supply chain automation

How can manufacturing facilities and warehouses manage the complexity of a post-covid marketplace? See how the IDC predicts intelligent automation will change the world.

“…the hidden costs of labor, particularly in the current environment, have been undercounted by as much as 50%.”

Making the business case for supply chain automation text on a black and green background

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