Transforming the Australian Supply Chain Workforce: A Deep Dive into the Skills Gap and Technology Adoption
As technology in supply chain rapidly evolves, the persistent shortage of skilled workers looms large for Australian businesses. Supply Chain Insights explores: While the skills gap and labour shortages are undoubted challenges, could adversity pave the way for innovative and streamlined processes between man and machine?
Australia, much like most of the world, has a labour shortage problem. The closure of Australia’s international borders to stem the spread of COVID-19 left almost half a million jobs unfilled in 2022, with 28% of businesses reporting vacancies according to the Australian Bureau of Statistics. As of August last year, 388,800 jobs remain unfilled and no improvement is being felt in the supply chain.
From sourcing to production, logistics, and delivery of goods and services, supply chains are profoundly impacted by skills and labour availability. Industries such as warehousing and distribution face a critical shortage of manual labour, making it challenging to find and retain workers to run warehouse floors. Pasquale Tomasiello, Senior Regional Director at Dematic, says customers have significant concerns around the inability to find and retain warehouse labour. The shrinkage of workers within the warehousing and distribution segments of the supply chain has a flow-on effect to increased competition and higher wage costs.
On top of a general labour shortage, a skills shortage presents itself as a broader industry challenge. According to Pasquale, a dearth of control engineers and qualified engineers puts greater pressure on the industry to train and develop these skills internally.
“Organisations, like Dematic, who have invested in staff training and development over a sustained period of time benefit from having a strong, long-tenured pool of resources to draw upon to help train young graduates and attract qualified engineers to oversee automation projects. This is particularly important as more and more businesses compete for these few and far between resources which is why more and more companies are prioritising automation experts,” says Pasquale.
According to Raghav Sibal, Managing Director, Australia & New Zealand at Manhattan Associates, the Australian supply chain industry is yet to recover from the effects of border closures over the COVID-19 pandemic which prevented skilled workers from entering the country.
“The problem of a lack of skilled workers has lingered over the last few years, which in a way is getting worse because the demand on supply chain is increasing. The skills gap is widening, which is adding to the overall problem. The number of logistics jobs that are open and unfilled is very high,” Raghav notes.
The labour shortage impact extends beyond operational constraints, influencing overall supply chain productivity, cost structures, and the ability to adapt to evolving market demands. To counter this, Australian supply chains are embracing technology solutions in a transformative wave, with industry leaders looking to invest in cutting-edge tech because of the amalgamation of rising labour costs and workforce scarcity. David Sim, Supply Chain Director at TMX Transform, says to successfully usher in the automation era, experienced and highly intelligent operations managers and industry leaders are needed.
“The skillsets haven’t caught up to the direction the industry is trying to reach in automation, data science, and data-based decision making,” he says. “Working in fulfilment, omnichannel or retail environments is extremely demanding for operations leadership roles and requires stamina and an ability to absorb stress. Filling these roles with people who aren’t equipped to deal with the speed of innovation and technology can cost businesses millions, but the opportunity to get it right is exciting.”
Warehouse Opportunities
The warehouse landscape is changing quickly. Initially, labour costs pushed the needle towards more automation, and the recent shortages in workers have piled on the pressure. The critical challenge, according to Raghav Sibal, lies in finding the right balance between automation and manual labour. Warehouse technologies are proving essential in streamlining operations, from unloading trucks to efficiently managing assets, ensuring adaptability to fluctuating demands.
“Using sophisticated labour planning and forecasting technology has become critical,” he says. “Software gives visibility into the forecast of orders, but also an indication of what labour requirements would be needed to meet those requirements. If the order forecast is set to increase because of an upcoming sales event, how do you prepare and adjust to the hours needed from your workforce?”
Dematic’s Pasquale Tomasiello echoes this sentiment, emphasising that embracing new technology is not just a choice, but a necessity.
“The skills gap has made it imperative for companies to explore automation across various levels of warehouse and distribution functions. Technology adoption is no longer solely about addressing the skills shortage; it is now a strategic move to gain competitive edge.”
One technology making strides is Automatic Storage and Retrieval Systems (ASRS), helping to buffer and sequence pallets and cases, optimising processes for picking stations and sortation systems.
“The automatic storage and retrieval of pallets and cases can reduce huge amounts of labour,” Pascal says. “The combination of the storage and retrieval system with a very clever and ergonomically designed pick station creates this methodology called Goods-to-Person.”
More and more, robotic solutions are taking centre stage in warehouse operations. Autonomous Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs) handle transport functions to articulated armed robots for pick and pack operations. The integration of robotics not only simplifies transport tasks – replacing manual labour – but brings a new level of efficiency to pick and pack operations.
Importantly, the adoption of robotics is not limited to specific industries, it’s extremely versatile, making it a viable solution for warehouses across various sectors.
Despite the widespread adoption of technology in organisations, particularly in automation, businesses can struggle to transition seamlessly from implementation to benefits realisation. For organisations with substantial capital investments and comparatively smaller workforces, a lack of leadership makes it difficult to bring transformations to fruition. As organisations navigate their own transformation journeys, workforce planning, training, and effective leadership becomes paramount in ensuring the successful integration of technology into daily operations.
David Sim points out the challenges encountered at the middle and supervisory levels are felt the most, where skilled managers are becoming scarce due to the increased utilisation of automated systems. On top of this, David highlights that much of industry grapples with maintaining a robust continuous improvement framework and structure around automation changes.
“Organisations are usually very excited and energised by a shiny, new automation tool, but the initial buy-in can fade away as the fatigue factor sets in,” David says. “It’s not just about spending millions of dollars of capital, it’s also crucial to drive and maintain the smaller improvements. Once the gloss wears off, organisations need to have a plan around making the new technology sing for sustained benefits long term.”
Wearable Technologies
Tracking solutions, barcode technology, and wearable devices are emerging as key players in addressing the persistent challenges associated with labour shortages. Royston Phua, Vertical Practice Lead APAC Supply Chain at Zebra Technologies, sheds light on the innovative ways these technologies are transforming warehouse operations and bridging the skills gap.
"As labour shortages continue to plague the industry, businesses are exploring and adopting mixed-level sensors like radio frequency identification tags (RFID) to enhance their operations. Despite the initial cost, these technologies prove to be cost-competitive and justified over time because of the ongoing scarcity of skilled labour."
Usability needs to be a priority for those looking to invest in new technology, according to Royston.
“If the new technology doesn’t have a big learning curve, users can implement it right away. User-friendly tech with an interface similar to a smartphone makes it more comfortable for workers to embrace a new process.”
Royston emphasises the need for a strategic combination of labour and various automation solutions, dispelling notions of full autonomy in warehouse operations.
The integration of ‘barcode and sensor-based technologies, coupled with mobile computing apparatuses’, plays a crucial role in augmenting labour resources. These technologies support businesses in boosting productivity, retraining workers, and enticing them to stay within the organisation.
“A shift on a warehouse floor can be brutal, physical work,” he says. “Wearable technology emerges as a game-changer in enhancing flexibility and efficiency within warehouse operations. It frees up the hands of operators, enabling them to execute tasks on the spot with the highest level of productivity. Not only is this resulting in financial gains, but it’s taking care of workforces who engage in monotonous, frankly sometimes exhausting manual labour.”
By minimising unnecessary tasks such as excessive walking, bending, and reaching, wearable tech helps workers concentrate on more value-adding functions, which creates a sense of team and job satisfaction.
Software as the Backbone for Automation
Much like automation, warehouse management systems (WMS) are fast evolving. According to Raghav Sibal, there is a common misconception that a large kit of automation can fulfill all warehouse requirements. Instead, more sophistication is required to bring out the benefits of automation, especially in warehouses with a combination of human and machine labour. Raghav notes that Warehouse Execution Systems (WES) have become crucial to be used as part of the WMS for warehouses with diverse automation pieces and control systems. More warehouse automation – often from different vendors which provide distinct control systems – brings its own complications and has only increased the requirement to bring different software systems into one.
The transition to Software as a Service (SaaS) and cloud-native applications is helping businesses reduce previously troublesome integration challenges and provide seamless data flow in real-time across applications.
“Integrated software from years past have been individual applications interfaced together with data and messages flowing back and forth. There are still multiple points of failure and information delays between applications with this approach. With this new technology stack available with native cloud technology, there is no need for integration, which gives a true unification between a warehouse solution and a labour solution,” he said.
"Cloud-native technology has really made unification possible in the supply chain."
Collaboration is Key
Collaboration within the supply chain industry can help to address the skills gap. By working collectively, the industry can influence authorities to increase skilled migrant visas and implement consistent skill sets and training standards. The current surge in re-skilling and re-tooling needs a unified approach to maintain a minimum training standard, so there’s consistency as professionals transition between businesses.
“There’s a difference between doing things quickly and doing things properly,” David says. “Collaboration can help avoid those hasty decisions which lead to bigger problems down the line, such as capital blowouts, delayed timelines or the souring of relationships.”
Royston Phua also sees huge value in collaboration, considering the gravity of catalytic events such as the COVID pandemic, geopolitical tensions, and climate events.
“Slowly but surely, more collaboration will happen,” he says. “It must, because the world has changed. Businesses need to move away from siloed operations – which is admittedly a huge challenge – to find ways to collaborate within their supply chains.”
