The Impact of automation on warehouse efficiency and profitability
By Rami Younes, General Manager, Swisslog Middle East
Warehouse operations form the backbone of modern supply chains, yet many businesses continue to rely on outdated, manual processes. Although these methods may seem cost-effective in the short term, the long-term impact can be significant. As global supply chains become more complex and customers expect faster, more accurate service, the failure to embrace automation quietly undermines a company’s competitiveness, efficiency, and profitability.
Automation not only reduces human error and speeds up operations but also enables real-time decision-making. Despite these benefits, many organisations hesitate to invest, often underestimating the hidden cost of inaction.
Why automation is more than a tech upgrade
Warehouse automation serves as a powerful catalyst for business growth by replacing manual tasks with intelligent systems that boost operational efficiency, reduce costs, and provide the flexibility needed to scale. For example, automated storage and retrieval systems (AS/RS) play a key role in minimising picking errors and increasing throughput, directly addressing some of the most labour-intensive and error-prone processes.
Beyond these improvements, automation offers real-time inventory visibility and data-driven decision-making, which enable more accurate demand forecasting and quicker responses to supply chain disruptions. Without these capabilities, companies risk falling behind more agile, digitally advanced competitors. Given that labour costs often exceed 50% of total warehouse expenses, with order picking alone accounting for up to 55% of those costs, automating core processes like picking and packing can significantly reduce overhead while improving both speed and accuracy.
Understanding the price of standing still
The cost of doing nothing is not always obvious, but it’s significant. Manual processes tend to be slower, less accurate, and more labour-intensive. This leads to higher overheads, longer fulfilment cycles, and reduced order accuracy, directly impacting margins and customer satisfaction.
Labour shortages compound the problem. In many markets, finding and retaining warehouse staff is becoming increasingly difficult, with annual turnover rates in warehousing reaching as high as 43%. Automation is not about replacing people, it’s about complementing them. By automating repetitive tasks, businesses can better utilise their workforce, reduce reliance on temporary staff, and ensure operational continuity during peak seasons. Moreover, 63% of organisations have already adopted technology to monitor and assess supply chain efficiency, underscoring the clear shift toward digital transformation.
The price of missed opportunities
Perhaps the greatest cost of inaction lies in missed opportunity. As competitors embrace automation to enhance speed, capacity, and responsiveness, companies that delay may struggle to keep up with rising customer expectations. They risk losing out on new business, especially in high-growth areas like e-commerce and omnichannel fulfillment, where speed and precision are essential. High-performing supply chains are already yielding tangible returns: according to Deloitte, 79% of these companies report above-average revenue growth within their industries.
Moreover, inefficient warehouse layouts and poor space utilisation often force companies to invest in new facilities prematurely. Automation technologies such as vertical storage or dynamic slotting can maximise existing space, deferring or eliminating the need for costly expansions.
A recent breakthrough in warehouse automation now allows for the simultaneous handling of dry, chilled, and frozen goods within a single AutoStore system. This tri-temperature capability, already operational in Europe, reduces delivery times, optimises footprint, and cuts energy costs, offering a glimpse into the future of smart warehousing. This trend is mirrored in the global logistics robot market, which is projected to exceed $12 billion by 2025, growing at a compound annual rate of 23.7%.
The bottom line: inaction has a price
When evaluating automation, it’s essential to look beyond initial capital costs. Consider the full picture, labour costs, error rates, fulfilment speed, customer satisfaction, and scalability. Every delayed order or mispicked item comes at a cost. Every inefficient process risks losing a customer. With over 60% of warehouses expected to adopt automation by 2026, companies that hesitate risk falling further behind.
The impact of inaction may not be immediate, but over time, shrinking margins, rising operational pressures, and customer churn will take their toll. By factoring in the true cost of doing nothing, decision-makers can build a more accurate ROI model and make smarter, future-focused investments. In an increasingly competitive landscape, the greatest risk isn’t change, it’s doing nothing.
