The pandemic could accelerate job automation – here’s how the change would impact cities, the labor force, and inequality

automation
According to the World Economic Forum, nearly 40% of US jobs are at risk for automation.

  • Hyejin Youn is an assistant professor of management and organizations at Northwestern University.
  • She says the pandemic may speed up job automation and widen gaps in wages, skills, and social capital.
  • This could lead to the downfall of many US cities, but Youn hopes it will instead spur innovation.
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For more than a year now, many of us have worked from home, pets on laps, children babbling just offscreen. The experience has been a revealing one. Some of us have learned to embrace the flexible hours, the five-step commute, and the relative dearth of pointless meetings; others have felt disengaged and burned out by the challenges of collaborating on Zoom.

But the pandemic has also exposed a more significant split in the labor market, one that has experts worried as they speculate on the long-term impacts of the crisis.

“What we now see very clearly is that some jobs can be done from home, and others simply cannot,” said Hyejin Youn, an assistant professor of management and organizations at the Kellogg School. “Distinguishing between these types of work can help us track inequities in the labor market across cities.”

So far, the trends are worrisome. Those who can log on from home have been largely unaffected, whereas those whose jobs require a physical presence have either been laid off or faced with the choice of protecting their health or guaranteeing their next paycheck. And as companies look to cut costs, more and more jobs are now under threat of automation, which Youn fears may widen the gap between cities that flourished pre-pandemic and those that were already struggling.

“There’s always the hope that a crisis like this will spur innovation,” Youn said, “and nobody knows precisely what the long-term outcomes will be. But the concern is that rather than shaking things up, the pandemic might simply reinforce the system we already have.”

From “optimization” to automation

One consequence of remote work is that companies might accelerate the pace of automation, in part because they’ve had a chance to monitor more workers online and assess which tasks – or entire jobs – a machine might do more quickly.

With nearly 40% of US jobs at risk of automation, according to the World Economic Forum, the performance data from 2020 might have significant implications. When an employee’s every click, step, or delivery stop is recorded in digital form, a company can learn to optimize that work – and perhaps codify human routines into processes that are better suited to machines.

Using digital information, companies can identify and optimize certain task routines by finding better ways of arranging the tasks within the routine, micromanaging human workers, and developing machines to take on the tasks.

“This is the uncomfortable truth,” Youn said. “Recording an employee’s work is preparing for the day when you replace them with a machine. And this will lead to further gaps in wages, skills, and social capital.”

And while there will still be some tasks that are not codifiable – especially ones that require tacit knowledge or empathy and hospitality – certain jobs are sure to be streamlined and passed on to less-skilled laborers or organized into routines that can be handled by machines.

“Technology has always increased inequity,” Youn said. “Now we just have the means to make it happen even faster.”

The impact on cities

If these trends do accelerate, the effect on America’s urban landscape could be devastating. Youn has previously studied the ways in which automation affects US cities unequally, and she worries that this disparity will only worsen as businesses adapt to post-pandemic life.

“Cities might segregate further,” she said. It’s likely that wealthy, productive hubs like Silicon Valley will return to something resembling business-as-usual, given how valuable in-person collaboration can be for the kinds of breakthroughs on which tech thrives. On the other hand, the outlook for a small or medium city might be even more bleak than in 2019.

The impact of this geographic rift is hard to measure, Youn said, but it likely doesn’t bode well for the effort to solve the nation’s social and political polarization.

“It might make the echo-chamber problem worse, with certain kinds of high-skilled workers hermetically sealed from everyone else,” she said. Mountain View might come to seem even further away from Baltimore. And the prospect of remote-work patterns extending beyond 2020 is threatening to exacerbate the winner-take-all economy.

“It’s a well-known phenomenon in economics that social mobility increases after certain kinds of crisis, like war,” Youn said. “But this crisis appears to be different. It’s pushing us in the opposite direction.”

Reactive innovation

One source of hope is that the pandemic might spur new innovation. It’s certainly been a time when people and businesses have had occasion to reconsider their purpose and goals.

But Youn said we should distinguish between two kinds of innovation. The first is endogenous innovation, or change that evolves from within a business, society, or ecosystem. The second is reactive – change in response to external events.

“The pandemic is clearly a major event that will force some kind of innovation,” she said. “But this doesn’t mean we will innovate in the direction we aspire to as a nation or society. It’s less endogenous, more reactive.”

And some of this reactive innovation – including the many creative ways companies learn to digitize jobs – might have negative long-term effects. In fact, the focus on maximizing efficiency may actually limit endogenous innovation: in particular, optimizing technologies to execute processes leaves little room to come up with the kinds of breakthrough ideas that reshape industries.

For companies that have the luxury of focusing past their immediate survival on long-term innovation, Youn advised bringing employees back to the office whenever feasible. Because in her view, the early work of endogenous innovation cannot be done remotely, at least not very well.

“When it comes to arriving at ideas that are not well defined, thinking far into the future, that’s tough over Zoom.”

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How the next generation of automation will drive warehouses of the future

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Melonee Wise, CEO of Fetch Robotics

COVID-19 has upended many businesses, but none more so than brick and mortar stores that rely on foot traffic. The combination of government-mandated shutdowns and consumer worry made these retailers’ sales tank in 2020, with almost 10,000 U.S. stores closing permanently. But consumers didn’t stop shopping – trapped at home, they took their buying online, which led to an e-commerce boom.

That boom has strained distribution and fulfillment centers, which every online order passes through before reaching a buyer’s doorstep. The pandemic exacerbated existing labor shortages in these warehouses; meanwhile, consumers expect online orders to arrive faster than ever, with two-day shipping the new standard. Warehouses are under tremendous pressure to do more with less.

These challenges won’t go away when the pandemic ends. In fact, IBM research shows that COVID accelerated the shift to e-commerce by 5 years. To keep up with this growth in e-commerce and to compete against the likes of Amazon, companies have begun viewing automation as more than a competitive advantage – it’s now a necessity. Warehouses must embrace new automation technologies like robotics and connected devices. Existing automation has already improved safety and efficiency, and warehouses that embrace the next generation – flexible solutions for monitoring and changing workflows on demand – will flourish. Here’s how automation has already addressed some of the biggest warehouse challenges and what’s next.

Warehouses are at a breaking point

The world has changed drastically in the last half century, but some warehouses haven’t. Many remain labor intensive, relying on workers to find a specific item in a sea of products and walk with it, sometimes miles, to the right processing station.

As the pandemic increased demands on warehouses, many companies struggled to hire staff to keep up while following COVID-19 regulations. Facing growing order volumes, these companies had to rely on staff to walk miles every day to pick products off shelves and keep operations running.

Among warehouses that have embraced automation, the pandemic proved all automation is not created equally. Many warehouses that have automation in place rely on fixed solutions such as conveyors and sortation systems, which can take 6-9 months to implement and are difficult to adjust to support new workflow needs. These fixed solutions were pushed to their limit in 2020, as facilities sought to meet new demands and make changes to their workflows on the fly.

Automation has made warehouses safer and faster

In response, some companies have begun automating specific workflows within their warehouses to reduce pressure on workers and increase productivity. COVID-19 accelerated this trend as facilities had to adopt social distancing rules and limit the number of workers in their facilities. In some of these facilities, employees now work side-by-side with mobile robots that quickly move goods across long distances, reducing physical strain on workers and speeding up production.

Automation also makes it easier for companies to operate warehouses in smaller facilities. As retail foot traffic dried up and online demand soared, some companies outfitted old retail stores that are closer to population centers as distribution centers. Using robots to power operations at all hours, they can fulfill and deliver orders faster.

How the next generation of automation will drive warehouses

Historically, a major sticking point in automation adoption is the time and cost of installation. Installing fixed automation systems requires facilities to cut operations in half for weeks. That obstacle is fading: new flexible automation solutions can be operational in a day. For example, warehouse workers can unbox a mobile robot, connect it to wifi and have it autonomously moving materials within hours.

In the case where there is a large investment in fixed automation that companies want to leverage, but still implement flexible automation like AMRs, cloud-based AMRs offer a way to bridge the gap between these two types of automation. For example, AMRs can autonomously move totes on and off a conveyor system by moving to the end of the conveyor, letting the cloud software know that it is next to the conveyor, and have the cloud software turn on the conveyor system and the rollers on top of the AMR to move a tote on or off the AMR. The same sort of integration can be used with other types of fixed automation.

Even after automation is installed, another challenge is that warehouse work effectively happens in a black box. Facility managers see what goes in and out, but not which aisles are congested or when a forklift moves too fast. Mobile robots with sensors can help by acting as “hall monitors,” showing managers the floor in real-time. Managers can spot inefficiencies and dangers, then create strategies to increase productivity and stop accidents before they happen.

As the shift from physical stores to e-commerce continues, warehouses will be more essential than ever to companies’ relationships with their customers and their bottom lines. With an ongoing labor shortage and heightened consumer demand, warehouses that embrace a new generation of flexible automation will be safer and more efficient.

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RightHand Robotics director of product management explains why automation is no longer a choice, it’s a necessity

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Artug Acar, director of product management at Right Hand Robotics

Throughout the pandemic, logistics has become the center of attention well beyond the e-commerce world. Consumers running out of hygiene supplies; shortages of food on the shelves at their local grocery stores; difficulties reserving a reasonable time slot for online food delivery – these have brought heightened visibility into logistics for consumers, industry professionals, and venture capitalists, alike. This global realization that effective logistics is now more critical than ever in society has made it apparent that meeting customer demand and managing growth requires improved efficiency in the supply chain. Automation is no longer a choice, it’s a necessity.

As companies look for ways to keep up with increased demand, a smart approach is to add automation into an existing system. At this time of digital transformation, companies look to cutting edge technologies that they can embed into their existing operations to provide short-term improvements. Unfortunately, incremental upgrades in the system for processes that were not designed for automation often cause unforeseen problems, subsequently leading to blaming the new technologies for these significant issues. Traditional hardware components and methods, however, rarely mesh well with new technologies. The key to solving this problem is stepping back and looking at the overall system as a whole to really gain the most out of these new high-tech products.

However, this concept is not new – visualizing automation in warehouses has been going on for around 30 years. What is new is the rate of innovation and the level of automation now available. Today, automation can impact the heart of your core business with new technologies that can automate picking, pack-outs, and even front-door delivery. It requires team effort to ensure that you can meet customer demands without disrupting your supply chain.

A brilliant example of team effort and the steps it takes to meet customer demands is in the 2019 movie, “Ford v Ferrari.” This film depicts the American automaker Ford putting together a winning formula consisting of a powerful driving machine, a skilled driver and a team that was fully in tune with the need for all parts to work seamlessly together in order to get the most out of the Ford GT40. To be victorious required synchronizing different variables — from the race car designer to the ownership team and talented pit crew; the right wheels and engine; to the driver who knew how to handle the track properly. All these came together to make the Ford GT40 program a success – a true team effort.

So, how does this apply in a warehouse? Ask yourself, “Who is my team now?” Your team is beyond your four walls. When we think about going through a digital transformation, these are the three most critical parties involved and scenarios that typically take place:

1) You and the warehouse/logistics division that are investing in the new technology and putting resources into it. You know that automation is about being lean, and you are prepared to implement process improvements such as Kaizen to get the most out of automation.

2) The companies that are developing breakthrough products. You must work hand-in-hand with your innovation partner to ensure that your needs are being included in their roadmap.

3) The integrators (sometimes the technology companies themselves) who are in charge of meeting your needs with the available solutions. When a core step is affected, the limitations of the technology may not allow your expectations to be met, and integrators are crucial for bridging the gap between what the technology can provide and what you need achieved.

At this point, integrators play a critical role. Working with older systems while adapting newer technologies is not an easy task. The result is that projects take longer, and both the customer and the technology provider go through multiple iterations. Each party shares responsibility in the success of these projects.

Take for example one of the most successful case studies of digital transformation ever seen from our previous generation: Kiva Systems. Kiva was created by Mick Mountz (now board member at RightHand Robotics) after he experienced the burden of fulfilling customer expectations by relying on legacy technology for a growing industry while working at Webvan. What Mick and the Kiva team did was not just integrate autonomous mobile robots (AMRs) into an existing solution, he also analyzed the problem and developed a solution that completely changed how logistics and warehousing industries were thinking about automation. AMRs have been around since the 1950s, but until Kiva introduced their solution to the market, they had never been used the way they are today.

Since then, the pace of digital transformation has accelerated dramatically. Computing power and the evolution of vision systems, along with advancements in machine learning, opened up all-new possibilities that were not conceivable a decade or so ago. Right now, the challenge is not about developing components to solve these problems. Today’s innovators must build a solution for a complete overhaul of the legacy systems, so that the industry can get the most out of these breakthrough technologies.

Major players in the industry are looking at this problem by taking a step back – just like Kiva did 20 years ago. Large ASRS (automated storage and retrieval systems) companies such as AutoStore and ASRS integrators such as Element Logic are considering the capabilities that are needed to utilize these newer technologies at full capacity. Additionally, automated piece-picking, which is what RightHand does, is a growing market that ASRS companies are looking into for additional support within their systems. As the warehouse landscape improves for these breakthrough technologies, integration will be faster and continuous.

Successful automation is defined by how well exceptions are handled, and that requires a complete solution rather than small fixes. For example, an exception could be dropping an item during transfer. With a well-thought-out product in place, the automated piece-picking system would be able to detect this issue and either resolve it automatically or notify the site operations team to assist. These types of systems would consist of a flexible, nimble gripper connected to a robot arm, enhanced with vision capabilities and enterprise-level artificial intelligence software, integrated and designed to detect and address such issues effectively. New innovations and upgrades in these systems are now more widely available thanks to rapid technology developments. With the right system in place, exceptions can be minimized and easily resolved, leading to higher overall equipment efficiency – a key metric for automation systems. 

At the macro level, companies that are undertaking digital transformation would benefit more by doing a complete overhaul with buy-in from every team member. For a successful transformation, vendors and integrators must align around continuous improvement processes, including KPIs and timelines. At the micro level, your choice of partner is as important as the solution they are providing.

Now more than ever, implementing automation in warehouses is critical for a business to sustain itself, keep up with increasing demand, and manage growth. For warehouse professionals who are contemplating how to automate their systems, remember to apply lean processes and make it a team sport – that is the recipe for success. 

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