Tomorrow’s Supply Chain Today: Embracing Automation and Innovation
With booming e-commerce and critical labour shortages hitting Australian warehouses, automation is no longer optional. Supply Chain Insights explores the technological revolution reshaping warehousing and how businesses can prepare for the next decade.
In October 2024, a research report from Manhattan Associates on the ‘State of Warehouse Operations' found that 93% of Australian warehouse professionals are struggling with the issue of staff retention. Meanwhile, 98% of respondents globally believe their IT infrastructure is insufficient and requires urgent modernisation. The combination of these challenges poses a threat to retailers and logistics providers alike, as consumers continue demanding faster and more frequent deliveries.
Despite this technological demand, Pasquale Tomasiello, Vice President Sales Asia Pacific at Dematic, says he doesn’t expect a total ‘robot takeover’ to happen any time soon. Instead, he says the AI, automation and robotics rollout will continue under human supervision.
“AI and automation will eventually take over, but I think that's a long way off. There's going to be a layer of human interaction in every operation remaining for a long time – I think, ultimately, even beyond my lifetime,” Pasquale says. “There's going to be a supervisory layer of human management and control of an operation that will remain, but what that layer is doing will change dramatically.”
In 2025, warehouse managers are often on the floor fulfilling many responsibilities, including managing workers, quality assurance and inventory management. However, Pasquale believes the nature of their work will become much more technology focused in the coming years.
“The operation will be managed by AI and various pieces of software. So, people will be guiding that process, rather than managing it,” he says. “We advocate that the more automation you introduce into your warehouse, the more resilient and agile you can be to changes and disruptions in the market, variable labour challenges, and more responsive to customers and their increasing expectations.”
Max Reynolds, Director – Supply Chain at TMX Transform, agrees that automation implementation is a slow and steady surety over the mid- to long-term.
“Automation will continue to develop and roll out, particularly in non-value add tasks, such as the transfer of products from one process to the next,” he says. “There's huge opportunity to automate decision making, which when left to humans can be really time consuming.”
So, while human labour still has a place on the warehouse floor, the implementation of automated technology is a non-negotiable for logistics businesses.
Warehousing Game Changers to Watch
It can be easy to get caught up in supply chain buzzwords like ‘AI,’ ‘internet of things,’ or even ‘cobots.’ But there’s a reason they have all become so popular, as they enter the industry at pace.
As Pasquale and Max agree, they aren’t quite taking over, but any worthwhile warehouse should involve some level of automation. Whether it’s something basic like conveyors with automated sense and sort functionality, or fully autonomous mobile robots for picking single items, there is room for automation throughout the warehouse floor.
Royston Phua, Vertical Strategy Leader - APAC Supply Chain, Zebra Technologies, says there is an additional game changer making even bigger waves in supply chain innovation. Before a warehouse has been built and filled with such robots, it takes a good warehouse design to get started.
“Digital twins are one of the easier ways to simulate warehouse construction and operation. This allows the business to consider any potential discrepancies and fine tune the design ahead of breaking ground,” he says.
Royston adds that optimised warehouse design will become increasingly important in a strained labour market.
“Labour constraints will continue to be the primary challenge in warehousing. This is expanding because of the rise in omnichannel e-commerce strategy creating more demand for products at speed – more orders, more inventory, different product profiles, smaller picks, and faster frequencies. So, the tech that's involved must look at how the warehouse design accommodates for this growth, while requiring fewer staff,” he says.
Only 10 years ago, when concepts such as same-day delivery were only an ambition of retailers rather than the reality they are becoming today, warehouse operations didn’t need to be designed down to the second and centimetre. Of course, they aimed for perfection, but the days of two-week delivery schedules allowed for a greater margin of error. Today, Pasquale agrees that modelling for perfection has become imperative to a well-run warehouse.
“The use of AI for predictive modelling, diagnostics, and scenario analysis is going to be key to providing supervisors and operators with incredible visibility and incredible amounts of data,” he says. “Most importantly, it will offer them a level of operational predictability which we don't have today.”
Automation: Your Warehouse's Data Engine
The previous point raises another – how to manage all this data. Everybody wants to have accurate data and be able to track material movements within and beyond the warehouse. But as orders increase and new technology pervades the warehouse, how should traditional data analysts perceive these massive volumes of data and turn them into actionable insights for decision makers?
Dematic’s Pasquale says those traditional data analyst roles may cease to exist before long, as artificial intelligence digests immense inputs and makes split-second decisions without hesitation.
“Personally, I believe the role of data analysts will evolve and change significantly because AI will do it and produce a dashboard for managers to act upon,” he says. “I think where AI kicks in the most is the speed and the ability to analyse data and then turn that into predictable variables.”
Data can be used for a multitude of functions across the warehouse. It is used for inventory management, buyer profiles, shipment tracking, reverse logistics, warehouse design, cycle times, demand prediction, maintenance schedules, and even customer satisfaction ratings.
Further afield, Max suggests that increasing the interconnectivity of nodes within a supply chain will the biggest game changer over the medium term.
“For example, if I'm building an order for a specific delivery vehicle and I can get a notification that it's delayed in traffic, I'll deprioritise and switch focus to building an order for another vehicle that's closer and more likely to arrive on time,” he says.
“The biggest challenge to that approach is the quality of data and how different businesses currently store it. Even within a single business, we see different systems that are not well connected, so architecture within a business is vital. Once these internal systems are in place, we can then consider how they operate with their partners, and how they can achieve data fluidity across the entire supply chain.”
With such volumes of data, the need to store, manage and access it will continue to challenge the industry, while the benefits continue to stack up.
The Impact of Smart Warehousing Operations
The benefits of automation, robotics, AI, and more data in the warehouse include greater efficiency, fewer costs, and more accurate inventory management. Above all else, they allow modern warehouses to keep up with consumer demands.
It can be difficult for industry traditionalists to admit that such efficiency may not be achieved by humans alone. But just as the production line, the forklift, and the barcode have revolutionised the warehouse, these new technologies are the next instalment in a long history of transformation.
Royston says this move away from the risks of human error is for the best.
“Where AI is concerned, it continues to reduce human intervention where possible. This is beneficial for operators because we know that the warehousing labour pool is ageing,” he says.
“Machine learning algorithms enable the operators to understand how to leverage human and overall equipment resources. They find how to raise productivity by minimising exceptional processing and decision-making, and by giving expert guidance in all different parts of the warehouse operations.”
Of course, these are skills which humans have proven capable of, but it is the speed at which AI can do the same (at a fraction of the labour cost) which gives it the edge.
Costs are increasingly important to warehouse managers. As demand soars and economic pressures increase production costs, everyone is seeking any opportunity to continue operating efficiently.
Max says, “In good times, people have the opportunity to sit back and consider what the future looks like, but in the tougher economic times that we're seeing at the moment, people think, ‘I don't have time to think about the long term. How do I optimise and get costs down now?’”
“So it's far more about optimisation, and that can come in the form of smaller elements of technology and automation that can be rolled out quickly.”
Automation and Sustainability Benefits
The world of sustainable warehousing has truly boomed in the past decade, with greater awareness and desire to improve energy efficiency permeating the industry. Not only does a sustainable warehouse improve the company’s environmental impact, creating a new selling point to satisfy eco-consumer and regulators, but it reduces energy costs too.
The warehouse of the future has the potential to reduce its emissions in myriad ways.
Max is devoted to data: “Sustainability is another big driver for data connectivity. In a manual environment, it can be difficult to track environmental metrics. But with increased requirements to report on sustainability, a digitally connected supply chain gives you all the information you need to calculate your impact, track your progress, and report effectively.”
Royston returns to warehouse design: “The first step is generally replacing fossil fuels with renewable energy sources, but once that’s in place it’s important to then leverage productivity gains as a way of saving emissions. Every workflow will encompass some form of power utilisation, and the more efficient a warehouse’s workflow becomes, the less power is required.”
And Pasquale has Dematic putting sustainability at the heart of its product conception: “This involves using low-energy devices which turn off when they’re not in use. We then pair them with very intelligent software which manages the material flow of the goods so that we're not using any more energy than necessary.”
The Future Is Now
Historically, discussions of automation were a fantasy to be explored in decades’ time. Now, in 2025, these discussions are very real and very important. A warehouse without automation is becoming like a car without GPS, or mobile connectivity, or airbags. The argument for automation has become too great to ignore.
This technological shift extends beyond automation, to artificial intelligence. Royston sees AI as the next frontier.
“We see AI being pivotal and essential for the next three to five years and possibly more. We just need to see how the technology develops first. I would think that as time progresses, and with the various learnings that are accumulated by material handling operators and equipment operators, its application should continue to improve,” he says.
However, operators may not have the luxury of cautious implementation, as they navigate labour constraints and consumer demand.
Pasquale says he recognised a pattern of conversation occurring pre-pandemic where most customers sought to discuss automation as a cost-saving measure. However, the narrative has since shifted and the enquiries he receives are becoming more urgent.
“Post-pandemic, the conversation has completely changed to discussing business resilience and agility. Senior leaders are now telling me they need automation simply to run their business because they can't get enough labour to do it. So, automation is no longer just a question of optimisation, it’s about business continuity,” Pasquale concludes.
