Most UK supply chain leaders know automation saves money, but can’t prove exactly how much. That’s not just inefficient—it’s becoming dangerous as the UK faces a perfect storm of labour challenges that manual operations cannot weather:
- Only a quarter (23 per cent) of businesses expect to increase their headcount over the first few months of 2026. This is expected to be brief before another decline, predicts The Institute for Fiscal Studies.
- In late 2025, the UK saw the sharpest quarter-on-quarter decline, dropping eight percentage points—the steepest of all countries surveyed.
- Hiring and profitability remain constrained by persistent skills shortages, ageing staff pools, and rising employer costs resulting from: increased National Insurance, minimum wages, and other legislation.
With the labour market moving at an almost glacial pace, UK businesses can’t afford to rely on manual operations that spread labour even thinner than it already is. Furthermore, they cannot grow without the proper tools to see the problem.
Here’s the stark reality: manual picking and packing operations cost £3.50-£6.00 per unit fulfilled, whilst automated systems achieve £2.00-£4.00 per unit—a 25 to 50 per cent reduction in cost per unit. Yet the majority of UK warehouses still operate without the ability to track labour cost per unit with any precision, missing this massive profitability opportunity. That’s because their foundational WMS lacks real-time, centralised intelligence.
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The Demographic Time Bomb
A significant driver of the UK warehouse staffing crisis is demographics. The workforce is ageing rapidly, with fewer young people entering the field to replace retiring workers. Birth rates have declined significantly, meaning the pool of potential warehouse workers continues to shrink just as ecommerce demand continues growing.
Combined with the National Living Wage trajectory and post-Brexit immigration changes, the mathematics are simple: manual warehouse management operations are unsustainable, if not impossible. This is a fundamental shift that makes labour efficiency an existential issue for UK warehouse operations.
You Can’t Optimise What You Can’t Measure
This is the core problem facing UK supply chain leaders: without Supply Chain Intelligence (SCI) applications within your WMS to precisely measure labour costs per unit (CPU), you’re making critical business decisions based on guesswork. Just mispicked orders alone cause distribution centres in the UK to lose an average of £322,000 annually.
Manual Operations Reality:
- Pick rates average just 70-120 items per hour
- Order pickers spend 57 per cent of their time travelling and walking
- Labour represents 60 to 65 per cent of total fulfilment costs (£2.10-£3.90 per unit)
- Manual picking accuracy typically hovers just at or above 97 per cent, with each error costing £20-£60 to correct
Most warehouse operations can’t tell you where they stand on these benchmarks, can’t track the true labour cost of processing different types of orders, and can’t prove whether their operations are profitable compared to industry standards.
The Numbers That Make the Case for Automation
When you finally have the intelligence foundation to measure performance accurately, the case for automation becomes undeniable. Implementing automated warehouse systems like AutoStore—when properly supported by an intelligent WMS—can achieve:
- 40 to 50 per cent reduction in labour costs, attributed to minimised staff dependency
- 30 to 50 per cent lower operating costs overall, freeing up resources for growth-oriented priorities
- 50 per cent fewer staff members required, thanks to automation’s unmatched efficiency
- Up to 60 per cent less warehouse space required, as compact cube designs eliminate wasted real estate
What Automation with Intelligence Achieves:
- Pick rates increase to 200 to 300+ items per hour
- 50 per cent reduction in headcount requirements
- Labour costs drop to 30 to 35 per cent of total (£0.60-£1.40 per unit)
- Picking accuracy improves to 99.5 to 99.9 per cent
Most automation systems begin paying for themselves in just 12 to 24 months. For a warehouse processing one million orders annually, the difference between manual operations (£3.5M-£6.0M in total fulfilment costs) and automated systems (£2.0M-£4.0M) represents £1.5M-£2.0M in annual savings.
The Intelligence-First Approach: WMS as Your Foundation
Here’s what many UK warehouses miss: automation without intelligence is like building a house without a foundation. Successful UK warehouses are implementing SCI-enabled WMS that supports automation with measurement capabilities from day one.
This means having unified supply chain software that can:
- Track labour CPU in real-time
- Measure productivity gains with precision
- Calculate exact ROI on labour investments
- Identify which processes offer the highest return on labour optimisation
- Seamlessly integrate with best-in-breed automation providers like AutoStore
Your WMS, OMS, and forecasting systems all contribute to operational efficiency, but without a central intelligence layer that can measure and optimise performance, you’re still operating on assumptions rather than data. Winning in today’s market requires understanding that you must measure before you can optimise.
Beyond Labour Cost Savings: Strategic Advantages
The beauty of warehouse automation—when enabled by intelligent WMS—lies not just in what it saves, but in the strategic opportunities it creates:
Around-the-Clock Efficiency: Automated systems provide seamless 24/7 operation, ramping up throughput and ensuring order fulfilment continues day and night without overtime costs.
Guaranteed Accuracy: Errors in manual operations are costly—think customer returns and wasted inventory. Automated systems achieve 99.9 per cent picking accuracy and nearly 100 per cent shipment accuracy, eliminating these inefficiencies.
Strategic Workforce Deployment: Automation cuts traditional staffing headaches like recruitment, training, turnover, and absenteeism costs, allowing teams to redeploy employees into strategic, value-added roles.
Improved Workplace Safety: Automated systems take on repetitive, mundane, or hazardous tasks, whilst human workers focus on customer satisfaction, strategic planning, and other high-value initiatives.
Accelerating Implementation with the Right Platform
The difference between 18-month automation projects and 90-day measurable results often comes down to platform capabilities. Advanced supply chain software enabled by intelligence accelerates automation initiatives through:
- Intuitive interfaces that reduce learning curves
- Pre-built automation templates that eliminate starting from scratch
- Seamless integration capabilities that minimise disruption to existing operations
Find out how Deposco’s integrated, AI-based supply chain platform enables your automation initiatives with the full picture.
Scalability and flexibility become critical when targeting the performance improvements that separate manual operations from automated leaders. The platform must adapt to your specific industry requirements whilst providing the robust analytics that transform workforce performance data into actionable labour intelligence.
Real-World Results: WMS + Automation in Action
Real-world implementations demonstrate the power of this measurement-first approach:
The Hut Group (THG): After implementing AutoStore with proper WMS intelligence, THG achieved a 40 per cent reduction in variable labour costs with a two-year ROI, whilst processing capacity increased to 1.2 million units.
Kenco Group’s CPG Client: Generated £7 million in savings alongside 13,000 square feet of freed warehouse space, with substantial reduction in temporary labour reliance.
3PL Providers: A third-party logistics provider avoided the need for expensive site relocation by unlocking 400 per cent storage capacity via space-saving automation designs.
Companies implementing proper WMS intelligence typically see payback within 12 to 24 months when they can finally measure exactly where their money is going and optimise performance continuously.
Ready to Build Your Foundation?
Deposco partners with UK organisations investing in warehouse automation, providing the intelligent WMS foundation and integration with best-in-breed automation providers like AutoStore to maximise operational efficiency. Our SCI-enabled platform gives you the measurement capabilities you need from day one, ensuring your automation investment delivers measurable, sustainable results.