Warehouse Labor Shortage? How Better Layouts, Racking, and Material Handling Decisions Can Help

Warehouse labor problems used to be treated mostly as HR issues.

Can we hire enough people?

Can we keep them?

Can we train them fast enough?

Can we afford rising wages?

Those questions still matter. But today, they are only part of the problem.

For many warehouses, labor challenges are now exposing deeper issues inside the facility itself: poor layout, inefficient storage, long travel paths, congested aisles, outdated equipment, and material handling systems that require too many manual touches.

In other words, your labor problem may not only be a hiring problem.

It may also be a warehouse design problem.

A recent Peerless Research Group / Supply Chain 24/7 survey found that warehouse and supply chain leaders are dealing with difficulty attracting talent, labor shortages, technical and digital skills gaps, aging workforces, high turnover, and rising labor costs. The survey included 85 respondents, with a margin of error of +/- 9%, so the findings should be viewed as directional — but the pattern is clear: labor pressure is changing operational decisions across warehousing, manufacturing, logistics, and supply chain operations.

That shift has major implications for warehouse layouts, pallet racking, conveyor systems, pick modules, mezzanines, automation planning, used equipment decisions, and facility decommissioning.

If your team is struggling to do more with fewer people, the answer may not be simply “hire more.” It may be time to ask whether your warehouse is making labor harder than it needs to be.

The labor shortage is changing how warehouses are designed

The survey data shows just how widespread the labor challenge has become:

Difficulty attracting talent: 41%

Labor shortages: 36%

Technical and digital skills gaps: 35%

Aging workforce: 33%

High turnover rates: 30%

Rising labor costs: 25%

For warehouse operators, these issues show up in very practical ways.

Workers spend too much time walking.

Pickers lose time searching for inventory.

Forklift operators wait in congested aisles.

Product gets touched too many times before it ships.

Fast-moving SKUs are stored too far from shipping areas.

Older racking systems limit storage density.

Temporary labor struggles to learn complicated workflows.

Supervisors spend too much time solving layout problems instead of managing throughput.

When labor was easier to find, some of these inefficiencies were easier to tolerate. Companies could add people, add shifts, or rely more heavily on temporary labor.

That approach is becoming harder to sustain.

Today, the better question is:

How do we design the facility so the people we already have can work more efficiently, safely, and consistently?

Better warehouse layouts can reduce wasted labor

One of the most overlooked labor costs in a warehouse is unnecessary movement.

Every extra step, lift, reach, turn, search, and product touch adds up. A poor layout may not look expensive on paper, but it can quietly drain labor hours every day.

Common layout problems include:

Fast-moving products stored too far from pick or pack areas

Congested forklift aisles

Poor separation between inbound, storage, picking, staging, and outbound zones

Racking that does not match current SKU profiles

Underused vertical space

Manual movement that could be reduced with conveyor

Pick paths that force workers to double back

Storage areas that are hard for new or temporary workers to understand

Equipment layouts that slow down replenishment or shipping

When these issues exist, hiring more labor may only cover up the real problem. The facility is still inefficient. It just has more people working around the inefficiency.

A better warehouse layout can help reduce travel time, improve product flow, increase storage capacity, and make work easier to train and repeat.

That does not always mean a full facility redesign. Sometimes meaningful improvements come from re-slotting inventory, reconfiguring pallet rack, adding conveyor in the right place, installing a pick module, using vertical space better, or replacing outdated equipment with a better-fit new or used system.

Automation can help, but it should not be the first assumption

Many companies are looking at robotics and automation because of labor pressure. That makes sense.

The survey found that the most important factors companies consider when evaluating robotics are efficiency improvements, cost reduction, labor shortage solutions, scalability and flexibility, competitive advantage, and safety improvements.

Those are all valid reasons to explore automation.

But automation should not be treated as a magic fix.

If a warehouse has poor flow, congested aisles, bad slotting, outdated racking, or a layout that was never designed for automation, adding robotics may simply expose those problems faster.

Before investing in automation, warehouse leaders should ask:

Is our layout ready to support automation?

Are aisle widths, pick faces, and traffic patterns appropriate?

Can our current racking support the system we want?

Do we have the right conveyor handoff points?

Will automation reduce labor strain, or just move the bottleneck somewhere else?

Can we support the maintenance and technical skills required?

Can this system scale as the business changes?

The survey also found that technology adoption is changing workforce needs. Respondents said technology has shifted skill requirements for existing roles, increased the need for technical and digital roles, and, in some cases, reduced the need for frontline labor.

That matters because automation does not remove people from the equation. It changes the work people do.

A facility may need fewer repetitive manual touches, but it may need more multi-skilled workers, better maintenance support, stronger system knowledge, and clearer training processes.

The best automation projects start with the facility, the workflow, the labor reality, and the long-term operating plan — not just the technology.

Material handling decisions now have to account for training and usability

Labor shortages are not only about headcount. They are also about experience.

When turnover is high or temporary labor is part of the workforce mix, warehouse systems need to be easier to understand and easier to operate. Overly complicated layouts and inconsistent equipment setups create training problems.

A new employee should be able to understand the basic flow of the facility quickly:

Where does product come in?

Where is it stored?

How is it picked?

Where does it move next?

How does it leave the building?

What equipment is used at each stage?

If the warehouse layout is confusing, the training burden increases. Mistakes become more likely. Productivity suffers. Safety risks can rise.

This is where material handling design plays a major role.

The right racking system, conveyor layout, pick module, mezzanine, shelving, or material movement equipment can make daily work more intuitive. The wrong system can make every shift harder.

In labor-constrained environments, usability matters.

A system that technically increases storage density but slows down picking may not be the right choice. A cheaper racking configuration that creates congestion may cost more over time. A conveyor addition that reduces manual travel may pay for itself faster than expected if labor is the biggest constraint.

That is why material handling decisions should be evaluated not only by equipment cost, but by how they affect labor, training, safety, throughput, and future flexibility.

WMS and digital systems still depend on the physical warehouse

The survey found that Warehouse Management Systems were the most commonly cited critical technology among respondents, followed by customer integration platforms, AI-driven forecasting and planning, robotics and automation, and labor management systems.

This is another important point for warehouse leaders.

Software can improve visibility, planning, inventory accuracy, and task direction. But software cannot fully overcome a bad physical layout.

A WMS may tell a worker exactly where to go. But if that location is too far away, poorly labeled, blocked by congestion, or located in a storage system that does not match the pick profile, the worker still loses time.

Digital systems and physical systems have to support each other.

That means warehouse design should consider:

How inventory is slotted

How workers move through the facility

How forklifts, carts, conveyors, and automation interact

How picking and replenishment happen

How WMS logic maps to the actual building

How future automation may be added later

A warehouse that is physically designed around efficient movement will usually get more value from digital systems than one that forces software to compensate for poor flow.

Used equipment and phased upgrades can be a smart middle ground

Not every company is ready for a major automation project or a full warehouse redesign.

That does not mean they should do nothing.

In many cases, a phased material handling plan can help companies reduce labor strain, improve flow, and increase capacity without committing to a full rebuild all at once.

A phased plan may include:

Reconfiguring existing pallet rack

Adding used pallet racking where it makes sense

Installing conveyor in targeted zones

Adding a pick module

Expanding upward with a mezzanine

Improving storage density

Replacing outdated or damaged equipment

Creating safer and clearer traffic patterns

Removing equipment that no longer supports the operation

Selling or liquidating surplus material handling equipment

Used equipment can be especially valuable when companies need to move quickly, control costs, or solve a specific capacity issue without buying everything new.

However, used equipment needs to be evaluated carefully. Condition, compatibility, code requirements, safety, seismic considerations, and long-term fit all matter.

The cheapest equipment is not always the lowest-cost option if it creates installation problems, safety concerns, or future rework.

Decommissioning and relocation planning are part of the labor conversation too

Labor challenges also affect companies that are relocating, downsizing, closing facilities, or transitioning into new spaces.

A poorly planned decommissioning project can consume internal labor, slow down a move, damage equipment, reduce resale value, and create safety risks.

Warehouse leaders should think about:

What equipment should be reused?

What should be resold?

What should be recycled or scrapped?

What needs to be dismantled by experienced crews?

What equipment can be moved to the next facility?

What needs to be removed to meet lease or tenant exit requirements?

How can teardown happen with minimal disruption?

These decisions are not separate from the labor issue. They directly affect how much time, effort, and internal coordination a project requires.

When labor is already stretched thin, having a clear plan for dismantling, removal, resale, freight, installation, and cleanup becomes even more important.

Before you hire more labor, evaluate the warehouse

Hiring more people may be necessary. Increasing wages or improving retention may also be necessary.

But those actions should not happen in isolation.

Before assuming the only answer is more labor, warehouse leaders should evaluate whether the facility itself is creating unnecessary work.

Start with these questions:

Where are employees spending the most time walking, waiting, lifting, or searching?

Are fast-moving products stored in the right locations?

Are aisles congested or difficult to navigate?

Is the current racking system limiting throughput?

Is vertical space being used effectively?

Could conveyor reduce unnecessary manual movement?

Would a pick module improve flow and storage density?

Is outdated equipment slowing down the operation?

Would used equipment solve the issue faster or more affordably?

Is the facility ready for automation now, or should automation be planned for later?

What equipment could be reused, resold, removed, or replaced?

Can upgrades be phased to reduce disruption?

These questions help shift the conversation from “How many people do we need?” to “How can we make the operation work better?”

That is a more useful conversation.

The future of warehouse labor is tied to facility design

Labor challenges are not going away quickly.

The survey found that companies expect growth over the next 5 to 10 years in automation and robotics specialists, data analysts, supply chain planners, frontline warehouse labor, IT and cybersecurity roles, and drivers or transport operators.

That means the warehouse of the future will likely need both better technology and better physical design.

It will need people, but it will also need layouts, equipment, systems, and workflows that help those people perform at a higher level.

For some companies, that may mean automation.

For others, it may mean better racking, smarter storage, used equipment, conveyor, or a phased facility upgrade.

For companies relocating or closing facilities, it may mean a better plan for decommissioning, asset recovery, and equipment reuse.

The right answer depends on the operation.

But one thing is clear: labor challenges are now material handling challenges too.

If your warehouse is struggling with labor shortages, rising costs, turnover, or productivity issues, the next step is not always to add more people.

Sometimes the better first step is to look at the building, the layout, the equipment, and the flow of work.

Because the right warehouse design will not eliminate labor challenges entirely.

But it can make the people you have safer, faster, more productive, and better supported.

Let’s Talk

Need help evaluating your warehouse layout, racking, automation readiness, or material handling equipment? Conesco helps companies plan, source, install, reconfigure, dismantle, liquidate, and decommission warehouse systems nationwide. Request a consultation to talk through your facility goals.