– Supply Chain Insight –
Fishbone Friday: Warehouse Labor Shortage
Missed Distribution Budget
Welcome supply chain leaders, to the tenth edition of Fishbone Friday!
If you missed the last edition where we discussed possible root causes for a missed distribution center budget, you can find it here.
Let’s get into the topic of the week: a warehouse labor shortage.
As organizations continue to adjust to the new normal and strive toward pandemic recovery, many are struggling to attract and retain labor for their distribution operations. Attracting and retaining warehouse labor has always been an on-going challenge for companies, especially ones with seasonal demand curves and sporadic labor requirements; however, labor shortages have hit virtually every area of the supply chain and are being felt on the warehouse floor in a big way. When we talk about inventory shortages, a lot of the time it’s blamed on shipping delays and carrier costs, which certainly is true in a lot of cases, but part of the problem is a little closer to home than we like to think.
Everyone seems to be in a war for talent nowadays, originating from a combination of factors that include rising demand as consumers creep back to normal life, and normal spending habits, combined with a tightening labor pool pushing wage expectations and hiring incentives way up.
In fact, a CEO from one of the largest food distributors in the United States noted, as he addressed his shareholders in a recent conference call, that “Like many other companies, [they] have been incredibly challenged with hiring due to the labor shortage”. He commented that there had been a job fair in May with 500 jobs available, but only 4 candidates showed up.
Now, in such a competitive labor market, in addition to incentivizing potential new hires, it’s important to ensure you’re retaining your existing talent as much as possible.
In a recent New York Times article, when asked what companies can do to attract workers, Aaron Sojourner, labor economist and an associate professor at the Carlson School of Management at the University of Minnesota, commented that the first thing all organizations should do is “make the job better”. He went on to say that this includes “[Improving] wages, benefits, training, safety and respect”.
Furthermore, in an article published by Politico.com, Nick Bunker, director of research at the hiring website Indeed, commented that the “sectors leading the way in quitting are those where labor markets are already fairly tight or where hiring is ramping up: leisure and hospitality, transportation and warehousing, and retail trade”.
For the average distribution facility, this means failure to address the basics like offering competitive wages, improved safety, increase career growth opportunities, offering employment benefits such as heath insurance and performance incentives, to name a few, are not only creating a bad first impression for new hires, they’re costing you your existing talent.
In addition to the basics, something that I personally encountered first-hand over the past year while visiting various distribution sites is the value of a continuous improvement culture, not just in the organization as a whole, but in each distribution operation. A culture of continuous improvement might sound cliché, but there is a reason companies like Apple, Tesla, Google and Amazon are sought after employers. People generally want to be close to innovation and success, whether it’s in an office or on a warehouse floor.
Highly efficient and productive warehouses not only require less labor hours than their less productive counterparts, they make a much better first impression to new hires. Clear standard operating practices, leading-edge technology, optimization systems, and engaged and supportive management all have a huge impact on culture within a distribution operation.
So, with all that in mind, here is this week’s root-cause analysis for a warehouse labor shortage.
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Curious how can a fulfillment optimization system can help you not only refine and streamline your labor requirements, but create a safe, positive and productive working environment for your employees? Find out here