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Five Ways to Tackle the Labor Shortage

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Five Ways to Tackle the Labor Shortage

March 8, 2022

Labor Shortage – 5 ways to tackle it

What’s a good definition for a Call to Action? This one works. “… an exhortation or stimulus to do something in order to achieve an aim or deal with a problem.”

The current labor challenges do not show any signs of abating any time soon. There is a likelihood that the problem will get worse. The data makes a compelling case for focus now:

  • There are 490k open positions in the warehouse and transportation industry (Forbes 10/12/21)
  • The demand for warehouse labor will grow an additional 7 percent this decade (Bureau of Labor Statistics, 9/12/21)
  • Wages for this sector have increased 7 percent year over year (Bureau of Labor Statistics, 1/12/22)
  • Turnover is always an issue and is getting worse
  • As the labor pool shrinks, employers are loosening hiring requirements

How’s that for a Call to Action?

The work culture and competitive pay are a foundation for attracting and retaining staff. The challenge we see today is that we do not have enough labor to fill these roles. In a large part, this is a supply problem. We know that when demand exceeds supply, costs increase, and, at the extreme, shortages occur. The question becomes how to reduce demand.

There are steps that you can take in your warehouse and distribution operations to reduce the time needed to process an order and lower the headcount required. That reduces demand and helps address the labor shortage. Depending on your environment, the following strategies are worth a look.

The Five Ways to Tackle the Labor Shortage

  1. If you do not have labor standards, put them in. Performance will increase when the team knows their goals. When this is done, estimate productivity to improve by 15 to 35 percent. The measures need to be accurate, understood, and visible.
  2. Consider a labor management system. That takes your labor standards to a new level. Depending on the maturity of your operations, there may be as much as a 30 percent productivity gain.
  3. Evaluate your inventory handling procedures. As much as 50% of a picker’s day is spent in travel time; there are considerable gains in reducing that wasted time. Slotting and replenishment logic can greatly impact travel time and waiting time for pickers.
  4. Add a warehouse management system or upgrade your current WMS. A WMS will improve the material handling in your operation adding visibility and control. Better material handling will reduce the labor requirements. A warehouse execution system can add additional benefits to a WMS.
  5. Consider physical changes and technology from warehouse redesign improving the flow to high-velocity picking areas or things like mezzanine, conveyor, pick-to-light, voice picking, goods-to-person technology, AGVs (autonomous guided vehicles), and robotics.

All of these are potential solutions to the labor shortage challenge. None is a silver bullet and they all need to be considered in the context of your operation. There is no lack of stories about companies that made a major investment for the best of intentions, without getting the desired result. Often, the process and the technology did not align. Occasionally, there is an unwillingness to alter processes to optimize their new investment.

Change Management

Additionally, the suggested operational changes above all have different impacts on the culture of an operation. If the team is concerned about the impact of these changes on their jobs, if they are confused on why these changes are being made, or if they don’t have faith in leadership to execute these changes the project will fail. Make sure you invest in a robust change management process. It is as critical as any other investment you may make.

The pandemic accelerated the already increasing consumer demand for fast home delivery. The traditional distribution center or warehouse would be shipping to other retailer warehouses or direct to store as a large part of their mix. The demand for direct home delivery increases the order volume, although for much smaller orders. That model requires more labor, which increases demand against a limited supply. Labor costs increase. Labor shortages evolve.

Is it time, or past time, to assess your warehousing operations with an independent advisor?

Look for one that is dedicated to helping you make the best investments to improve operational performance.

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Jeremy Hudson

Vice President of Client Services

Jeremy’s focus is on the products and services clients need to stay competitive. Open Sky Group’s mission is to deliver technology-enabled solutions that allow our customers to achieve more while having the flexibility to adapt to change. Jeremy lives the core values and mission by bringing the best experience possible to our clients. He is an essential member of implementation teams, working alongside clients, and encouraging them to use innovation and best practices instead of customizations for success.

Jason Yantiss

Vice President of Client Services

Jason provides leadership to a variety of teams focused on implementation and integration. With 27+ years of experience holding operational and technical management roles in transportation, billing, and warehousing across a vast array of industry verticals, Jason is adept at driving multiple complex projects, understanding customer needs at all levels of the operation and providing viable solutions. Jason’s resume of 150+ implementation projects include Warehouse, Labor, Transportation, Yard Management and multiple AR/AP Freight Pay and Customer Billing systems. 

Eric McPherson

Vice President of Client Services

Mac works to oversee implementation and integration projects. A former Marine officer and military police officer, he brings over 27 years of supply chain experience, including 11 years at Blue Yonder in both delivery and service sales. Mac is a dedicated, team-oriented professional with a background in business management, professional services, customer service, and supply chain technology. His specialties include sales support, supply chain execution systems, project management, fulfillment operations, distribution operations, and GSA contracts.

Shannon Caflisch

Senior Vice President of Sales and Marketing

Shannon is responsible for the strategy and management of all sales, business development, and marketing programs. With over 25 years of sales experience and 15 years focused in the supply chain space, Shannon focuses on building strong relationships with clients and partners and strives to deliver the right software solutions to help conquer supply chain challenges. Shannon believes in learning by listening to understand clients’ goals, struggles, and what is important to their business to build lasting, successful relationships.

Alan Prillaman

Senior Vice President of Client Services

As Senior VP of Client Services, Alan oversees all consulting services and account management at Open Sky Group. Possessing over 30 years of combined industry and consulting experience, Alan leverages his unique background in IT, logistics, quality management systems, manufacturing and distribution operations, and facility and strategic account management to provide clients with creative resolutions to complex challenges. His core philosophy and passion are to deliver tangible value for and establish long-term trusted partnerships with our clients.

Mike Noble

Senior Vice President of Technology

As Senior Vice President of Technology, Mike leads Open Sky Group’s Managed Services, Software Services, Infrastructure Services, and Information Technology teams bringing 35+ years of experience in Supply Chain Execution and Information Technology. Mike and his teams ensure we maintain the highest levels of customer service in a secure and reliable environment, constantly reviewing and evaluating new technologies, their appropriateness and applicability so we can safely and securely transact our own business – and help our clients accomplish the same.

Chad Kramlich

CEO

Joining Open Sky Group in 2015, Chad, served as Chief Revenue Officer for three years prior to his appointment to CEO in 2022. With over 25 years of experience delivering results for high-growth software and consulting organizations, Chad is leveraging his background in building efficient and effective implementation teams, establishing high-impact services operations, achieving revenue growth, and deepening executive-level client relations to help propel Open Sky Group into a very successful future.