In the last two years, industries across the world have severely changed due to COVID-19. In particular, the logistics industry had to quickly shift to support increased ecommerce ordering, supply chain backlogs, and address the labor shortage.
Compared to February 2020 (pre-pandemic), there are 72,000 more jobs in the warehousing industry alone. Even though the logistics industry currently has more than 490,000 open positions available, fewer workers are willing to accept them because of the physically demanding work, often outdated technology, pay, and lack of training. Below we describe some of the changes related to the warehouse industry that may affect your warehouse and how you can thrive in the new world environment.
Finding Qualified Warehouse Workers
It has been difficult for third-party logistics (3PL) warehouses to find qualified workers right now as a result of the pandemic, a competitive labor market, and rising compensation levels. In fact, 71% of businesses are finding it harder to hire workers compared to 5 years ago. There are many reasons why warehouse workers aren’t ready to return to work. Here are a some of the most common reasons:
- Workers are concerned about exposure to COVID-19. If your warehouse is not taking precautionary measures to prevent the spread of COVID-19, you are less likely to entice workers to come out of unemployment or make a job change.
- During the worldwide lockdowns, many people used that time to get online training to advance or even completely change their skillset, resulting in even fewer people willing to go back to their original jobs or industry.
- Up until recently, the workforce was receiving enough, or in some cases more, money from the government via stimulus checks and unemployment. Nearly 73% of 3PL warehouses indicated that labor costs increased in 2021. It’s simple: workers want to be paid more.
- The workforce is getting younger. Younger generations grew up on technology and are fluent in most software systems—or can easily become fluent almost immediately. Many warehouses use out-of-date technology. If you are using outdated tools, you are not aligning with your workforce or the workforce soon to come in. In fact, 51% of employers cite outdated technology as a barrier to operational success. Most young workers will take a new opportunity that aligns with their technological skillset, making it difficult for outdated warehouses to keep young workers.
With the worker availability rate at only 1.2 workers available per job opening in the US, suddenly your competition isn’t just other warehouses, but virtually every industry in addition to the distribution giants like Amazon who support ecommerce.
In-store shopping has decreased more than ever in the last 1.5 years due to consumers switching primarily to online shopping. The expansion of ecommerce has resulted in a huge increase of fulfillment and distribution centers, which drains the labor pool. Suddenly your employees are going to the big distribution kahunas where they know they will make good money, receive benefits and training, while also using updated warehouse technology that streamlines their work.
The number of people voluntarily leaving their jobs rose by 164,000 to 942,000 in June 2021. With the market being so competitive, jobs are plentiful, while the labor force is scarce. It’s becoming increasingly common for a new warehouse worker to start, and then leave within the first 90 days for a better opportunity that matches their financial expectations or technology skillset.
In interviews with more than a dozen current and former warehouse workers across the country, nearly all described being overwhelmed amid staff shortages. Updated technology and software can help alleviate some stress for workers. Without the right technology, manual processes can take a toll on warehouse workers and impact efficiency. You can have the best team in the world, but without the right supporting technology, you simply can’t provide the level of accuracy, efficiency, or scalability required by today’s rapidly growing ecommerce customers. When you invest in technology, you invest in your future ability to grow and meet customer demand.
Consider your compensation strategy. Offer higher wages to compete with the expanding fulfillment and distribution centers. Higher wages, better benefits, and efficient workflows can all contribute to hiring the best workers who will stick around and become permanent employees.
Warehouse workers know they are in high demand, so they are picky on which companies to work for. A company who takes care of their workers, while also making their jobs more efficient (via technology like a warehouse management system and training opportunities) is more likely to keep their workers happy and loyal. Showing your employees that they aren’t just a number naturally creates loyalty.
Invest in training or continuing education. A great way to show your employees they matter is to offer training programs, continuing education, or scholarships to your employees. If an employee wants to go to school for Supply Chain Management, or they want to get certifications to grow their career in the warehouse, offer them aid to show they are valued. This in turn will provide benefits to your organization in the form of improved quality of work and greater efficiency in the warehouse.
If you have any employees who are interested in furthering their education, encourage them to learn about the Extensiv Supply Chain Scholarship. This Scholarship gives aspiring logistics and supply chain professionals financial support during their educational journey, while also inspiring new ideas for the supply chain and warehousing industry.
Automate key processes. To help keep warehouses from bottlenecking, most warehouses are investing in automation and technology to fine-tune their processes and decrease reliance on the workforce when possible. Creating smoother, more accurate, and efficient warehouse processes can result in long-term profit and security for your company. Implement technology and automation to increase productivity and efficiency of the existing workforce in order to establish sustainable growth.
Creating Your Workforce Strategy for 2022
With the warehousing industry rapidly changing, warehouses need to quickly make changes to keep up. Modernizing technology, training programs, benefits, and pay can help warehouses not only stay afloat but also to thrive. Though change can be daunting, growing with the times offers opportunities for long-term survival and profitability.
To benchmark your 3PL warehouse’s labor costs and programs against your competition, download the Third-Party Logistics Benchmark Report.