Logistics Labor: Solving the talent gap

The fast food restaurant across the street from your distribution center (DC) is giving away free iPhones to all new hires. The restaurant downtown just upped its weekly server pay to $5,000 to ensure adequate staffing for a busy holiday week. And, 40 hospitality companies held a one-day hiring fair where—along with entering a raffle for gas, hotel and restaurant gift cards—the first 100 people hired onsite received a $500 bonus.

These are just some of the creative incentives that businesses are using to draw new employees into the fold and also keep them there for as long as possible. Also competing for these workers are the world’s warehouses and DCs, both of which have gotten pretty busy over the last 12 months to 16 months. A 44% uptick in e-commerce orders for 2020 is driving some of the feeding frenzy in an environment that was already dealing with a labor shortage pre-COVID.

“There was a talent gap before the pandemic; so it wasn’t like this [labor market] occurred because of COVID-19,” says Abe Eshkenazi, CEO for the Association for Supply Chain Management (ASCM). Even pre-COVID, for example, a U.S. labor report indicated that there was one qualified candidate for every six supply chain job openings, primarily in the senior-level/career-oriented ranks.

“What we’re seeing now is that the gap occurs at every level within the supply chain,” says Eshkenazi, who is seeing a “significant talent gap” from entry level to mid-career to senior leadership, with the industry facing unique challenges as it tries to find individuals to fill open positions, qualify those individuals, and prepare them for successful careers in supply chain. “The pandemic only exacerbated the situation,” he adds, “that we were already challenged with prior to the disruption.”

An explosion in demand

From a macro perspective, Sara Gordon, The Adecco Group’s vice president and head of national accounts, says the U.S. labor market began feeling the latest impacts of government stimulus funds in mid-March (2021). At that point, eligible individuals received a one-time payout at the same time that the federal government added $300 to state unemployment benefits, depending on the individual’s eligibility.

“This created a significant impact that was different from that of the two previous stimulus distributions, and mainly because we’re also seeing an absolute explosion in demand,” says Gordon, citing a recent Wall Street Journal article that predicted gross domestic product (GDP) growth of about 7% this summer. “Consumers are spending money and their confidence is growing.” Combine these factors with a labor rate vs. labor force gap (read: people have left the workforce due to various factors), and the end result is a logistics sector that’s facing an unusually high number of constraints in its quest to fill open positions.

“There’s a McDonald’s across the street from one of our large warehouse customers that’s offering free iPhones for people to come in and interview,” says Gordon. “It’s just a different macroeconomic climate that we live in right now.”

Opening up the aperture on the labor pool

Right at a time when a “perfect storm” of factors are making it difficult to find, recruit, and retain warehouse labor, employee expectations and preferences are also morphing and evolving. According to Prudential’s most recent “Pulse of the American Worker Survey,” for example, 68% of American workers now prefer a job where they can work remotely and at the work site.

“Of workers who have been working remotely during the pandemic, 87% want to continue working remotely at least one day a week once the pandemic subsides,” Prudential reports. “One in three would not want to work for an employer that required them to be onsite full time.” This could create new roadblocks for warehouses and DCs as we emerge from COVID-19, and namely because many of the entry- and mid-level positions in these facilities do require an in-person presence.

To work through these issues, companies are not only stepping up their recruitment efforts, but they’re also positioning themselves as “employers of choice” to a broader swath of potential candidates. For example, they’re dipping into more diverse labor pools that may include (but aren’t limited to) military veterans, women and individuals with disabilities. They’re also infusing more automation into their workplaces not as a replacement for their valuable human labor, but to augment the efforts of those workers and relieve them of monotonous, repetitive tasks.

Combined with other initiatives, these efforts are helping logistics operations cast a wider net for new workers while also encouraging current staff to stay in place. “This is an opportunity for organizations to not only demonstrate their commitment to diversity and inclusion, but to also put more effort into recruitment and retention,” says Eshkenazi, who has seen the gender gap in logistics narrow in recent years, but adds that there’s still work to be done when it comes to promoting women and people of color into leadership positions.

“When we look at the supply chain talent pool by demographic, people of color—specifically women—are not compensated as highly as their male counterparts are for a variety of reasons,” Eshkenazi observes. “This is an area that the [industry] can really dig into because there are opportunities to hire individuals, but companies just need to open up their apertures on the talent pool, as opposed to what we’ve historically ‘looked at’ when hiring supply chain professionals.”

Stepping up to the plate

Across the supply chain sector, the associations, educational institutions and recruiting firms that support the sector are also stepping up to the plate to help fill the current labor gaps and prepare companies for the future. At ASCM, for example, Eshkenazi says the organization recently developed a procurement certificate and that it plans to introduce a warehousing and distribution certificate later this year.

“We want to help individuals get back onto the payroll and back on the job,” says Eshkenazi, who adds that the certificates were designed with the entry- or mid-level logistics employee in mind. The organization is also working with the government (via the CARES Act, for example) and several community colleges to find new ways to offer specialized training and job-specific skills, all in the name of boosting the current labor pool.

“There are a whole host of opportunities to get individuals back on the job,” says Eshkenazi, “while also supporting individuals who want to use our courses and content as stepping stones to much broader roles within supply chain.”

At The Adecco Group, Gordon is helping companies understand the value of becoming an employer of choice, and in creating strong employer brands, wage strategies, and engagement approaches centered both on attracting and retaining good candidates.

“At the moment, there are a lot more jobs out there than there are people who want to take those jobs,” Gordon points out. “Being an employer of choice and having the right employer brand are absolutely essential right now.”

With flexible scheduling being a must-have for so many employees right now, Gordon says warehouse managers should also be looking for ways to meet this demand while also covering their shifts. In some cases, this could be as simple as implementing a mobile app that employees can use to change their shifts around, request time off, or take their vacation on a do-it-yourself basis. Other companies are moving to four-day workweeks or allowing employees to work remotely on specific days, both of which help workers navigate the complexities of the “new normal” world (i.e., more childcare responsibilities, homeschooling, caring for sick family members, etc.).

“Not everyone can work the traditional 9 to 5 right now,” says Gordon. “By giving people the ability to plan their own schedules or pick alternative/flex schedules, companies can leverage a great opportunity to reengage with specific parts of the population that may have been disengaged due to COVID.”

Good planning pays off

With more automation making its way onto the warehouse and DC floor, the blend of technology and human labor has become more prominent over the last 12 months to 14 months as companies work to keep up with demand in a constrained labor environment.

Using labor management systems (LMS), gamification, and other tech-based approaches, companies are coming up with new ways to extract value from their workforces even as labor becomes more difficult to find and retain.

“We’re seeing a lot more interest in medium to long-term labor planning right now,” says Dwight Klappich, research vice president at Gartner, who still sees many companies doing their labor forecasts on Excel spreadsheets (i.e., here’s what we did in 2020 and here’s what we’ll need for 2021). In the current, fast-paced fulfillment environment, he says companies can use software to manage their most critical assets: their people.

“Organizations have spent tens of billions of dollars on demand planning applications, yet they forecast these critical assets with spreadsheets,” says Klappich. “That’s starting to change.” Also on the software front, warehouse management systems (WMS) and other solutions are becoming more user-friendly and adaptable. Also, the fusion of labor and automation is continuing as companies look for ways to operate more efficiently in a tight labor market.

“We’ve seen a significant increase in interest in robotics over the last 18 months, and it’s being driven in large part by labor constraints,” says Klappich, who sees gamification as yet another way to help improve employee retention and effectively navigate the labor shortage.

For example, some companies are running competitions and using mobile apps to track employee progress toward specific goals, all in the name of improving productivity and worker engagement.

Klappich says these and other initiatives are being driven by the need to minimize employee turnover and improve engagement. “As many companies continue to struggle with high turnover and high employee onboarding costs,” says Klappich, “the race is on to find new, innovative ways to attract new talent while also nurturing existing human resources.” •