4 Ways to Address the Warehouse Labor Shortage

Labor Shortages

Automation and new recruitment/retention strategies can help address the supply chain labor crunch.

There is an acute shortage of labor in the warehouse and logistics markets; but they are not alone.  There is a skilled labor shortage across the board in the service, repair, and manufacturing sectors as well. Additionally, the lack of truck drivers in the U.S. is contributing to a spike in shipping costs.

As we reported last year, the growth in the supply chain and manufacturing sectors has led to a 6:1 difference in the number of new positions created versus the available labor pool. This is made worse by a decline in labor force participation and an increase in retirements. A report from January found that 81.6% of companies employing warehouse workers use supplementary, temporary, or contract workers.

So what can warehouse operators do to address this gap, while still meeting their customers’ needs? A few strategies are emerging that can help the deficit now, while also laying the groundwork for a larger pool of skilled workers in the future.

Grow Your Own.
Many entry-level jobs in the warehouse have been eliminated by automation, contributing to the lack of experienced workers in the current labor pool. In response, some industries have launched their own internal training and certification programs, recruiting high school or college grads with a promise of a guaranteed position upon completion.

Most potential employees are looking for full-time jobs. The traditional cycle of mass hiring before the peak season followed by layoffs isn’t working in a tight labor market.  Internal development may also require creating different types of shift structures to attract younger employees, and find ways to keep them busy during non-peak periods.

Expand Your Labor Pool.
Recruit from otherwise untapped labor segments, like veterans. That will require some rebranding, outreach to local organizations and an evaluation of employment practices, like adjusting hours or flex-time policies so working parents can accommodate their children’s schedules. Companies like Patagonia even offer on-site child care for distribution center employees.

According to an ARC Advisory Group/DC Velocity study, many managers are also adjusting their standards, hiring employees with no prior warehouse experience or that have criminal records, and in some cases easing back on drug screening requirements. (The latter may become more common as states legalize medical or recreational marijuana use.)

Invest in Automation.
Forward thinking companies have turned to robotic picking and material handling systems, mobile computing, and other solutions to help their current employees be more productive.

In Japan, where the country is facing its worst labor shortage in 40 years, robotic solutions are rapidly emerging as a go-to strategy for supplementing the distribution center workforce.

Employees benefit from ergonomically designed goods-to-person pick stations and time spent engaging in productive activity rather than wandering down aisles, searching for items.  For example, with Perfect Pick, accuracy rates are dramatically higher as the system is designed for a minimum number of touch points. 

Instead of using a put wall to sort items for orders, you may consider an automated solution such as, Sure Sort, a robotic item sorter that easily handles complex variables and delivers a wide variety of parcels and single items to their final location in a single pass.

Improve Retention Strategies.
A recent survey by the Warehouse Education and Research Council (WERC) found that two-thirds of warehouse managers say people are the top priority in their companies. These companies invest more heavily in technology that augments human work (such as automated put walls) rather than things like drones and driverless vehicles.

There are many companies that strive to make work more pleasant and attractive for current and potential employees.  Regular breaks, bonus programs, employee discounts, free break room food, and air conditioning are often among the perks.

ARC Advisory Group recently conducted a survey to track which labor management strategies are the most popular with distribution center managers. Most managers struggle to keep employee turnover below 10%, but the study was able to glean a few essential best practices for attracting and retaining good warehouse employees.

Those include considering feedback from multiple sources (not just supervisors) for employee evaluations, training managers to effectively coach staff, developing objective performance measures, and creating continuous improvement initiatives.

With demand increasing, warehouses will need to invest in a mix of technology, training, and new recruitment strategies to ensure they meet their customers' needs. By following the plans above, warehouses can also invest in their future by creating a new, skilled labor force they can rely on for years to come.