A dozen supply chain executives met over breakfast at this year’s Supply Chain Leadership Forum (SCLF) to share their views, experiences and current challenges. When asked, “What’s going on in your operations?” by Denny McKnight, moderator of the discussion and President of Tompkins International, a common theme quickly emerged from the group, which was, “how are you attracting and retaining top talent amidst the current labor shortage?”
While a topic of discussion over the last several years, eCommerce growth continues to fuel labor demand in logistics and distribution. As an example, with estimates of 2.4 million positions unfilled by 2028, the Korn Ferry Institute calculates that the labor shortage will cost U.S. businesses more than $73 billion in lost revenue by 2030.
In response to these growing labor issues, Gary Church, a Vice President with Tompkins International, asked the group what types of strategies they are employing to find–and keep–skilled workers.
Tom Marshall, Large Scale Project Manager of Supply Chain Technical Resources for Hallmark Cards, said that the greeting card giant—which processes more than a million units per day—is having to move employees out of manufacturing and into distribution to cope with labor issues in their distribution center.
Bo Evans, Continuous Improvement Supervisor for MTD Products, a worldwide leader in outdoor power equipment, has seen great potential in moving employees from one area of the distribution center (DC) to another based on capacity needs. By employing this method, Evans explains, “We’re finding that we’re creating Jedi Masters at our DC, they’ve learned the whole value stream of the entire facility.”
With the labor demand at an all-time high and eCommerce showing no signs of slowing down, workers have the upper hand in the employment relationship today. With new DCs opening up daily across the country, and wage increases not an option for many facilities already under pressure to cut costs, how can you create an attractive work environment?
Eric Cagle, an industry veteran with 30 years of experience leading logistics operations for major global organizations, believes that companies need to rethink antiquated policies and become more flexible when it comes to managing employees. “Once you establish yourself as a flexible employer, you not only bring in good workers, but also see better retention from being flexible,” Cagle said.
Ben Barras, President and COO of Indie Do Good, an online marketplace for entrepreneurs to sell their products and give back to charities, agrees with Cagle. “We have to challenge ourselves to rewrite the book around intake and young professionals,” said Barras. He also added that this can be challenging for leaders who have been practicing methodology for more than 30 years and are stuck in their old processes. “The generation they are trying to appeal to is radically different, so you need someone who specializes in communicating to these new generations,” Barras explains. “Younger people don’t mind working late but want longer lunch breaks to exercise or get sun. They bring a wealth of innovative thinking and aren’t purely driven by money like older professionals, and they just want to be appreciated. Retention skyrockets if you can give them those little things.” Barras also added that millennials frequently express their job satisfaction on social media via selfies of themselves picking products on the job, which serves as a free—and credible—extension of the company’s recruitment efforts.
Chris Wiest, Director of Supply Chain and Distribution for Peter Millar, the luxury apparel company, emphasizes the importance of appealing to this younger audience. “When we’re trying to grow a quality workforce, we’ve realized that if we leverage our brand to recruit people like millennials, who identify more with brand and culture, that creates a better environment,” said Wiest. When asked how Peter Millar accomplishes this, Wiest explained that one way is by giving employees immediate access to the product, including a handful of the brand’s luxury polo shirts—which they also wear as a uniform—as well as a product allowance and deeply discounted employee-only sales.
Karla Howard, Director of Supply Chain for Berkshire Blanket, has found success with a flexible model for part-time employees. “We offered staggered shifts so mothers could come in and work while kids were at school and it made a difference because they actually wanted to come work and were very productive while they were there, even if it was only 5-6 hours a day,” Howard said.
Cagle and Wiest have also found success with this approach. In addition to working moms, the companies have also appealed to university students looking to make a little extra cash, especially around the holidays. Cagle added that while there is a lot of turnover with this method, it is still successful due to the high amount of productivity achieved during the peak seasons.
Marshall, whose company also experiences extreme peak seasons, has utilized recruiting firms to attract quality employees. “We quickly learned that the firm could hire better than our 40-year-old HR department, and their onboarding process was much more efficient,” explains Marshall.
Jim Tompkins, Chairman and CEO of Tompkins International—and aptly dubbed “Dr. Optionality” by SCLF attendees—also advocated for recruiting firms that specialize in placing people with disabilities, as numerous studies have found that these employees bring a high level of skill, loyalty and dedication to the workplace, resulting in significantly higher productivity and retention rates.
The group also discussed the role of robotics, and how to strike the balance between human labor and automation. The consensus was that robotics can be an effective and affordable way to supplement human labor, especially during high demand, with Marshall reinforcing the fact that warehouses will always need good talent and robotics can never fully replace that.
In addition to navigating the labor crunch, entrepreneurs at smaller companies, like Katie Sterns, Founder of Share Local Love and You Betcha! Box, have additional barriers to entry. As a subscription and gift box company featuring artisan products by Minnesota makers, Sterns needed space to consolidate and pack materials, but—like many small startups—was having a hard time finding out how to do that affordably, with flexibility, without any startup capital. After packing products out of churches, which are exempt from licensing laws, Sterns banded with other local co-packers and is now working with a small 3PL. “We’re all too small to get into DCs individually, but if we can combine pallets and SKUs, we have the opportunity to leverage economies of scale, buying power and volume discounts that we wouldn’t get without collectivizing,” said Sterns.
To learn more about this and other challenging topics, and network with industry peers, be sure to join us at next year’s SCLF, May 4-6, 2020 in Pinehurst, N.C.