ARC Advisory Group recently did a survey that yielded some interesting findings of the current labor situation in warehouses and distribution centers. For instance, 50% of all warehouse job openings have five or fewer applicants, which is up from 32% five years ago. Of that smaller pool of applicants, half have no prior experience. At the same time, the survey found that turnover is higher than ever before. Also, a healthy overall economy, and a low unemployment rate have exacerbated the situation creating an ongoing labor shortage in the industry.
To compensate, companies are investing more in automation. However, that’s not a panacea. In fact, over the next decade, there’s a projected 7% yearly growth in warehouse jobs. So there are more job openings, fewer applicants with less experience, and more turnover once an individual is hired. The balance of power has shifted from the employer to the employee.
Workers have leverage now. If they don’t like their work at one warehouse, they can easily find a job at another one. Therefore, companies need to change their approach to the labor force. Paying a higher wage is not enough. Consideration needs to be given to other enticements like signing bonuses, stay bonuses, paid time off, flexible shifts and incentive programs. Today, success is more than just about productivity; it’s also about engaging employees.
A greater need for greater efficiency
At the same time, there’s an urgent need for workers, market changes have put more pressure on DCs than ever before. The era of omnichannel has arrived. B2B companies are making smaller, more frequent shipments. B2C customers are buying across channels using a wide range of fulfillment options. They’ve also come to expect faster shipping that is either low cost or free. Complexity is up. Delivery windows are tighter. Moreover, the cost to fulfill keeps increasing. To compete, operations must be as efficient as possible.
Warehouse efficiency can be visualized as a pyramid with three levels. The base is formed by establishing repeatable processes, consistently performed by all workers in the distribution center. The second level is labor management, which measures how employees are performing the processes compared to other benchmarks and measurements. The third level is employee engagement, which allows supervisors to interact with workers to improve performance. The key to better productivity is access to data and technology solutions that enable supervisors to leverage it.
Bringing mobility to managers
Traditionally, managers were “chained to their desks” and isolated from their employees, inventory and the action taking place on the warehouse floor. This led to a lack of visibility into operations, a lack of responsiveness to issues and a separation between supervisors and workers.
Technology solutions that are mobile allow managers to go wherever they are needed. With access to critical applications via a tablet or handheld device, they can move throughout the DC to oversee labor, work, and inventory. They can react to problems, shift resources and move personnel to adapt to changes in order requirements.
Even more important, supervisors can use real-time data to engage workers truly. They can view performance information and offer praise and incentives, right on the spot. They can recognize if someone is underperforming, see their location and immediately offer advice for improvement or move him or her to a different task. The more a manager interacts with employees, the greater a connection is formed between them. This mutual trust and respect have a host of benefits, leading to a better work environment, higher productivity, higher motivation, greater job satisfaction, and better overall retention. Employee engagement is a win for workers, a win for supervisors and a win for companies. As the antidote to a constant churn of hiring, training, and replacement, it also can become a competitive advantage.
New ways to engage workers
Successful operations today are finding ways to encourage their workers to want to excel, want to contribute to organizational success, and want to go beyond standards and benchmarks. To achieve that requires the right technology and the right approach.
Devices built on the Android platform have opened up new possibilities for worker tools.
A more-powerful device, combined with an intuitive interface can present a range of data, including up-to-the-moment worker performance. Rather than hear about their performance from supervisors, employees get immediate feedback by seeing it in real time.
Another promising area of employee engagement is gamification, which is a design style that focuses on human motivation. Similar to smartphone game apps and fitness programs, the most-successful versions of employee engagement are gamified to give users positive reinforcement. As workers perform better they get affirmation for their efforts through things like digital badges and rewards. These can range from a ranking in the app to tangible items like gift cards, spot bonuses or a reserved parking spot. This model is structured for employees to become self-motivated. Rather than doing the minimum amount of work they need to avoid a negative consequence, they are driven to reach for higher goals.
New possibilities for employee engagement
The key to maximizing your workforce has to go beyond productivity. Today, the best operations are focusing on employee engagement programs that give workers a sense of accomplishment and empowerment, so they are self-driven to increase their performance. A modern technology platform and gamified tools feature user-friendly interfaces and real-time creating a new kind of work experience. Initiatives that engage and empower workers create a win-win scenario for employers and employees that are well worth the investment.
Peter Schnorbach is the Senior Director of Product Management for Manhattan Associates. Peter has responsibility for Labor-Management and Slotting Optimization.
Peter has been instrumental in pushing labor management to the forefront as a mainstream supply chain solution. Peter is a leading authority on warehouse employee engagement. Peter has published numerous articles, has been interviewed extensively and has been quoted in publications such as Information Week, Supply Chain Executive, DC Velocity and Modern Material Handling, among others.
He has spent 20 years managing industry leading supply chain product lines. Before joining Manhattan, he was the Vice President of Product Marketing at RedPrairie. Prior to that, Peter spent 12 years in logistics positions at United Defense, Alliant Techsystems and Honeywell.
Peter has a Law Degree from Mitchell Hamline Law School and a Bachelor of Arts Degree from the University of St. Thomas.