Why Workforce Productivity for Third Party Logistics and Wholesale Distribution Can’t Just be an Operational Issue Any Longer – Part 1 of 3
Workforce productivity can’t just be an operational issue any longer. This has been put on the backburner for too long. New practices have been proven by leading distribution and logistics providers that can reduce payroll costs by at least 5 percent, while increasing productivity and improving employee retention (source: JDA Value Engineering).
This 3-part blog series will take a deeper dive into the importance of warehouse workforce management for wholesale distribution and third party logistics (3PLs) and how to create and sustain a high-performance workforce culture. In part 1 of the series, we’re going to take a deeper dive into how having a flexible technology platform can help optimize workforce productivity. The right technology can make a big impact on simplifying processes, offering associates flexible schedules, engaging and connecting with associates and the ability to leverage accurate data and insights to drive a high-performance culture.
The Importance of Warehouse Workforce Management for 3PLs and Wholesale Distribution
Despite advancements in warehouse automation, robotics and the Internet of Things (IoT), the ultimate constraint and largest direct cost to your warehouse operation is still within your workforce. Due to the aging global population, coupled with historically low unemployment rates, workforce shortage is a big concern and one that doesn’t look to improve for some time. In fact, according to the Rainer Strack TED Talk, “The Workforce Crisis of 2030 – and how to start solving it now,” most of the top GDP countries will face a critical workforce shortage by 2030, including countries such as the United States, United Kingdom, Germany and Japan. The TED Talk highlights the following big workforce shortages: The United States will have a 4 percent “surplus,” which is down from 10 percent in 2020. Additionally, the following countries all face large workforce deficits: Canada (-11 percent), United Kingdom (-1 percent), Germany (-23 percent), Russia (-24 percent), Brazil (-33 percent) and Mexico (-8 percent). There’s a fierce competition for available skills around the world, yet a big workforce shortage.
Yet, logistics and distribution companies have continued to go through tremendous transformations that put even more pressure on the need to have a highly flexible and productive workforce. The shifts in manufacturing and retail business models, along with innovative advances in technology, increasing customer demands and other challenges associated with unified commerce (B2B and B2C), have created significant opportunities for both. The transformation is causing dramatic changes in demand across a very diverse customer base. Order profiles are resulting in much smaller, more frequent orders, thus requiring more touches, meaning more labor is needed in distribution centers and retail stores.
The challenge for logistics and distribution companies is figuring out how they can perform better with the workforce market conditions they face, especially with continued growth in unified commerce and slow growth in workforce availability. In fact, many logistics companies are underperforming their targeted workforce productivity goals by at least 5 percent (source: JDA Value Engineering).
And, as competition heats up among both local and national logistics companies, the need to hire well-qualified warehouse workers across the U.S. to fill existing and emerging jobs is likely to grow. To attract and retain the most qualified workers in the field on an ongoing basis, it’s critical for businesses to offer workers both competitive benefits and wages. In order to compete for today’s scarce labor, companies are forced to pay warehouse workers a very competitive hourly rate, offer incentive/pay for performance and provide more generous benefits, such as health insurance and retirement savings plans, as well as flexible scheduling and mobility.
Five Steps to Improving Workforce Optimization
Increasing productivity and performance is a continuous improvement process, which is why implementing the right technology is critical to success. The five steps below outline how your organization can optimize workforce productivity:
- Drive change and culture, led by the CEO: It all starts with the CEO clearly establishing and communicating goals and standards.
- Engage and connect with associates: Provide associates with education and visibility to performance standards and goals. Also engage associates by giving them flexibility to plan their work schedules to support their lifestyles demands.
- Turn supervisors into leaders: Drive continuous improvement and high-performance based on live performance data, insights and tools.
- Empower HR to create a great place to work: Give HR advanced visibility so they can effectively manage short-term and long-term labor needs, improve morale and attract the best talent.
- Leverage accurate data and insights to drive a high-performance culture: Sustain a high-performance culture with fair and competitive pay, incentives and clear, objective accountability.
The next two blogs of the series will take a deeper look into different existing opportunities, especially because in today’s environment, unified commerce has made it far more complex to perform replenishment tasks in the warehouse and how organizations can adapt to attract and retain highly qualified associates.
Why JDA’s Warehouse Workforce Planning and Performance Management is Critical for Optimizing Workforce Productivity for 3PLs and Wholesale Distribution
Using JDA Workforce Management solutions, you can optimize workforce productivity and create and sustain a high-performance workforce culture within the warehouse. JDA provides you with real-time visibility into labor performance before it becomes an issue. JDA’s workforce planning and performance management help solve additional problems in the market to better serve customers and provide a robust labor solution that delivers greater employee engagement, communication and retention. Contact JDA to learn more today.