Labor shortages in the supply chain industry are having a significant impact on logistics and transportation. While some predicted that the economy would improve post-pandemic, many organizations still struggle to find and retain labor.
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A Descartes study on the supply chain and logistics workforce found that 37% of organizations are experiencing high labor shortages, 61% have transportation disruptions from understaffing, and 58% said that shortages impacted customer service.
While other areas of the economy are rapidly recovering, supply chain labor is still in the red. This trend indicates that things can’t return to normal without drastic changes.
Logistics and transportation are challenging sectors to work in. With pressures like long hours, low pay, and labor-intensive work, organizations must start rethinking their workforce strategies to attract and retain labor.
A Closer Look at the Impact of Labor Shortages on Supply Chains
When there aren’t enough workers to get the job done, it seriously impacts business performance. According to the Descartes study, the areas that have been most impacted by the labor shortage include transportation operations (67%), warehouse operations (56%), transportation planning (51%), inventory and distribution planning (51%), customer service (42%), and demand planning (37%).
This market disruption translates into lost revenue, more supply chain delays, higher costs, and issues meeting the capacity shippers seek since there aren’t enough drivers. Of course, this also leads to dissatisfied customers when their products aren’t delivered on time, or they can’t access the products they need.
What’s Causing These Labor Shortages?
While the COVID-19 pandemic is viewed as a catalyst that triggered the labor shortage issue, the truth is that several underlying problems have already plagued the supply chain. The pandemic simply highlighted and exacerbated these issues, leading to a mass exodus of workers.
For starters, an aging workforce is a significant part of the problem. As baby boomers leave the industry, there aren’t enough younger workers coming in to replace them. According to the U.S. Bureau of Labor Statistics, the median age for warehousing, manufacturing, and transportation employees is 45 and older.
Another issue is changing priorities. Younger generations want different things from their jobs, including better pay, healthier work environments that prioritize their well-being, and more flexibility regarding remote work and time off.
There is also competition among other industries. According to the U.S. Chamber of Commerce, there are currently 8.1 million jobs available across various industries, but only 6.6 million people are seeking work. While this is good news for job seekers, it’s bad news for organizations trying to fill those open roles because there aren’t enough workers. Logistics and transportation have to compete with all those other industries, some of which may compensate workers more.
Effective Strategies to Address the Labor Shortage
All of these issues point to the need for more meaningful intervention. To compete with competition from other industries and attract younger generations to replace an aging workforce, organizations must be proactive in their recruitment and employee retention strategies and consider the changing priorities of today’s workforce.
1. Automation
If there is too much work and not enough people to do it, then you might want to consider automation. Automation can help alleviate labor shortages by streamlining workflows and digitizing processes. Automation shouldn’t be a long-term solution to replace human workers, but it can reduce the load for the workers you do have, so they focus their efforts where they can be more productive.
2. Employee Training
A key element in attracting and retaining talent is nurturing that talent. Workers today want to know that there is room for growth and that the company they are working for cares about their development. Companies trying to retain employees should provide these opportunities through training and certificate programs.
It’s also important to note that organizations need to focus on upskilling and reskilling as new technologies enter the playing field. This helps address knowledge gaps when introducing innovative strategies and software.
3. Internal Communication
Internal communication plays a crucial role in worker retention. Studies show that organizations that prioritize effective communication increase their employee retention rates by 4.5 times. Good internal communication makes workers feel seen, valued, heard, and better supported, making them more likely to commit to their work and the company.
Additionally, effective workplace communication can boost employee well-being. When communication in the workplace is good, it helps workers feel more connected, helps them develop better professionally, fosters innovation and leadership growth, and allows workers to better address their concerns and manage workplace stress.
4. Employee Value Proposition
According to McKinsey & Company, organizations that build attractive value propositions for their employees, such as offering better wages, find it easier to retain their workforce. While offering more competitive wages is a start, a major part of showing employees they are valued is rewarding and incentivizing them in other meaningful and impactful ways.
Your company can provide incentives like better benefits programs, more flexible time off, and simply having appreciative and hard-working managers. Engagement here is critical. The more workers feel engaged and valued by their employer, the more committed they will be to staying and helping the company achieve its goals.
5. Workforce Planning
Finally, a crucial aspect of addressing labor shortages in the supply chain is strategic workforce planning, which involves reviewing the skills and needs of a workforce on an ongoing basis. However, it’s not just about training and development; it’s also about how the recruitment process is handled and making sure workers are paired with tasks that are best suited to their skill sets, career goals, and working styles.
To accomplish this or build this kind of strategy, companies must start by performing a workforce gap analysis. Identify current workforce capabilities, skill gaps, and other issues (such as high turnover rates). You can then use that information to build an effective action plan for your organization.
Conclusion
While the labor shortage presents complex challenges, it is not unsolvable. It does, however, mean that companies might have to make drastic changes to attract and retain quality talent. This means bold interventions and acquiring executive support to implement the needed changes, but they are necessary to address the labor shortage effectively in the long run.
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