On the SCLA Think Tank February 6th session, top supply chain leaders joined thought leader Chris Jones (formerly with Descartes) for an in-depth look at what to expect in the labor market. The SCLA is the leading think tank in supply chain, and our executive members come together every other week to delve into the top challenges and explore actionable solutions.
Why This Study?
The pandemic exposed the critical vulnerabilities in our labor market, and while the economy remains robust, significant challenges persist:
- Extreme Workforce Shortages: There are still more job openings than available workers.
- Demographic Shifts: A declining population in the U.S. and many parts of the world is exacerbated by years of immigration policies that haven't evolved with business needs.
- People-Intensive Operations: Supply chain and logistics rely heavily on human capital, underscoring the need for leaders to pivot their strategies and tactics.
Key Findings from Three Comprehensive Studies
Drawing from two Descartes studies, How Bad Is the Supply Chain and Logistics Workforce Challenge? and What Are Companies Doing to Survive the Supply Chain and Logistics Workforce Challenge?, that were based upon a SAPIO Research survey of 1,000 supply chain executives across North America and Europe, along with corroborative insights from Lightcast’s The Rising Storm, A Demographic Drought Report, here’s what was uncovered:
The Workforce Challenge Is Real
- 37% of respondents report high labor shortages; 77% experience some level of shortage.
- 58% have seen customer service impacted by these shortages.
- The hardest roles to fill include:
- Knowledge Workers: 55%
- Managers: 54%
- Drivers: 47%
- Warehouse Workers: 40%
- 42% observed that workforce shortages negatively affected peak season performance.
- 61% noted that transportation operations have suffered the most.
Wage Impacts and Strategic Adjustments
- Wage Impact Today vs. Future: In 2024, 17% of organizations felt wages were very impacted, a figure expected to rise to 39% by 2029.
- Evolving Hiring Strategies:
- 47% have altered approaches for laborers (warehouse workers & drivers).
- 46% for knowledge workers (planners & analysts).
- 42% for managers.
- Retention Strategies:
- 49% for knowledge workers.
- 45% for laborers.
- 43% for managers.
Attracting and Retaining Talent
Organizations are implementing innovative tactics to both attract and retain talent:
- Attraction Tactics: Working time flexibility, adopt the latest technology and higher pay in that order of importance.
- Retention Tactics: Investing in on-the-job training, higher pay and working time flexibility in that order of importance.
The Technology Factor: Enhancing Productivity
As labor shortages intensify, technology offers critical solutions:
- For Labor-Intensive Operations:
- 70% are optimizing delivery routes.
- 67% are utilizing driver mobile productivity solutions.
- 65% and 62% are investing in warehouse soft and hard automation.
- Additional tech deployments include warehouse robotics (54%), driverless vehicles (39%), and drones (36%).
- For Knowledge Workers:
- 71% have adopted automated real-time shipment tracking.
- 69% are using back-office automation.
- 67% have integrated advanced analytics.
- 63% have implemented digital customer self-service solutions.
- 60% have upgraded to current generation TMS/WMS.
- 53% and 52% are exploring AI and robotic process automation, respectively.
What’s Changed Since the Study?
Even as the economy booms and unemployment hovers near record lows, several factors remain:
- Stable Workforce Participation: Levels are nearly back to pre-pandemic norms.
- Immigration Standstill: Programs like the H1B have stalled, with an anticipated reduction in the undocumented workforce.
- Reshoring Manufacturing: A push to bring back manufacturing is likely to increase demand for workers further.
Recommendations for Supply Chain Leaders
- Boost Workforce Productivity: Focus on optimizing efficiency for both laborers and knowledge workers.
- Become the Employer of Choice: Enhance workplace culture and benefits that meet employee expectations.
- Decouple Growth from Workforce Expansion: Scale operations strategically without proportional increases in headcount.
- Emphasize Retention: Prioritize retaining talent over constant recruitment.
This comprehensive study lays out a clear roadmap for navigating the current labor market challenges. As we adapt to these evolving conditions, leveraging both human and technological resources will be key to building resilient, future-focused supply chain operations.
How is your organization preparing for these challenges? Let’s continue the conversation.
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