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Supply Chain Leadership is Ignoring Staffing Issues
Consumers are continuing to spend. The transportation and warehousing industry is not scaling up its labor force for the holidays.
I expect those two trends to continue. If so, supply chain leadership could be facing a logistics Nightmare before Christmas. Supply chain professionals certainly do not want peak season 2023 to resemble the classic Tim Burton movie.
Face it:
- Consumers are going to spend for the holidays.
- Warehouses, distribution and logistics centers still need workers.
- Holiday shopping seasons usually translate into holiday shipping delays.
Supply chain executives would do well not to ignore that trifecta. I have warned here and here (just two of several) that supply chain managers are ignoring labor. Meeting customers’ expectations will require better leadership.
Unstoppable Consumer Spending for Peak Season 2023
Despite high inflation and interest rates, U.S. consumers are showing no signs of slowing down their spending. Interestingly, consumers are not just spending on tangible goods. According to The Wall Street Journal, many are choosing experiences over material possessions.
They are taking trips. They are buying concert tickets. They are prioritizing enjoyment over homeownership and retirement savings. This trend suggests that the demand for goods and services will remain high during the holiday season.
Hiring Continues – Except in Transportation
What’s more, the latest jobs report indicates that the U.S. added 336,000 jobs. As The Washington Post reported, that number is significantly more than expected. This job growth, coupled with wage growth outpacing inflation, has kept consumer confidence strong.
- Of course, the devil, or the nightmare, is in the details. According to the U.S. Bureau of Labor Statistics, in September:
- Private education and health services increased employment 65,900.
- Government increased employment 73,000.
- Professional and business services increased employment 21,000.
- Leisure and hospitality increased employment 96,000.
Notice what’s not there? Transportation and warehousing, which only added 8,600 jobs from August 2023 to September 2023. And that follows two months of declining employment (-6,800 in July, -18,900 in August.)
Clearly, supply chain “experts” are not planning on a seasonal peak even equal to last year. They certainly are not ready for the increased sales I anticipate for the 2023 holidays.
Need more proof? Amazon, UPS, FedEx, the U.S. Postal Service, Target, DHL eCommerce, Radial and Geodis plan to hire hundreds of thousands of workers for peak 2023.
Luckily, there’s still time – if you go the flexible labor route. Flexible labor through companies like Task4Pros can augment your current staff or even operate entire warehouses.
Logistics Labor Woes Persist
The warehouse and transportation industry’s labor woes have been well-documented over the last few years. Despite the overall job growth, some sectors, including transportation and logistics, find it difficult to attract and retain workers.
This labor shortage will create bottlenecks in the supply chain, leading to delays and increased costs. As demand for goods increases during the holiday season, already strained supply chains may struggle to keep up.
This could lead to the aforementioned logistics nightmare before Christmas, with delayed deliveries and stockouts becoming increasingly common. Consumers do not like holiday shopping marred by empty shelves and late deliveries.
Lessons from ‘The Nightmare Before Christmas’
In “The Nightmare Before Christmas,” Pumpkin King Jack Skellington’s plans to take over Christmas result in chaos.
Similarly, if not addressed promptly, the current economic trends could lead to a chaotic holiday season. Shipping strategies, abundant warehouse space and spiffy technology won’t matter if you don’t have the labor.
Investing in workforce development and encouraging labor force participation has not worked in the transportation industry. New policies do not seem to attract workers, even when leadership is in a mood to hire full-timers.
Jack learns from his mistakes and works to set things right. Likewise, it’s crucial for businesses to address their labor issues. Business leaders need to examine flexible labor options that allow them to scale up or down as demand changes.
Flexible Labor Can Curb Holiday Shipping Delays
Task4Pros has a 100% fill rate and a turnover rate less than half the industry average. The company has rapidly expanded, providing flexible labor and even managing entire warehouse operations.
The W2 employees have workers compensation, background checks, drug testing and onsite supervision and training for all personnel. That training means the Pros hit the warehouse ready to work, not ready to be trained.
Many of these Pros aren’t looking for full-time work. Like your Uber, Instacart and DoorDash drivers, they prefer flexible hours. And some in the warehouse industry are starting to catch on, as Liz Young reports for The Wall Street Journal.
So while current economic indicators point toward a potential logistics nightmare before Christmas, you can mitigate these risks. After all, supply chain leaders want to serve our customers joy and celebration, not a nightmare before Christmas.
I would love to hear more about how your company is preparing for peak seaso
Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.