What happens when you have limited optionality for fulfilling excess demand?
I think we’re going to find out as we move toward the Peak 2023 holiday shopping season. From my conversations with supply chain personnel all over the world, I’m hearing that the industry employs about 7,000 fewer warehouse workers than last year. My contacts are not getting approval to hire full-time personnel to handle the expected surge, mainly because of recessionary fears.
Despite all that talk – a recession has been around the corner since mid-2022, the Conference Board projects a 99% probability of recession in the next 12 months – most are predicting record sales for Peak 2023.
Insider Intelligence expects U.S. holiday retail sales to grow 4.5%, with retail spending totaling $1.328 trillion. eCommerce could take 19.6% of those sales, putting even more strain on your omnichannel transportation systems.
Beyond getting the goods to the store or the front door, many retailers are having trouble finding enough people to stock shelves, a problem that, like all supply chain issues, goes beyond U.S. borders. In fact, MeuChapa, a Brazilian subsidiary of flexible labor solution Task4Pros, is now moving the product from the DC to the retail store and to the shelf in that South American country.
Such flexible labor options are seeping into industry after industry, from Uber to Airbnb to fractional executives. Flexible labor is different from old-style temp labor – true flexible labor draws from a pool of workers who already know their job and arrive ready to work, not ready for training.
Flexible labor can help with the problems above and might be necessary in an era of increasing labor strife. Although it looks like deals have been reached to avert potential strikes at U.S. West Coast ports and between UPS and the Teamsters, some experts predict more large-scale actions in the future. In fact, Canadian dock workers and Yellow Freight did not reach deals until after employees walked out.
Either way, come October and November, everybody is going to be majorly short on hiring people. Now couple that with the fact that the logistics industry has a turnover rate of 49%, according to the International Warehouse Logistics Association, and you have the makings of a holiday disaster
I see 3 things the industry could do to help shore up their operations for Peak 2023:
- Start working now to secure flexible labor options before your operations get overwhelmed. Don’t call Thursday morning and expect to fill a 20-person shift Thursday night.
- Adopt family-friendly polices to maintain good relations with your current workforce and trim that drastic turnover rate. It’s easier to keep the good workers you have than to find, hire and train new ones.
- Conduct a transportation capacity analysis to discover gaps in your abilities and devise a transportation model that can adjust as needed. This could range from new transportation solutions to short-term warehouse leasing.
Start now unless you want your Peak 2023 operations drowning in waves of unmet orders, bottlenecked supply chains and overfilled warehouses.
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.
