E-commerce, automation hot topics at DLS panel on Warehousing and Labor Fulfillment

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CIFFA was a sponsor and exhibitor at the recent Distribution Logistics Summit which took place November 5 and 6 in Brampton, Ontario.

Julia Kuzeljevich, Public Affairs Manager, led a discussion on the topic of Labor: Fulfilling the Next Generation, which discussed how the warehousing, and the related labor market, are changing rapidly, including recruitment, retention, adaptability, and evolving skill sets.

Discussion also revolved around e-commerce pressures and automation.

The speakers were Paul Jan, a Managing Partner with Tevah Advisory, and a Supply Chain Strategy Instructor, UC Irvine, Ryan Susteras, Owner, ZiggyJobs, which aims to create an On-Demand Workforce for the supply chain industry, and Derek Lynch, Director, Sales, with Dematic.

The warehousing industry faces a near-constant shortage of workers and an aging population, with a third of the workforce over 65.

According to a 2019 U.S. study on statistics around warehouse trends, warehouses and DCs can experience up to 15% turnover, and nearly half of all new hourly warehouse workers abandon their jobs within the first three months.

Also, the direct cost of replacing a warehouse worker can reach as high as 25 percent of the resource’s annual salary. E-commerce is amplifying the effect with its more complex customer requirements.

According to 2019 US Supply Chain Warehouse Trends, the usage of paper-based systems decreased to 48%, labor management system use increased to 15% and the use of WMS increased to 93% for the first time.

In this climate, the productivity of warehouse workers becomes essential.

Automation is being adopted in many settings but it doesn’t necessarily mean elimination of jobs, but the potential for improvement.  Automation can play a role in taking away the undesirable and dangerous jobs, and improving/assisting picking accuracy.

Even taking into consideration situations where automation can be applied, peak season volumes often mean that human labor is always needed.

So there is some focus on making the warehousing industry appealing to a more “transient” workforce that is interested in temporary, seasonal and stop-gap employment, at least in the “lower end” positions.

Says Ryan Susteras, “We’ve been in a situation where there has been shortage of staff for a long time. Maybe focusing on retention is not the thing to do. We should start thinking about adapting to the flexible workforce,” he said. Companies need to know how to optimize in terms of their needs.

The idea of an “on-demand workforce” is one that has a pool of available labor that have been verified, and is more readily accessible via an online database vs. a time-consuming paper process.

“On-demand” is not as established for the Canadian supply chain, Susteras said, but has been more widely used in the U.S.

According to the panelists Canadian businesses are often late to follow some trends.

Paul Jan noted that Canadians take more of a wait and see attitude on results, for example automation.

“We want to see someone else try and test things before we take a chance. Canadians are generally late adopters,” said Susteras.

But there has still been a huge appetite for ramping up automation in the last five years, he added.

Early adoption of automation is in areas such as voice picking, and there is a smattering of vision-enabled technologies being tested in the warehouse environment, said Lynch.

“Automation can be as low-level as moving from paper-based to voice picking,” he said.

As you go up the chain of complexity of technologies, it’s toward mobile robots and other more sophisticated applications.

In the e-commerce warehouse environment, people are adapting to many of the technologies which are easy to grasp and can be especially enabling for the disabled or the aging workforce.

What makes for a successful implementation of automation?

“The company has to understand its business case, and giving employees the clear picture of what you want to achieve helps the implementation,” said Jan.

“If you decide to go down the automation path it will work best if you communicate to your staff why you have decided to make this decision,” Lynch said.

“Make sure that the right person is responsible for training, or you’re setting yourself up for disaster,” Susteras said.

The timing is good with regard to the new technologies in terms of attracting a younger workforce.

“These are the right people to figure it out,” said Susteras.

Jan said that with the younger generation, the technology is an appealing draw, but beyond that lies the opportunity for collaboration and interest in becoming supply chain leaders.

The “gamification in the industry” means that a lot of the technology is intuitive.

How do you train to that?

It’s about integrating different working styles.

“It’s about engagement more than anything,” said Lynch.

The metrics that can be built and the data that can be harnessed boils up to a persona that gives better insight into the overall network of the operation. And the transparency of productivity that can be measured can be a motivating factor for employees (albeit also a source of contention).

How do we reach out to potential new hires for warehousing?

The way to do this is to focus on the technology aspects which make the job attractive, and on the potential for a job that comes with a flexible work environment, for that population that is trying to get into a first job or add a part time job as a sideline to something else, said Susteras.

What will continue to need a human touch in warehousing?

In the context of automation, those boundaries are really changing daily, said Lynch.

The human touch is always needed to handle the “uglies”, i.e. items that could be seasonal and require specific handling, like canoes, and those sorts of things that will still rely on forklift drivers.

There is always going to be a segment of the volumes going through the DC that’s going to need a human interaction.

In grocery DCs, for example, with automated palletization, automation in freezers is a great result for “staffing” an area where fewer people want to work.