Global economic changes and rising consumer demands are creating a shortage in supply chain talent from the warehouse to drivers to the executive suite. Moreover, from demographic forces to skills gaps to fierce competition, finding and hiring good transportation and supply chain employees has never been harder.
Ryder Systems, Inc.
With lower unemployment levels across most industries and government subsidies such as that given during the coronavirus pandemic, finding, hiring, and retaining qualified workers is a growing challenge for many businesses. In some industries, the worker shortage is on the cusp of becoming a crisis with the logistics and transportation industry being particularly hit hard. It’s become increasingly difficult to fill driver and service technician positions in the transportation sector, and experts predict the talent shortage in supply chain logistics is only going to get worse.
According to a recent study by the Global Supply Chain Institute at the University of Tennessee, executives recognize the warning signs as 91 percent of CEOs identify a need to change their strategy for attracting and recruiting talent, although 61 percent claim they have not taken the first step to do so.
In this report, you’ll learn key challenges companies are facing with talent management; strategies for recruiting, training, and retaining a strong driver and warehouse workforce; and the role technology plays with a productive workforce.
Talent Demand versus Supply
The key to developing a best-in-class talent management plan is to understand the challenges the supply chain industry is facing. According to the US Bureau of Labor Statistics, it is estimated that the industry needs to fill about 1.5 million jobs through 2022. However, demand for supply chain talent outpaces supply six to one. While universities offer undergraduate and master’s programs to fill the void, keeping up with the demands of the industry are tough.
For example, the U.S. is graduating about 10,000 industrial engineers a year, while there are, conservatively, 13,000 to 14,000 openings for industrial engineers right now across the country. The industry is facing 2.1 percent unemployment for those with a bachelor’s degree or better, so it’s an extraordinarily tight job market. Additionally, the supply chain sector is competing for the same pool of talent with many other industries, such as automotive and aerospace.
On the truck driver side, there is currently a shortage of about 60,000 truck drivers in the U.S., and that number is expected to almost triple over the next eight years, according to a report by the chief economist of the American Trucking Associations. The Bureau of Labor Statistics (BLS) projects average annual demand of 28,300 new diesel technicians a year through 2022, but only about a third of that number are joining the industry, according to a TechForce Foundation report.
Hiring the Perfect Employee
Supply chain companies must do their part in attracting a stronger, skilled workforce to the industry. Gartner, a leading research company, has identified a strategy to attract and retain new talent to the supply chain. This strategy includes starting the workforce pipeline earlier by offering internships to build experience, creating a culture to mentor workers, implementing career development plans, and giving access to cross-functional programs.
Employee retention has exacerbated the talent issue for some companies more than others because of high employee turnover. As some organizations have a low or flat turnover rate, others are experiencing high turnover. During exit interviews with these employees, companies have discovered the departure is not always tied to pay. The Gartner strategy found, according to one executive conducting exit interviews, “long and inconsistent hours frustrate workers.” A second collective issue is “many employees don’t want the pressure of incentives versus a fixed wage.” The third top theme centers on training and management. Often workers have said their expectations for the job don’t always match the job description, training is not streamlined, and supervisors need to be better equipped to handle daily disruptions.
While not universal across all businesses, night shifts have the highest turnover. For some companies, it represents as much as 80% of their total turnover. Best practices to lower the night shift turnover rate should begin during recruitment. Managers should look for prospects who have previous night shift experience and stayed in those positions for over one year. After hiring night workers, managers need to give them support as they typically have little interaction with other managers and supervisors.
Managers should make time to interact with their night crew to evaluate performance and show they have their best interests in mind. Another good way to acknowledge and retain night shift employees is through various incentives. Management can provide a “shift premium” to night workers. This is an incremental increase in wage or salary to compensate for the inconvenience of working at night.
Automation’s Role in Talent Management
As supply chains become more sophisticated and digitalized, the roles of workers are changing as well. As new technology platforms and automation emerge, workers are focusing on other areas of value, which play key roles in talent retention and efficiency. As warehouses are implementing more robotics, scanners, and tools, and employees take on new roles worker satisfaction levels are increasing and they feel more valued. As a result, machines and human labor work together faster, better, and safer, which in turn aides in employee retention.
Investments in new technology for labor management inside the warehouse is also critical. This technology provides performance metric visibility, labor management, and data automation within a warehouse, enabling stakeholders to build labor strategies that improve recruiting, training, and efficiency.
One new technology that has become prevalent during the coronavirus pandemic, is being found to have uses going into the future. The FastSensor Active Distance Alert & Monitoring, or ADAM, is being used across Ryder supply chains to monitor if employees are coming within a close proximity of each other. The sensors allow managers to see heat maps of employee locations which in turn show if and where workers are congregating – which can be for picking inventory or socializing. This information can be used to improve efficiencies whether it is moving high-touch inventory for easier access or redirecting employee flow.
Additionally, technology such as Ryder OpsBox™ - an analytics platform for labor management – provides floor visuals for employees, daily metrics, workforce planning, and customer visibility dashboards. Furthermore, OpsBox provides an automated, accurate platform that drives analytics and increases labor productivity more than 10%. As a result of these technologies, companies gain visibility into performance metrics down to the single employee level, performance analysis, and contractual key performance indicators. This can lead to double-digit labor productivity improvements, as well as increased employee engagement and improved retention.
Developing a Talent Strategy
In order to overcome the talent challenges, companies need to develop a best-in-class recruiting, training, and retaining strategy. Supply chain leaders have the skills and experience necessary to take ownership of talent by successfully developing strategies and making wise investments.
The key to the strategy is to think about talent as you think about supply chain management:
- Have a clear vision/strategy/plan for internships, hiring, and retention • Automate where it makes sense
- Ensure the continuity of talent including clear risk mitigation strategies for ensuring talent availability
- Make intelligent decisions on whether to recruit external talent or develop existing resources
- Make talent a priority
The skills required to be successful in a supply chain organization are diverse, complex, and broad. This combined with the current market situation where the demand for most of these skills exceeds the supply creates a huge business challenge.
However, by continuously improving your talent management strategy, you can maintain a strong pool of qualified recruits, streamline training, and lower turnover rates. The strategies highlighted in this report have been tested and proven over the years in complex, diverse, and global supply chains. They can be used to renew your supply chain talent strategy and systems to create the talent and culture that you need in a competitive global environment. Applying these learnings will help enable you to make supply chain talent a competitive advantage for your business.
