You’d be hard-pressed to find an industry where a well-oiled supply chain is more central to success than in warehousing. Whether it’s for e-commerce conglomerates, brick and mortar grocery stores or big box merchandisers, warehouses contain enormous volumes of goods of every which kind. Through a combination of automated technology, enterprise resource planning software, a well-defined mission statement and an actively engaged staff, a warehouse can put itself in a position to thrive and keep the supply chain moving.
But with an increasing number of warehouses missing some of these critical pieces, warehouses are struggling to put the supply chain puzzle — broken by the pandemic — back together.
One of the pieces that warehouses are missing is people, namely labor. When applicants are hired, it isn’t long before they’re on to another opportunity, or out of the industry entirely. Indeed, according to the Bureau of Labor Statistics, the turnover rate in 2017 for the warehousing sector was approximately 41%. It has since jumped to nearly 50% in 2021, which is down from just over 59% in 2020.
Numerous organizations are encountering the same challenge with labor, and as a result, are sweetening their compensation packages to encourage hires to stay aboard or to pick them over competitors. Abe Eshkenazi, CEO for the Association for Supply Chain Management, told Supply Chain Dive that it’s a game of one-upmanship for many employers.
“Competition for talent at the entry-level is significant right now,” Eshkenazi explained.
Because they’re effective, wage increases have been the fallback option for many employers, which include organizations such as Walmart and Amazon. Walmart, which is the world’s single largest employer, announced last year that it was raising wages for over 425,000 of its employees, including those who work in the supply chain. As The Wall Street Journal reported at the time, warehouse workers at Walmart earn an average of $20.37 an hour, substantially more than what the typical employee makes who works in store as a sales associate. Amazon, meanwhile, recently raised starting salary to $15 per hour.
But Eshkenazi says employers will have to go to greater lengths to be successful and get their turnover rates to a sustainable level.
“I’m not sure there’s one silver bullet,” he said. “You’ve got to give [workers] something more than just pay.”
Perception plaguing warehousing
Providing that “something more” workers want — but don’t think they have — may require changes of approach within the industry itself. Many believe that the sector lacks for opportunity, with little room for growth or ways to advance. Illustrating their point, consumer goods supplier Gopuff recently announced that instead of placing employees in alternative roles, it would lay off 10% of its global workforce due to the closure of several of its warehouses, Supply Chain Dive reported separately.
Susan Boylan, a senior director analyst for the market research firm Gartner, told Supply Chain Dive that warehouses must get ahead of the perception issue if they’re to be successful with hiring and retention. Key to that is showcasing the career path that is possible in this line of work and what makes the profession fulfilling and fun.
“They have very smart infrastructure that rely on a lot of technology, but the prevailing image is a dusty old warehouse,” Boylan said.