Retail really seems to be humming along nicely.
Yet, lost in all the positive retail headlines is the engine that keeps the storefronts running -- distribution centers and the supply chain infrastructure responsible for product flow to stores and customers, no matter where they live.
The New Distribution Center
The entire fulfillment and distribution chain has seen radical changes in the wake of online retailers and next-day delivery.
How you get items in physical stores has been greatly altered by how you get stuff delivered to your doorstep.
It used to be that goods moved like this:
Product Created by Manufacturer ----> Product Sent to Distributor / Wholesaler / Retailer -------> Product Sent to Regional Warehouses and Distribution Centers --------> Product put on store shelves
In those much simpler times, product fulfillment and ordering maintained a highly-predictable and easily measured cadence. You could tell what time it was by the manner of orders being delivered and how pallets moved around a warehouse.
Bill Stark, a VP of engineering for United Stationers, one of the largest office supply distribution centers in the country explained how the workflow looked like, and how it’s changed in the last few years.
“In the past, we had seasonal peaks, like back-to-school or the start of the year when businesses have new budgets. You’d see a 25 percent bump for a few days or weeks, and then it would taper down to average,” Bill explained in an article by Supply Chain 247.
“It used to be that orders flowed in during the first shift, we picked them on the second shift, and we shipped them on the third shift for next-day delivery, “Bill recalls.
Orders were historically tracked based on these predictable lifts in business, but now the ‘gotta have it now’ internet ordering has changed the game. Now, unpredictable lifts come in when consumers get home from work and place orders, or key in products spontaneously from their mobile devices. A huge component of distribution center orders is stuff that is submitted for next-day UPS delivery.
Today, product movement is much more dynamic and variable because of the pressure put on retailers by the demands of digital ordering and delivery.
Last year, The New York Times profiled the rise of the ‘new’ distribution centers.
Located in close proximity to cities once known for their industrial prowess, a new crop of distribution center has been popping up in places like Riverside, California and Jacksonville, Florida -- just a few of the hottest markets for DCs. Midwestern cities like St. Louis and Indianapolis are also seeing a resurgence in commercial activity for distribution centers -- partially because of their proximity to millions of consumers craving product delivery.
While Amazon has garnered their fair share of press around the future location of HQ2, they’ve also received a sizable amount of coverage around their distribution centers. There are dozens of articles about Amazon’s quest to build and staff fulfillment centers from Grand Rapids to Greensboro.
🚛Challenges of Distribution Centers
Just like any other sector dedicated on hourly labor, distribution centers are finding it challenging to recruit and retain workers. Low unemployment rates, a host of economic variables and changing workforce dynamics are forcing warehouse HR managers to up their game. Financial investment in employees in the form of hourly wages, while still pivotal in the hiring process, is just as important as the perks offered by employers and the environment employees work in.
Underscoring just how challenging this environment is: Amazon’s recent hiring binge. They had a goal of hiring 50,000 employees in a single day, but logged just around 20,000. That’s no small number, but it shows that today’s workforce may not be as stoked about the intense, manual labor required of these facilities. Also, worker dynamics are changing -- they are no longer as engaged as previous generations and financial challenges and family requirements are forcing them to be more creative and flexible with their hours.
Here are some other important factors that show the underlying impact of hiring on distribution and fulfillment centers:
🚀 E-commerce skyrockets. As traditional retailers like Target and Walmart join the digital retail arms race with Amazon, the need for employees to help move product in warehouses has also increased. As of June 2018, warehouse positions increased 4.3 percent -- a slight increase since March.
📈 Supply & Demand. Distribution facilities are massive endeavors, occupying large swaths of land and buildings that are measured in millions of square footage. Some of them require hiring hundreds, if not, thousands of workers. That’s a challenging feat to overcome when an employer is pulling from a limited pool of available workers in a tight labor market.
💰 Pay Matters. But, not as much as you’d think. Because price competition is so stiff, another distribution center nearby can offer even the slightest increase in wages to lure talent. According to Tom Landry, President of a staffing firm, “A guy who makes $10 an hour, you offer $10.25, he’s going to leave. That’s another tank of gas.”
✅ Bonuses & Perks. Labor inside a DC is challenging and the hours are long. As talent can easily be lured away, employers are getting much more creative with the perks they offer their staff including barbecues, shift flexibility, and even gas cards. Some DCs offer attendance payouts and bonuses structured on higher productivity or peak-season shift work. In the end, these perks weigh heavily on a company’s ability to have high retention.
😎 Atmosphere & Environment. Just as important as some of the perks is the type of environment offered to employees. Is a space located in the hot and humid Southeast properly ventilated or air-conditioned? Are employees treated fairly? Do they get paid breaks?
💪 Flexibility. In line with some of the shift flexibility, employers are starting to understand that their target employees enjoy work schedules that are not the traditional hours. Some warehouses are compressing workloads into packs of three days, totaling 36 hours. These types of shifts are appealing to college students, working parents, and even retired folks.
One of the biggest challenges faced by employers is acquiring talent. But, once they’ve done so, it is best for them to do anything they can to retain that corps. After all, long-term employees knowledgeable on processes become the most productive, and reduce friction caused by constantly retraining and onboarding new hires.
At the same time, this is why some companies are investing in automation, especially as demand increases from digital commerce. Automating processes and enabling employees with software, mobile devices, or tablets to help direct them around a facility is a way to keep headcount lower and an employee’s job manageable.
🍦How Branch Keeps Unilever Churning
If you buy an ice cream product at your local grocery store, there’s a good chance it has made rounds at a Unilever distribution center. Breyer’s, Ben & Jerry’s and Talenti are just a few of the brand names you’d recognize that are created, blended, packed, and shipped by Unilever -- the world’s largest ice cream company.
Today, they ship product to more than 40 countries. One of their distribution centers that packages ice cream is located in Sikeston, Missouri. We recently had the chance to speak with a number of employees there who’s job is to keep the plant, well, churning.
It takes a lot of people to coordinate a massive (and in some instances, very cold) plant for all the steps necessary to ship the treats to meet consumer demand. From handpickers to quality associates, we asked them how Branch has helped make their work life a bit easier.
For a number of hourly workers at the Sikeston facility, Branch has helped them easily see their schedules, communicate with colleagues and supervisors, and even handle unplanned personal scheduling needs.
Scheduling, once a paper-based process at Unilever, has now become a much more efficient process thanks to the employee self-service tools that Branch provides, including shift swapping, partial shift coverage, and secure employee messaging and engagement.
“We have team page lets you know what’s going on you can post any comments also you can see your shifts and hours worked love ❤️ it,” said Sheila Randle.
Another employee told us how having a schedule with them on their mobile device helps save time from going into the office to check.
“I got up one morning ready to go to work, so I decided to check my Branch, just to find out that I didn't have to com in for work. If I hadn't of check it , I will have went to work for nothing. Thanks to branch, said Angelo Nicholson.
For times when important plant updates or news needed to be communicated, Branch has been able to handle that at scale. In one instance, managers used Branch to deploy updates during unscheduled downtime.
“Line was down, and schedules wasn’t posting,” “Supervisors made a post to stick with regular scheduling.”
❗️Unpredictable Family Plans
When life interrupts work -- and that can happen any time, without warning, Branch has been a valuable tool to help employees immediately flag their managers and work with others to pick up those shifts, benefiting both the employee and the company at the same time.
“When I needed time off for my sick child, I just put my shift on branch and someone picked it up for me instead of me having to use a point,” Michelle Flye told us.
For another employee, a medical procedure was made a little bit easier because scheduling was mitigated by both Branch and a supervisor, quickly.
“I was having surgery in June and Liz the Supervisor came to the rescue cause all the other to get the day off before I had to have surgery cause they still had me on the schedule even though I had told them ahead of time and she had found someone the day before I had the surgery to work for me and I really appreciate her,” explained Shontasha Cranford.