While over three quarters of respondents indicated they are contending with notable labor shortages, 37% cited their resource constraints (e.g., drivers and warehouse workers) as high to extreme (see Figure 1). Only 5% said they were facing no shortages and just 19% characterized shortages in their organizations as little. For respondents in C-level positions, the high to extreme shortage number climbed to 46%. Even in organizations where respondents indicated they had better-than-average employee turnover, the high to extreme number rose to 44%.
Given supply chain and logistics operations are resource-intensive, it’s not surprising that workforce shortages in this area can undermine customer service performance. According to the study, 30% of respondents indicated customer service was very to extremely impacted by resource constraints while only 12% said it was not affected in any way. For companies where respondents indicated they had industry-leading business performance, the very to extremely impacted number rose to 49%. Equally insightful was the effect of management’s view of the importance of supply chain and logistics operations: when supply chain and logistics is seen as a necessary evil, customer service is significantly more impacted (51%) by labor shortages compared to when it is seen as a competitive weapon (29%).
While all facets of supply chain and logistics operations are competing for resources, how acute the issue is varies by function. Labor-intensive transportation operations (61%) and warehouse operations (56%) were the areas noted as suffering the most from resource shortages (see Figure 2). For respondents with worse-than-average employee turnover in their transportation operations, the number increased to 65%. For those with better-than-average employee turnover, the figure decreased to 57%.
In addition, many organizations rely heavily on logistics partners to execute resource-intensive warehouse and transportation operations. According to the survey, only 9% of respondents indicated that their logistics partners’ performance was not impacted by workforce shortages whereas 36% said it was very to extremely impacted.
Today’s high-performing supply chain and logistics operations are rich in data generated by real-time GPS-based mobile applications and advanced logistics and analytics solutions. As a result, they now require a growing number of knowledge workers in addition to a full complement of laborers. According to the survey, 55% of respondents indicated that positions for knowledge workers (e.g., planners and analysts) were the hardest to fill (see Figure 3), closely followed by 54% who said positions for managers were the most difficult. Almost one-third (32%) said replacing warehouse workers was not hard, compared to only 13% for knowledge workers. Interestingly, 26% of competitive weapon respondents characterized filling manager positions as very to extremely hard while 40% of necessary evil respondents did.
Supply chain and logistics success is driven by the quantity and quality of the workforce. Supply chain and logistics leaders need to rethink strategies for hiring and retaining workers and for using technology to help mitigate current and future labor shortages. How is your organization addressing the workforce challenge? Let me know.
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