Contingent Employment Strategies in Retail Warehouse and Distribution
In today’s world of retail both online and off, the warehouse and distribution center is king. In the past, retail stores served as the central point where merchandise was kept until it sold. Today, sophisticated distribution systems are able to quickly and efficiently dispatch items to retail environments or directly to consumers’ homes. In addition, greater emphasis on seasonal shopping has place a high value on the ability to quickly changeover merchandise for seasons, holidays, and special promotions. And, finally, just in time delivery and ecommerce have further put an emphasis on having products at the ready to be shipped when and where someone demands it.
The retail industry has put a fair amount of technology to bear on these challenges between software, tracking systems, and automation including robotics. Even drones have been bandied about as a possible solution. However the re power behind this new dynamic in warehousing and distribution is in people. Even as more automation has been introduced, many warehouse and distribution centers, from mom-and-pops to multinationals, depend on a flexible workforce to get the job done.
Temporary staffing plays an integral role in providing workers to warehousing and distribution operation through seasonal highs and lows and in meeting peak demand for products. Managing this human element is key to the success of this strategy. For example, Nesco Resource helps to manage this type of resource across the country which is a boom to many local economies as well as being an effective tool for growth for many brands. For example, in Columbus Ohio, a major center for this work, the temporary staffing market is seeing people employed full time as the needs shift between suppliers. The result is a workforce that is nearly fully employed with a base of employers who enjoy flexibility to shift on the fly personnel when and where they need them.
The New Seasonality Paradigm
The big ramp up of holiday shopping to Christmas has long been a staple of seasonal help in the retail world. Today, however, seasonality has spread to a wider range of targeted retail timeframes. For example, one of Nesco Resource’s clients services the sports apparel industry. Carrying logos for major teams on an array of hats, shirts, toys, housewares, etc. The seasonality of that client ebbs and flows not only with sporting events such as March Madness, but can also change according to the all too familiar unpredictable nature of team wins and losses. Depending on inventory, for example, Nesco Resource may receive a call for more workers because last night’s upset saw an increase in demand for merchandise that just wasn’t in stock previously.
In addition, there has been much more emphasis on seasonal shopping habits in marketing campaigns leading to a growth in sales around a wider range of holidays. Mother’s Day 2015, for example, saw Americans spending a record $21.2 billion in up from $10.4 billion in 2004. In the same period, American’s moved from $12.7 billion to $18.9 billion in spending for Valentine’s Day and Halloween moved from $5 billion to $7 billion. Even unofficial “holidays” like back to school season and spring break can see bumps in the highs and lows of seasonal shopping. All of those increases are great news for the retail industry. But they also present a challenge.
As warehouse, shipping, and fulfillment jobs become more seasonal, they are also becoming more demanding. A typical job in this sector just 10 years ago required little more than a strong back and work ethic. Today, workers need to be comfortable around automated systems and be trained in the basics of scanning equipment. Much of this tracking and automation is linked to a larger trend in Big Data. An article appearing in The Manufacturer on 2015 trends in warehousing touches on how Big Data will shape the future of this industry:
“This data includes the order information prior to the orders being fulfilled, so that alternate fulfilment decisions can be made throughout the day. Order history information is too required, so that the right consumers can be notified if there are any quality or recall issues; it can also be used to track consumer buying patterns.”
Employers work with staffing firms like Nesco in order to plan for these seasonal highs and lows, but also to ensure that workers posses the job qualifications and receive training to be able to handle the processes and equipment required to collect and use information. This has long been a practice in the manufacturing sector and the practice is moving into the increasingly demanding world of warehousing and fulfillment.
Just in Time Meets the Small Box Store
Along with seasonality is the trend in just in time delivery. In the past, inventory tended to be a guessing game rather than the technologically driven science that it has become today. Retailers like to know that they are shipping and carrying the exact amount of merchandise they need.
Many retailers, known for their big box stores that dominated the landscape for the past 20 years, have begun to introduce smaller stores. Target, for example, is introducing smaller express stores a trend covered recently in Fortune.com:
“Target, looking longer-term to build on its newfound but fragile sales momentum, said on Monday it plans to open a few more quick-service TargetExpress stores, typically 20,000 square-foot locations, this year. The company is looking to reach new, affluent customers who are moving to city centers and are loath to go shop at a big-box Target store in the suburbs even if they are partial to the brand.”
Target is not alone in this trend. Walmart, for example, plans to implement a similar strategy. This strategy, if it is to succeed, requires a more demanding just-in-time policy. The challenge is ensuring that Just-In-Time doesn’t become Not-Enough-In-Time. Such a tight tolerance can further be exacerbated by running low on labor in order to meet demand.
Temporary workers are increasingly becoming part of this growing trend. As Just-In-Time delivery leads to Just-In-Time Employment workers can move between centers rapidly applying the same skills for a different centers. This also speaks to a growing trend in regionalizing warehouses throughout the US. This helps retailers keep up with Just-In-Time delivery, but also is creating centers for employment at strategic locations across the country. The development of a workforce close to these centers ensures that the skill base is cultivated and used as demand increases.
E-commerce Large and Small
And speaking of just in time technology, ecommerce has significantly altered how the world shops and buys. What was once a few niche products has become a huge array of products available. In fact, a major trend in retail is for commodity products to be shipped online. As American’s move away from shopping in Big Box environments, they are pointing and clicking in order to buy the essentials like soap, toilet paper, and cleaning products.
In essence, Amazon.com, a onetime online book dealer, has grown into a competitor for Walmart. At the same time, the Walmarts of the world are becoming more Amazon.com like. Walmart, Costco, and Target, for example, all have significantly increased their online activities in recent years and the trend isn’t likely to abate. Forbes reported the Costco generated $3 billion from revenue in 2014 which represented a 19% increase in online sales over the previous year.
From an employment standpoint, E-commerce is often seen as a job-killer, taking away from the local economy. In fact, it has created an entirely new job opportunity in the shipping and fulfillment side. And these jobs exist in ecommerce in all sizes. Amazon and the Internet in general have opened up ecommerce to a whole array of small businesses selling very niche product directly to consumers. Relatively small manufacturers who may have supplied larger retailers in the past are now selling directly to the world.
Missouri Star Quilt Company which employs 180 people in Hamilton, MO, is a great example. The company, is a small family business that saw an explosion in Internet orders after a viral YouTube marketing campaign. Missouri Star is just one example of many a small companies finding success through ecommerce and employing a significant number of local people to fulfill orders.
These small manufacturers of everything from fashion items, machine parts, and more, are often faced with a labor problem they never had in the past. Some are working with fulfillment houses while others are handling the work in house.
While they face all of the challenges behind the ebbs and flows of holiday demand, seasonal demand, and just in time delivery, they often don’t have the base staff or capital to invest in interviewing, vetting, and training new employees.
Temporary staffing firms often work with a wide range of industries and have access to a pool of talent that is accustomed to working in many different industries. Workers who work in an automotive plant may have transferable skills to working in an automated warehouse for example. Working in an assembly plant gives workers experience with different products. The high demand for “pick and pack” jobs simply means finding temp workers that are detail oriented, comfortable with some levels of technology and automation, dependable and diligent. Because temp staffing firms are working with a pool of workers every day, they can be that link to a pool of talent for a company whether it’s an international retail giant or a mom and pop operation.
Looking Ahead
For many warehouse and logistic operations, the future of efficiency does not necessarily rely on technology. There is some research that shows that the average workforce within a warehouse operation is working 60 – 70% of capacity. Some are introducing sophisticated Engineered Labor Management standards that can help increase worker efficiency.
Coupled with this trend, is the trend in managing a temporary workforce more closely. For example, Nesco Resource will often work very closely with clients in the warehouse and fulfillment space to not only fill individual positions, but actual train a pool of workers prior to entering a job. This creates efficiency in terms of the hiring process and onboarding process, but also ensures more consistent training to increase workers’ efficiency on the job.
In fact, we often take this one step further and actually create onsite management for a temporary workforce. This helps efficiently deal with safety, scheduling, training, and overall efficiency. This approached has been employed in many different work environments and is effective in manufacturing as well as shipping and logistics.
Overall, as warehousing and logistics expands along with trends in just in time retail, ecommerce, and seasonal buying habits, a temporary workforce strategy can help maximize profitability while remaining competitive. Many of these trends are being led by an increasingly demanding consumer. We all want inexpensive but unique product. We want them just in time but on time. And we want to get goods when we want them but when everyone else wants them. This consumer demand is a challenge but through a combination of technology and workforce strategy, the retail industry is geared up to the task.