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4 Ways to Combat the Warehouse Labor Shortage

Estimated reading time: 3 minutes

Worker in warehouse

Warehouses are facing major workforce shortages due to rising demand for logistics services. The need for labor is driven primarily by e-commerce sales, which have ballooned by 32.4% since 2019 to reach an all-time high.   

Experts predict U.S. manufacturing to experience a labor shortage of 2.1 million jobs by 2030. To address the growing labor shortage, employers are re-evaluating their strategies to attract and retain employees while working to drive productivity to keep up with ever-increasing market demand.  

Here are four key strategies for bridging the labor gap:   

1. Adjust recruitment approaches  

recent survey of more 800 U.S. manufacturing companies revealed that 77% expect to grapple with  hiring both entry-level and skilled workers for the foreseeable future.  

Factors contributing to the industry’s hiring difficulties include: 

  • Retirement: Older generations that have sustained the manufacturing industry are retiring and younger generations are less interested in making careers in manufacturing.
  • Concerns about work/life balance: Work/life balance is the top area where survey respondents believe manufacturers fall short and the top reason respondents are considering leaving the industry (especially women). 
  • Training needed:Many jobs require a certain level of skill or experience. These jobs must be sourced from the local workforce and provide training, which can take several months to more than a year to complete. 

To address these challenges, employers are implementing the following strategies:   

  • Build career awareness early by working with local high schools to promote manufacturing careers with attractive salaries when teens are thinking about their futures.
  • Adapt shift-based jobs to offer more flexible arrangements. 
  • Recruit former military personnel for positions that require mid-level and high-level skills. 
  • Leverage advanced technologies, such as virtual reality training, to help employees grow their digital skills.
  • Identify opportunities for diversifying workforces through Diversity, Equity, and Inclusion (DE&I) programs, and then evaluate leadership performance based on meeting hiring goals and other DE&I metrics. 

2. Mitigate retention challenges 

Turnover in warehousing is nearly 60%. According to the Warehousing Education and Research Council (WERC) DC Measure survey, 4.7% annual turnover is considered best in class, while operations with turnover of 40% or more have a major opportunity for improvement. The costs of such high turnover have a significant impact on an operation’s profitability because hiring and training just one replacement employee can cost thousands of dollars.  

Actively incorporating operator input will help warehouses determine the best-fit set of tools to maximize labor productivity and retention. According to a Gallup study, organizations with better employee engagement achieve higher performance, including substantially better retention and productivity. To keep employees engaged, assign them the high-value tasks and automate cumbersome, repetitive tasks through robots and technology. Equipping employees with ergonomic tools also offers greater comfort while improving productivity. Given that fatigued workers lose an average of 5.6 hours of productive time per week from reduced cognitive performance and difficulty concentrating, the investment is a win for employees and employers alike.   

3. Implement technology and tools  

In addition to helping with recruitment and retention, technology and automation can increase productivity, which is particularly important when facing a labor shortage. According to a benchmarking survey of warehouse automation vendors, the global market for warehouse automation services is expected to double by 2025 with nearly half of survey respondents planning to add or enhance warehouse management systems (WMS) and cloud infrastructure over the next year. A separate survey of 150 organizational leaders indicates that more than 40% plan to implement or enhance plans through artificial intelligence (AI) or machine learning.

Top trends in warehouse technology and automation include using devices to scan inventory and record assets, incorporating sensors into warehouse infrastructure, and using RFID tags to automate scanning  while improving accuracy and efficiency. Popular technologies being integrated with warehouse management systems (WMS) include voice-directed picking and heads-up device displays, which augment human workers to make their jobs easier. Warehouses can also leverage more intelligent automation, such as robots or “cobots” (collaborative robots), which work alongside human associates and take on manual tasks. And Intelligent automation with data analytics can help warehouses predict and adjust daily workflows and performance.

4.  Institute pay-for-performance models  

Warehouses today are driving workforce productivity by adopting pay-for-performance models. Capstone Logistics enhances warehouse productivity by 10-40% by paying associates and charging customers according to productivity levels—aligning peak performance with success for all.  

Bridge the Warehousing Labor Gap 

Implementing effective strategies to enhance recruitment, improve retention, and drive productivity can takes substantial resources and time. For solutions with an immediate impact, warehouse support services are available.  No matter your location or size, Capstone can place skilled labor, management, and function-specific technology in your manufacturing or distribution facility within days to meet your most urgent and challenging needs. We handle everything from the entire warehouse to any single function within the warehouse. 

Need associates with specific qualifications? No problem.  

We conduct a job market analysis for each operation that helps us create a unique hiring plan. Our team of 50+ recruiting managers then use a "matching strategy" to examine operational needs and facilitate hiring. A combination of resume screens, telephone contacts, in-person interviews, and behavioral strength assessments are used to ensure the right team of associates will serve our partners. 

Read more about our Warehouse & Fulfillment Services or contact a Capstone representative to discuss the possibilities.