Solve Your Warehouse Worker Shortage with a Labor-Only Strategy
Estimated reading time: 3 minutes
Traditionally, manufacturers, retailers, and distributors have had two options for meeting their warehouse staffing needs: hiring and training employees in house or outsourcing all warehouse operations to a third-party logistics (3PL) provider. But as supply chains continue to grow, retailers are opting for a hybrid solution that provides the benefits of both models. Here’s an overview of the options.
Warehouse Labor Management Options
Maintaining in-house warehouse staff, requires recruiting, hiring, training, and managing people to execute warehouse operations within your own facilities. This approach affords full control over your processes and people but can be risky and expensive when warehousing is not your core competency. The current labor shortage has compelled companies to resort to a warehouse staffing company model, but this approach often does not meet the productivity or financial needs of modern warehousing or manufacturing operations.
Full Outsourcing to a Traditional 3PL
Outsourcing warehouse operations to a traditional 3PL typically means having them manage your entire distribution operation, including warehousing your products in their facilities, which are staffed by their people. Sophisticated operations and technology, and integrated service offerings make this an attractive option. This model also enables you to focus on your core competencies while avoiding the burden of logistics workforce management, including hiring, training, and recruiting.
But there are tradeoffs. Companies lose some control over the distribution process when placing products in an offsite facility, creating risk for your brand. You’re also limited to the 3PL’s choice of Warehouse Management System (WMS) technology, which can make integration with your systems and processes difficult.
Outsourcing Labor Only
Although some traditional 3PLs offer labor-only solutions as part of their service offerings, it’s not their preferred sale. Most will try to sell you on full-service outsourcing to include their physical warehouses, their material handling equipment, their preferred WMS technology, and their warehouse workers. Because the “labor-only” strategy does not help them meet their business goals, traditional 3PLs dedicate fewer function-specific resources to manage labor-only arrangements, focusing instead on creating turnkey offerings that include all facets of fulfillment.
Because of this, warehouse operators often turn to temp labor or warehouse staffing agencies. Temp workers can help you fill gaps for specific functions in distribution center operations, such as unloading or selection. This reduces your need for human resources staff to deal with personnel issues related to hiring. However, temporary staffing carries a major risk of lackluster performance due to steep learning curves and high employee turnover.
A hybrid “guest in your house” solution sits on the spectrum between full outsourcing and warehouse staffing company—and offers the benefits of both. With this option, warehouse operators retain control over their building and technology and partner with management from a third-party for increased productivity and reliability. It’s a cost-effective approach that offers distinct benefits:
- Onsite managers and supervisors
- Well-designed training and organizational development programs
- Technology-agnostic approaches and experience working with all WMS systems
- Function-specific technology to enhance operations
- Laser focus on specific warehouse processes, productivity improvements, safety, and quality control
- Pay-for-performance cost structures
Solve Your Warehouse Labor Challenges
Today’s supply chain challenges have changed the distribution and warehousing landscape for distribution centers—in some ways for the better. Instead of shipping your products to an off-site facility and losing control, Capstone can customize a solution utilizing your distribution center and supplementing operations with focused logistics expertise, management, benchmarking, and function-specific technology.
Looking for experts to manage your warehouse? Contact us to learn how we can help you increase productivity, lower costs, and mitigate your warehouse labor challenges.