With happy employees equalling happy customers, it’s no surprise that retailers have focused their workforce management efforts on customer-facing staff. But as more revenue moves online, effectively managing your warehouse and distribution centre (DC) workforce has never been more important.
Of all the resources in your warehouses and DCs, your people have the greatest capacity for agility, innovation and growth. But you’ll only get back what you put in.
At a time when retailers are facing challenges on all fronts, it’s more important than ever to focus on treating your employees well. If you look after your people, they’ll look after your profits.
But, as we reveal in this article, optimising your workforce in a way that works for your business and your employees relies on having the right systems in place.
A Perfect Storm for Warehouse Operations
As more shopping takes place online, retailers have recruited greater numbers to warehouse and distribution centre roles. A considerable challenge when DCs are located in distribution hotspots where competition for skilled warehouse staff is high.
At the same time, ever-tightening profit margins have exerted the need for cost control measures on warehouse operations. And, as the sector has begun to play an increasingly important role in countries’ economies, the media has increased its scrutiny with a focus on people practices. As industry leading online retailers know, this risks reputational damage for employers who are accused of not looking after their people.
These trends have created a tempestuous operational situation. With media and government scrutiny high, alongside the need to secure sufficient talent, warehouse and DC operations must not only attract but engage and retain their people. All while continuing to find ways to increase profit margins.
These are already tough challenges for your business to face. But the storm’s not over yet.
The Future People Challenges Facing Your Business
Compliance and Legislation – Change is Coming
The COVID pandemic continues to impose fluctuating regulations on businesses at national and local levels. Warehouses are faced with finding ways to systematically incorporate various factors – like social bubbles and limited numbers of people within certain shifts and work areas – into scheduling. This is no mean feat at any time of year but it’s particularly difficult during winter, many warehouses busiest period.
Beyond COVID, more legislative changes and compliance issues are looming. In the UK, it has traditionally been difficult to fill warehouse roles with UK workers resulting in a reliance on non-UK EU nationals who hold 25% of UK warehouse jobs.
At the time of writing, we don’t know whether the UK will leave the EU with or without a deal and – if a deal is struck – what that will look like. However, one thing’s for certain. Deal or no deal, the UK will be operating a new points-based visa system from January 2021. Which means, if you want to employ non-UK nationals you will need to:
- Register as a Home Office Licensed Sponsor from 1st January 2021
- Only hire overseas workers who can speak English, are paid a salary of £25,600 and/or who meet skill thresholds
With the average warehouse job paying significantly below the pay threshold, recruiting non-UK workers will be extremely challenging. Which places the focus back onto recruiting more UK workers into warehouse and DC jobs they have traditionally rejected.
Finding Quality Staff Has Become More Difficult
Despite many of the sector’s roles being considered low skilled, employers have struggled with skill shortages. According to the Employer Skills Survey 2017, the main causes of hard-to-fill vacancies in the warehouse industry were:
- Low number of applicants with the required skills
- Not enough people interested in doing this type of job (particularly for warehousing)
- Low number of applicants generally
- Applicants lacking computer literacy/basic IT skills
- Difficulty communicating in a foreign language
As a result, employers have turned to agencies to meet their labour needs, especially flexible workers. But with everyone else trying to find the right employees with the right skills, the sector faces a worker shortage.
The War on Talent Is Worsened by Its Local Nature
Warehouses have traditionally been built in strategic locations where they can best serve their demand footprint at the most reasonable cost, often near good transport links. In the UK, this has resulted in a concentration of warehouses in the Midlands at the heart of the UK’s motorway network and in the highly-populated London and South East. With the growth of online retail, DCs in more remote locations have opened as well as smaller DCs close to urban markets.
“Because relocation for low-paid jobs is highly unlikely, businesses must recruit from local – and therefore limited – talent pools. These local restrictions amplify the war for talent.” Chris Love, Managing Partner
However, the war on talent could be eased as unemployment in the wake of COVID is expected to soar.
While that might take care of recruitment challenges in the short-term, hiring people whose first choice job was not warehousing or DC operations presents another challenge. How will you engage these people to ensure high quality work and good productivity? And, as the economy recovers, how will you retain these new workers that you’ve trained and upskilled?
The answer is to make your organisation a more attractive prospect than other firms. To deliver a better employee experience so your warehouse or DC offers more than a basic wage for coming to work. But some organisations within the sector are already on the backfoot when it comes to delivering even the most basic employee rights.
Poor Administration Lets Warehouse and DC Operations Down
Recent government research shows that warehouse and DC operations are struggling with basic administrative challenges:
- Wage underpayment
- Not being paid for all the hours worked and /or not being paid on time
- Employees are not informed of their holiday entitlement or allowed to carry forward unused holiday resulting in unpaid holiday
- Too many working hours
- Employees who have not opted out of the Working Time Directive are breaching the 48 hours limit in a week
- Too little holiday entitlement
- Employees are not receiving the legal minimum of holidays including bank holidays
- Part-time workers are not having their holidays accurately pro-rated
- Insufficient rest breaks
- Being told or asked not to take breaks when there is a high level of work to get through or when targets were not being met
- Incorrect scheduling that fails to plan for worker’s rights to 11 hours rest between working days, and an uninterrupted 24 hours without any work each week, or an uninterrupted 48 hours without any work each fortnight
There are four issues here:
- Failing to meet employees’ basic legal rights is a compliance risk.
- Insufficient rest has the potential to cause more accidents, resulting in lost time stoppages.
- Employees turn to their line manager to resolve administrative errors taking up valuable time which could be spent on other priorities.
- Failing to meet employees’ most basic rights erodes the trust that’s fundamental to a positive employee experience. This is likely to reduce engagement, productivity and any intention to go above and beyond for the business.
Beyond getting these basics right, warehouses and DCs also need to do more to secure employees for the long-term. Like ensuring sufficient training and development, offering career paths, creating an attractive culture where people enjoy coming to work, enabling flexible working patterns and giving employees greater empowerment over their personal performance.
Although all these challenges might seem insurmountable, there’s a solution that can help – workforce management software.
Labour Planning. Workforce Management. What’s the difference?
Labour planning software: Workforce management software:
- Cost focused
- Minimises labour costs
- Improves warehouse efficiency and utilisation
- Ensures the visibility and improvement of warehouse performance
- Measures and manages warehouse resource performance
- Employee focused
- Efficient scheduling processes
- Integrated planning across corporate and fulfilment operations
- Ensures complete workforce compliance
- Enables flexibility leading to employee engagement and improved customer service
Get Ahead of the Competition with Workforce Management Software
With modern workforce software, there’s no reason for administrative errors like underpaying wages to creep into your business. But basic record keeping is just the start as workforce management and labour planning software also:
- Improves your scheduling processes – mature workforce scheduling algorithms ensure you make the most of employees’ available time while meeting legal working time and break requirements.
- Identifies performance issues – so your managers can spot problems, offer additional training and support and ensure quality and productivity metrics are met ensuring your employees’ personal success.
- Accurately calculates payments – seamlessly integrate the workforce management system with your payroll to ensure timely payouts with no added administration.
- Gives employees greater control – mobile apps empower employees to update their health status, volunteer for additional shifts and book time off providing the work-life balance sought by employees of all generations.
- Extra profit – a more effective workforce leads to improved accuracy and customer service, better client retention and a healthier bottom line.
- Cost reductions – e-commerce warehouses reap additional benefits by reducing the costs associated with issues like re-sending orders that have been incorrectly fulfilled. Or limiting the need to refund customers’ premium delivery fees on later orders.
Transform the management of your workforce in this way and you’ll save managers’ time enabling them to better support staff and improve the employee experience. As a result, absenteeism and turnover will go down and the quality of work, productivity and profit will go up.
And the extra 50p an hour the warehouse next door pays? It won’t matter. Because your reputation as an employer of choice means you can take your pick from the applicants who approach your business for work. Saving you recruitment time and costs and ensuring high quality workers.
Workforce management and labour planning technology has already improved the employee experience of millions of retail workers. Now it’s time for warehouses and distribution centres to follow suit.
Download our free e-book to explore the savings you could make with warehouse and DC workforce management and labour planning software.