What is Labor Engagement, Safety and Efficiency in supply chain?
Hiring and retention are major pain points facing supply chain operations, persisting both today and in the years ahead. While a likely recession and higher unemployment levels are easing pressure on the overall job market, businesses are still struggling to fill vacancies to keep their warehouses and transportation networks running smoothly due to demographic shifts and aging populations. According to the World Bank, the number of people of working age (between 15 and 65) will decline in the U.S. over the next decade by 3 percent.
On a global scale within the Organization of Economic Cooperation and Development (OECD), Korea, Japan, Germany and Italy are most strongly impacted by a decline of their working age populations. Germany’s workforce age population is predicted to decrease by 15 percent, Korea and Italy by 20 percent, and Japan by nearly 40 percent.
The industry has always struggled to recruit and maintain their workforce due to the repetitive and physically demanding work required in supply chain positions. In fact, warehousing has the worst labor retention rate by industry sector at 37 percent, while the average across all other industries sits at 3.6 percent. Given the limited labor market, it is essential for organizations to find ways to keep their workers engaged, motivated and safe in their work environment. Equipping workers with the right technologies and tools to keep them engaged, as well as enabling them to work as safely and efficiently as possible.
Benchmarking today’s supply chain
In 2022, Körber launched a global research project aiming to understand the underlying factors that drive supply chain complexity. The research project resulted in the identification of six operational areas:
- Labor Engagement, Safety and Efficiency
- Agility and Resilience
- Digitization and Process Automation
- End Customer Experience
- Facility Optimization
In response to these rising complexities, Körber then commissioned its first ever Supply Chain Benchmarking survey. The research was designed to assess current supply chain best practices and establish benchmarks. The results, based on a representative survey among more than 200 companies, shed unparalleled insight into the industry and best practices to improve supply chain operation and performance. Participants were scored and categorized into four maturity levels: leader, advanced, developing and initiating.
Our benchmarking survey found that the maturity levels for the complexity factor Labor Engagement, Safety and Efficiency were as follows. Only 22 percent of respondents ranked as leaders – remarkably the lowest percentage of leaders across all six complexity factors. The advanced maturity level had the highest number of respondents place there, coming in at 57 percent. 18 percent of respondents were considered to be in the developing stage, and only 4 percent of respondents placing in the initiating position.
What distinguishes leaders from the rest?
Not only is Labor Engagement the complexity factor with the lowest percentage of leaders, but across regions, only 1 in 3 supply chains say they have an adequate number of employees. The leaders, though small in quantity, are in much better shape. 89 percent of them said that they have enough staff, while only 27 percent of advanced supply chains reported an adequate number of employees. This leaves the question: what are leaders doing that the rest of the industry is not?
Split into three categories of Labor Engagement, Safety and Efficiency, we found a variety of solutions and technologies supply chain leaders are implementing with the goal of solving the ongoing uncertainty in a fast-changing labor market.
Key strategies for Labor Engagement, Safety and Efficiency
Now more than ever, supply chain operations in various industries need to prioritize finding ways to engage their workforce. As of November 2022, the U.S. Chamber of Commerce reports that the industries of durable goods manufacturing, wholesale & retail trade are in a labor shortage.
Globally, OECD studied the average percentage change in employment across low- and high-paying industries from 2019 to 2022. Middle- and low-pay industries (like manufacturing, transportation & storage, wholesale & retail trade) reported employment losses. In fact, employment in low-pay service industries was below pre-pandemic levels in 21 countries.
Employers are faced with the challenge of retaining the labor they have, as the stakes are raised with the number of open positions waiting to be filled. For those looking for work, the desired positions have shifted towards higher-educated, office-based positions. Warehouse positions often involve manual, repetitive and physically challenging activities. Businesses lacking the technology and processes for workers to effectively and efficiently fulfill their duties only exacerbates the difficulties. In addition, pay is often a barrier as general warehouse work is at the lower end of the pay scale average. Whether it be the challenge of sourcing or retaining labor, businesses must tackle efficiency and engagement head on.
Gamification – the use of game mechanics to digitally engage and motivate people to achieve their goals – is a fairly recent but promising solution to effectively engage employees. It encourages positive behavior through incremental goal setting, virtual incentives, ongoing feedback and tips throughout the shift. The transition to mobile devices has allowed gamification to be increasingly utilized in the warehouse to both enrich worker experience and engagement. Almost three quarters of leaders recognize the solution’s potential and have already deployed gamification, compared to less than a third of advanced organizations.
Additionally, productivity is a strong benefit of using gamification in the warehouse due to its ability to trigger the creative and reward-seeking parts of the brain. Though an app used at work, it does not feel like work to the staff as it acts as an external stimulus promoting employee productivity. In turn, warehouse performance is positively impacted. Offered rewards and progress tracking – attached to goals based on picking rates or KPIs – can increase their motivation and improve efficiency. When employees know exactly how to hit a target, they are driven to perform better. Using gamification for staff engagement deals with the issues of boredom and repetition at work, while also helping workers value their career goals and personal performance.
Employee health and comfort is the second part of Labor Engagement, Safety and Efficiency. Transportation and warehousing have the second highest rate at 4.5 percent (after the construction industry) of non-fatal workplace injuries. Key hazards for warehouse workers include unsafe use of forklifts, improper stacking of products, improper lifting techniques, repetitive motion injuries, failure to follow proper procedures, etc.
Across all regions, supply chain professionals in our Benchmarking survey are actively working to improve workplace health and safety. More than a third are working on multiple workplace ergonomics projects – including Autonomous Mobile Robots (AMRs), autonomation and voice-directed work – to reduce distractions, harsh repetitive movements like bending and turning and offering tools for lifting heavy objects. In this category, leaders do significantly better than the rest with 86 percent attaining their workplace safety goals. In comparison, less than a third, at 29 percent, of advanced organizations have reached their safety goals.
With the high rate of accidents, it is the organizations responsibility to find strategies and technologies to lower the risk and increase employee safety. Leaders are thinking not just about attractive packages and incentives, but also of the wellbeing and satisfaction of their employees. In turn, those employees are rewarding them with greater loyalty.
A gamified app can provide safety instructions in a more informal and engaging way, making it more likely for employees to memorize and follow the guidelines. New employees, for example, can explore tips on safe work practices before beginning their day. By the end of their shift, workers can receive a notification informing and rewarding them for fulfilling their tasks safely.
Voice technology, where structured verbal instructions are communicated to staff via a connected headset and reported back through a microphone, both directs the worker and captures their responses. This solution – specifically designed for high-volume, complex and time critical operations – blocks out the noise of the warehouse and streamlines worker activities. It improves efficiency and productivity across various functions, including picking, put away, replenishment, cycle counting, receiving, etc. while also providing employee safety and engagement.
Voice-directed technology enables workers to complete their work via voice-driven commands, eliminating the need to click through screens. It keeps the workers hands and eyes free, focused on their task with their heads up. This means workers are less distracted and more aware of their surroundings, including MHEs, shelving and other workers. The increased awareness lets workers be more aware of danger and less prone to accidents.
Autonomous Mobile Robots (AMRs)
AMRs use a combination of sensors, vision systems and mapping software that allows them to respond in real time to changes in their environment. They can move independently around the warehouse, avoiding people and objects without human guidance. The technology can used to perform intricate product picking and fulfillment themselves but can also be used to move pallets and undertake tasks humans find more physically demanding, repetitive or dangerous.
By reducing the steps and movement humans make in the warehouse, AMRs can improve warehouse safety as there are fewer opportunities for slips and falls. In addition, AMRs can take over the more challenging tasks to reduce repetitive strain injuries, fatigue and fatigue-related accidents. AMRs also offer similar awareness benefits to voice, freeing workers from using handheld devices and keeping their heads up.
In addition to safety, AMRs alleviate the worker shortage and improve efficiency. Most commonly used to help organizations rapidly scale to meet peak demands, AMRs can move goods more efficiently than human workers. By aiding new seasonal staff on where and what to pick, employees can become fully productive members of the team faster than if a human trained them. AMRs help both permanent and temporary warehouse staff become more productive, which in turn helps improve their engagement at work.
Achieve Labor Engagement, Safety and Efficiency with Körber solutions
In summary, businesses need to rethink how they plan to engage long-term employees to reduce turnover, how they train new and temporary peak season employees for success, and how they can comply with the continually changing health and safety guidelines. Doing all this while also improving productivity and efficiency is a daunting task, but Körber’s supply chain software and technologies can help businesses create a more engaging and safer employee experience at work.
Want to learn more on what current supply chain Labor Engagement, Safety and Efficiency leaders are doing? Visit our benchmarking practice or download the full Benchmarking report for more details on the survey results.
For further insight on the complexity factor Labor Engagement, Safety and Efficiency based on the Supply Chain Benchmarking survey, download the infographic and Labor Engagement, Safety and Efficiency supply chain performance guide.