A Manufacturing Footprint Fit For The Future, Via Advanced Analytics

The labor mismatch has pushed private-sector wages to increase at more than double the long-term pre-COVID-19 growth rates, yet positions remain unfilled. Some are directly related to the impact of the COVID-19 pandemic and are therefore likely to be temporary. There are indications, however, that deeper structural shifts are at play that could have a longer-lasting impact on labor supply and demand. On the supply side, evolving work preferences and accelerated retirement may continue for some time; likewise, demand shifts from services to goods also appear to have some staying power. Companies may reduce reliance on labor across the supply chain over the long term through product reengineering, lean-management transformation, and automation.

Employers are looking at transactional factors, such as compensation or alternative job offers, but these are not the primary drivers of attraction does uss express work or attrition. Employees place greater value on relational elements, such as a sense of belonging or having caring and trusting teammates at work.

Companies that solved for competitive wages and built attractive value propositions for employees have found it easier to retain their workforces. The company then designed a range of interventions to mitigate these issues, including a leadership training program for supervisors and managers to address frontline grievances. It also provided greater flexibility in scheduling and pay, and collaborated with customers to solve the root causes of employee-satisfaction problems—such as SKUs that were difficult to pick and deliveries that were scheduled for inconvenient times. Other factors, however, could lead to more permanent shifts in the labor supply. The relationship between job openings and unemployment has departed from past trends and appears to be driven by fundamental shifts in labor supply-and-demand curves . Structural shifts in the labor market have left companies struggling to recruit and retain workers.

A Manufacturing Footprint Fit For The Future, Via Advanced Analytics

Second, companies could design bold interventions that structurally change both the demand and supply of the organization’s labor. Third, companies may require strong executive-level support to ensure that cross-functional initiatives are implemented effectively. With demand for workers exceeding supply, the cost of labor has increased accordingly. Private-sector nominal-wage growth is more than double the long-term pre-COVID-19 pace—more than https://whattdw.com/uss-express-delivery-and-logistics-job-reviews-by-ecommerce-specialist/ triple when adjusted for the consumer price index . Transport and warehousing labor has been most affected in terms of cost, with wages increasing four times faster than before the pandemic. Last, a change in mindset toward work may also be an underlying factor of long-term shifts in labor supply. McKinsey research indicates a disconnectbetween why employers think their staff are leaving and why employees are actually leaving their jobs.

  • There are indications, however, that deeper structural shifts are at play that could have a longer-lasting impact on labor supply and demand.
  • “On orders” are being cut at greater rates and experiencing significant delays, driving even further volatility in order patterns.
  • There are also regional differences, and in some cases labor availability varies significantly at different zip-code and skill-level combinations.
  • Companies can take measures to shift network flow away from labor-stressed nodes, especially where labor supply varies across regions.
  • Companies that employ third-party logistics services are also experiencing considerable challenges, such as transport rates increasing by up to 30 percent.
  • Additionally, the shift in consumer spending from services toward goods during the COVID-19 pandemic, which added supply-chain pressure to refill fast-selling products, may also stick.

One logistics company used advanced analytics, including machine-learning techniques and web scraping more than 50,000 reviews, to identify causes of worker attrition among its drivers and distribution-center employees. It found that the physical nature of the job, lack of work–life balance, and scheduling issues were key drivers of attrition. A consumer-goods company was able to increase productivity by cutting 30 percent of its product portfolio with limited impact on sales. It achieved this by defining the labor cost and complexity of each product, deploying advanced analytics to estimate the substitutability of each product, and conducting an assortment and optimization simulation to identify which SKUs to delist .

Leveraging People Analytics To Improve Frontline Retention

A trucking company successfully deployed people analytics to improve frontline retention. First, it identified the top quartile of drivers who were most likely to leave the company. Analysis of this high-risk population allowed the company to identify the key drivers of employee dissatisfaction and implement targeted interventions. The labor mismatch is a complex challenge, one that may be here to stay for a while—and it is clear there is no silver-bullet solution. Companies looking to embark on a labor-resilience transformation can take the following three steps.

Addressing the challenges is not easy, and focusing on recruitment and pay may not be sufficient to resolve the issue. Successfully navigating the current labor mismatch requires a comprehensive set of coordinated actions that address labor issues and their effects across the value chain. Nevertheless, there are actions executives can take https://www.indeed.com/cmp/Uss-Express-Delivery-LLC/reviews to respond. Companies can reassess their product and service portfolios by building a robust understanding of each offering’s operational and commercial trade-offs. One company was able to increase throughput at its factories and warehouses by optimizing its product portfolio (see sidebar “Increasing output by reducing complexity”).

Reimagining The Job Of A Driver And Warehouse Worker

A McKinsey survey found that among respondents who had left their jobs, 45 percent cited the need to take care of family as an influential factor in https://kellerlogistics.com/ their decision. And training programs that were suspended due to the pandemic, such as those provided by driving schools, have largely resumed.

The 2021 Labor Mismatch Has Had A Profound Impact On Us Businesses

Furthermore, automation could help companies improve employee engagement and satisfaction. More than 40 percent of employees spend at least a quarter of their time performing manual and repetitive tasks. In some cases, automation can help not just reduce labor demand, but also allow employees to spend more of their time on higher-value, meaningful work.

But a set of concrete actions can help address this imbalance across value chains. Companies can engage suppliers with large labor forces—for example, temporary labor, food services, janitorial services, and third-party transportation—to ensure operational viability or identify alternative suppliers that can reduce first- and second-tier supplier risk. Finally, the company developed an implementation structure and stood up a project-management office to ensure that initiatives were successfully implemented. In distribution centers where changes had been implemented, worker retention improved by about 10 to 15 percent; the company sought to scale those gains across the organization. Companies can explore new sources of labor supply—for example prison-, juvenile-, or veteran-transition programs—or adapt roles for non-English speakers and reskill workers from declining industries or roles. They can also engage suppliers through cleansheet—based negotiations that build in complete cost-to-serve estimates, such as cost differences for labor-intensive activities, and service factors such as lead times and delivery windows.

How Covid

As the US economy recovers postpandemic, demand for labor has outstripped supply. Companies are facing the “Great Attrition,” coupled with increased competition for labor. The transportation and logistics sector has been particularly hard hit, with the impact of worker-retention challenges and rising labor costs being felt across the entire value chain. Since the logistics and construction industries typically attract similar pools of labor supply, the impact of such legislation would extend multiple years into the future. Additionally, the shift in consumer spending from services toward goods during the COVID-19 pandemic, which added supply-chain pressure to refill fast-selling products, may also stick.

The United States’ post-COVID-19 economic recovery has seen an unusual reduction in labor-force participation. Jobs are available—the job-openings rate is around 50 percent above prepandemic levels—but the workforce to fill them has contracted. Companies can deploy digital performance-management tools, such as control towers, to manage labor flows. Daily cross-functional war rooms can increase visibility around labor availability and help the organization to plan and adjust accordingly. This seems challenging, but there are reasons to be optimistic. Companies are seeing meaningful shifts in their labor-supply profiles by taking the following steps. Owen Davis et al., “The pandemic retirement surge increased retirement inequality,” The New School Schwartz Center for Economic Policy Analysis, June 1, 2021, economicpolicyresearch.org.

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