How Can Supply Chains Boost Slipping Workforce Morale While Under Transition?
The highlight of 2023 has been labor unions rising up in demand for better working conditions, job security, and fair wages. Such calls could get louder in the future.
Reprint of an article in The Logistics Report by Vishnu Rajamanickam, Oct 4, 2023.
“Workers are integral to supply chains” Nick Pellegrino, COO, Boxzooka, “despite all the automation and process transition.”
The initial portions of this article discuss the ongoing Automotive Worker strike and the full article is linked here . The article continues with:
This isn’t just a story of automotive supply chains. Manufacturing, at large, is undergoing a transition where automation of non-value-added repetitive tasks is becoming cheap enough to replace humans in the equation. The same is true of warehousing and fulfillment operations, as is evident with the ILWU's skepticism over allowing automation in their yards.
Integrating automation into supply chains without appearing predatory to the workforce is a challenge. How do we deal with workforce inertia that occurs from supply chains transitioning?
“It is important that workers realize they are integral to supply chains despite all the automation and process transition,” said Nick Pellegrino, the chief operating officer of order fulfillment company Boxzooka, with extensive experience running agile fulfillment facilities.
“We had a customer who added jewelry to their product line. One Friday, we received 5,000 different jewelry items. Based on SKU velocity assumptions and demand forecast, we slotted the new inventory over the weekend. When it went to market on Tuesday, it sold out immediately,” said Pellegrino.
“Had we been in a highly automated environment, it would have been challenging to adapt so quickly. Instead, we were able to adjust because of our human workforce, creating a pick line to get every order out within 24 to 48 hours, far exceeding our service-level agreements.”
This flexibility, Pellegrino argued, was due to a strategy that prioritized operational agility, which entailed a healthy mix of human workforce and automation.
For instance, consider an AutoStore™ servicing a 30,000 sq. ft. portion of a massive warehouse. Cubes would be built 100 feet long and 30 feet tall, with robots operating on top of the cube. Inventory gets inducted into totes placed in a grid within the cube. When the order arrives, the robot brings the tote to an operator who picks the SKU. While this is incredibly optimized for consistent demand, dynamic changes in SKUs and product lines — like the above scenario — would need more malleable fulfillment options with humans as the lynchpin.
So, how do we ensure workers feel comfortable and at ease? “By giving them a full-time employee status,” pointed out Pellegrino. “It’s common to see companies have a 50% full-time and 50% temporary labor mix, which isn’t great. I’d call for at least 90% of the workforce to be full-time, even if it means handling seasonal peaks in demand.”
Incidentally, an important demand in the UAW strike runs parallel — the call to end the tiered employment system that engages workers on a ‘temporary’ basis, extracting comparable work from them as full-timers, but at lower pay scales and worse benefits.
“The key to retaining employees in today’s labor market is to focus on being an employee-centered operation,” said Pellegrino. “It is about actively upskilling the workforce.”
“At Boxzooka, we have associates who started with basic tasks and have gradually moved up to become leads or even supervisors. We even have client success managers who started at an hourly rate and moved through the ranks to a position where they directly interact with our clients. This offers team members a career path, not just a job. Whether advancing to a forklift driver position, becoming a lead, or moving up to a supervisor role, it’s important to provide opportunities.”
This is congruent with what Biden, one of the more worker-friendly presidents in recent times, has promised — better-paying blue-collar jobs. Pellegrino contended that a dynamic of shared prosperity takes root by fostering an environment where blue-collar workers can have career mobility and seek growth opportunities.
Such an ecosystem will also lower employee churn rates, helping companies scale operations sustainably. “This is significant considering some poorly managed operations in the industry can see turnover rates exceeding 100%, where you’re replacing your entire workforce every month,” said Pellegrino. He suggested that making internal promotions a part of the retention strategy will signal to the team that upward mobility is attainable, keeping them motivated and engaged.
“Employee engagement is another critical aspect, which builds organizational culture. Creating a sense of community and encouragement within the team while supporting individual well-being and a work-life balance translates into dedication from the team. This way, when a client issue requires immediate attention, I would never have trouble finding volunteers willing to step in. Automation can’t replicate human commitment.”
To that effect, building a sense of community in manufacturing or warehousing operations would require mid-level managers and frontline leaders with solid people skills. “My first job right out of college was as an industrial engineer for Coca-Cola. I remember asking the VP of Manufacturing why they hired me, and he said while they looked for engineers who were analytical and process-driven, they specifically took me for my people skills,” said Pellegrino. “Strong leaders make it easier to implement processes and engage with the workforce.”
Ultimately, while automation does warrant change in regular operations, the primary concern for those on the frontline isn't the technology itself, but job security. It’s essential to remember the very human faces behind these jobs. To many households, these jobs are lifelines, providing a steady income and the promise of climbing the economic ladder.
“If employees are treated well, given a good salary, and offered opportunities for growth within the company, employee turnover decreases. People become more committed and are less inclined to leave their positions,” he said. “In an employee-centric environment, companies can be confident integrating automation into operations without sacrificing workforce morale.”