A panel of logistics leaders convened by the Warehouse Education and Research Council are convinced that workforce and technology challenges will dominate the industry in 2020 as well as for the foreseeable future.
“Salary comparisons and adjustments where necessary will be key to hiring and retaining strong workforces,” says Dan Beard, senior director of distribution for NexTerra Wine Company. He says management needs to increase its emphasis on improving and strengthening corporate culture to mitigate that challenge.
The same holds true for Canada, according to David Singer, senior vice president at Thomas, Large & Singer, a 3PL based in Markham, Ontario, who says that in his local market unemployment is at the lowest rate it has been in more than 40 years.
“Not only will that continue to drive wages higher, but employee churn will also still be an issue. That will make it even more imperative that warehouses and DCs find ways to increase efficiency,” Singer explains, “particularly as they add services that drive greater value for their clients, like co-packing, labeling, kitting, and direct-to-consumer deliveries.”
He expects that, as an employee retention strategy, operations will link workers to efficiency. “We’ll see expanded tracking of labor and incentivizing higher performance with rewards based on KPIs employees are accountable for meeting.”
Jeremy Banta, professor of supply chain management at Columbus State Community College, points out that some facilities now sport basketball courts, ping pong tables and even gyms, employee amenities that are no longer limited to Silicon Valley tech startups.
“If, by 2020, companies haven’t realized that corporate culture is an issue, then shame on them. It’s got to come from the top down.”
Brad Long, brand marketing manager for Yale Materials Handling, cites other impacts. “The labor shortage and turnover rates pressure operations to re-examine their strategic workforce planning, with a keen interest in technologies like robotics and connected Internet of Things solutions, as well as hiring and retention activities. The focus is to make the most effective use of labor resources that are available.”
Further compounding labor challenges are customers’ fulfillment expectations, he notes. “On average, 69% of customers will not shop with a company again if their delivery is late. With stakes this high, speed, agility and quality are imperative to get customers their orders correctly and quickly.”
Long also says SKU proliferation will continue to rise with the numbers of distinct items produced and that consumers demand. “Businesses must respond by adjusting their facility layouts and optimizing their workflows to accommodate.”
The continuing shortage of qualified truck drivers will persist in causing sleepless nights for supply chain managers, says Aaron Wilker, managing partner at C2 Logistix. “I’m sorry to report that nobody had a solution that was guaranteed to get drivers.”
Beard says distribution leaders will invest in the systems that deliver improvements in safety, productivity and efficiency, which has driven an increase in supplier partnerships to enable users of key management software to leverage Cloud and mobile platforms.
“Advancements in mobile technologies for the warehousing, distribution and transportation sectors have grown significantly in the last few years, and I believe we’ll see wider adoption of iOS and Android-based applications for warehouse management in 2020,” he observes.
Wilker also anticipates that more operations will shift from site-hosted to Cloud-hosted software, including enterprise resource planning, WMS and TMS. “For companies with a sales force that absolutely depends on accurate inventory, the ability to share real-time updates via Cloud-based software is a game-changer.”
<h3>Rise of the Robots</h3>
Wilker believes companies will increasing embrace automated systems in 2020, but selectively, where they increase productivity and support the bottom line. Companies who hesitated to invest before now are finally seeing quantifiable successes from early adopters, which makes the capital investment more appealing, he asserts.
“I’ve been seeing a lot more interest in automatic guided vehicles and autonomous mobile robots to interface with conveyors and move pallets or products as a supplement to the manual labor force,” Wilker points out.
He believes systems that increase accuracy and minimize labor touches for inventory picking and putaway – such as automated storage and retrieval systems and augmented reality visual headsets – will likely see more installations as well.”
Robotic lift trucks are getting more attention, Singer and Long note. “They improve efficiency by optimizing workflow, offering greater dependability and enhancing labor productivity,” says Long.
“When used as part of an operations’ strategic workforce planning, robotic lift trucks can augment available labor resources, fostering ‘cobotics’ with humans working alongside robots. This leverages the strengths of both to make repetitive tasks and more complex, value-added functions more efficient,” Long explains.
Automation implementations definitely offer DCs increased productivity with less labor pressure, but a safe working environment must be maintained, stresses Chaneta Sullivan, director of safety, quality and compliance at Chick-fil-A Supply.
“Obviously, OSHA citations and inspections are on everyone’s radar, but recent OSHA communications continue to show a high focus and citation rate for workplace accidents and injuries involving machinery, machine guarding, lockout/tagout, fall protection, and more,” she says. “The resulting fines have been huge, in the hundreds of thousands of dollars, and could cripple a company if the injury is significant enough.”
Sullivan attributes some of that uptick to increases in automation. “My concern is that companies aren’t necessarily focusing as much as they should be on putting the proper protection around this equipment, like machine guarding, as well as on the importance of training.”
She adds, “Both should be a big part of a company’s culture. Adding efficiencies to warehousing can be very beneficial, but any labor and/or financial benefit will be insignificant if we forget to train our people the right way and ensure they enjoy the ability to go home the same way they came to work. Brand reputation and having a true culture of care trumps everything.”
As someone involved in the food supply chain, Sullivan also expects increased use of technology in food tracking and traceability. Technology can further expand visibility into the entire food supply chain from end-to-end, an imperative factor to protecting consumer trust, she argues.
“In a highly regulated environment, any technology that can be used to track product source, condition, and safety particularly its time and temperature from end-to-end, is key. We are currently exploring technology which will provide enhanced visibility and dashboard capabilities to ensure we maintain the highest standard of care and quality for our supply chain and the food we ship every day.”
<h2>OSHA Raises Citation Fees</h2>
The Occupational Safety and Health Administration has raised the maximum penalty amounts that can be assessed employers for safety rule violations.
“These increases, while disappointing and disruptive to your business, are not a big surprise,” observes attorney Samantha Monsees of the law firm of Fisher Phillips.
Federal law mandates that the fees be adjusted each year to take into account the effects of inflation. The intention behind the annual increases is to adjust these penalties to ensure that they can continue to serve as a deterrent to violations of federal laws and regulations intended to protect workers.
All penalties assessed by OSHA after January 15, 2020 are increased as follows:
• Other-Than-Serious violations: $13,494, increased from $13,260 in 2019.
• Serious violations: $13,494, up from $13,260.
• Repeat violations: $134,937, rising from $132,589.
• Willful violations: $134,937, increased from $132,589.
The penalties apply to all citations issued by OSHA after Jan. 15, including those imposed on employers with open inspections, Monsees says. “Going forward, you can count on OSHA continuing to increase civil penalties in January of each year.”
She also reminds employers that if you do business in any of the 26 states where a state agency enforces the Occupational Safety and Health Act, civil penalty amounts may differ.
In recent years, OSHA has routinely issued Serious Citations with the maximum penalty amount, which should serve as a wake-up call for employers, says William Principe, an attorney with the law firm of Constangy Brooks Smith & Prophete. “These increased penalty amounts should give you all the incentive that you need to be in compliance.”