Other Voices: Distribution center boom and a perfect storm of labor disruption

Editor’s Note: The following column is by Mike Starich, CEO of Orion Talent, a provider of skilled talent acquisition, recruitment optimization and military hiring to businesses in manufacturing, supply chain, energy, healthcare and more. It is part of Modern’s Other Voices column, a series featuring ideas, opinions and insights from end-users, analysts, systems integrators and OEMs. Click here to learn about submitting a column for consideration.

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A few short years ago 1 million-square-foot distribution centers and same-day delivery were exceptional. Not anymore. As consumers transition from traditional brick and mortar shopping to faster home delivery, Amazon is rapidly building, buying and renting spaces of all sizes to facilitate DCs closer to the consumer.

With the entire supply chain facing unprecedented disruption and the unemployment rate at a 10-year low, industry recruiters are under intensified pressure. Establishing a strategy in this hyper-competitive hiring environment is critical to keeping production levels high and overhead costs low. Many organizations that gain new business in support of DCs are underestimating the impact of their contract wins and sudden growth. With limited internal staff and processes to attract, source, screen or on-board, they are unprepared to meet the demands of intensified hiring cycles.

The skilled talent gap might be greater than you think. Hiring for roles such as skilled facilities technicians with PLC certifications have become increasingly challenging, and very few companies have strong training programs for this area.

Step up efforts to recruit skilled (and unskilled) talent
● Build an employer brand that caters to this sector and develop a pool of potential candidates for immediate hire or to draw upon later. Employee branding now requires more effort since searching eyes scan ads, job boards, social media and newsfeeds.
● Retrain traditional customer-facing retail workers for customer service or call center positions and non-skilled DC roles like pickers or drivers. 
● Partner with universities to attract young talent and develop an internship program.
● Consider skilled talent with transferable skill sets from other industries.

There are also growing challenges in recruiting unskilled talent. For example, it is becoming increasingly difficult to find people who can pass standard background and drug testing. In these situations, I recommend upgrading screening processes in order to mitigate expenses tied to higher failure rates on background checks and drug tests. Consider hiring veterans to fill these roles. This widening pool of candidates is more likely to pass background tests due to ongoing and systematic testing within the military.

Make better use of Big Data
Data collection and analysis can be an incredibly intense process and many HR teams are unable to perform the level of predictive workforce planning necessary to support the business. Inaccurate data, especially with things like daily headcount required on the DC floor, can have extremely negative implications for both recruiting and DC managers.

● Have people on board who understand how to define, collect and manipulate data critical to the recruiting process such as headcount requirements, fill rates, pipeline, source, cost-of- vacancy and time-to-hire.
● Organize data to reflect business needs. Establish a process for HR and operations to communicate on a regular basis and agree on data points to be measured.

Get HR and recruiting aligned to business strategy
Short of high growth or crisis situations, far too many companies just give lip service to having HR “at the table,” making it even more difficult to have resources ready to meet the labor demands of the organization.
● Get HR to speak in terms of P&L rather than typical HR-speak. Develop a recruiting strategy that measures progress in terms of production efficiencies, risk management and other metrics relevant to operations.
● Make sure recruiting has the appropriate budget and mechanisms in place to build a strong talent acquisition system with tools/training/licenses; branding (website, ads, sponsorships); headcount for sourcers, recruiters, schedulers; travel budgets; infrastructure set ups; and Applicant Tracking Systems (ATS).
● Assess whether to in-source or outsource recruiting. Take a realistic look at internal talent acquisition costs per hire and your company’s stance on recruiting costs.

Enhance your employer brand
While there is only so much you can do to directly address the skills gap, you can still improve recruiting efforts by building a solid online employer brand that gives candidates a better sense of your business, values, and opportunities.
● Increase base hourly wages to improve retention and offset the cost of excess overtime.
● Don’t overuse robotic emails and texts. While Artificial Intelligence makes the recruiting process more efficient, excessive automation is off-putting to the candidate experience.
● Find new ways to make your benefits package more competitive such as offering tuition reimbursement and flexible shifts to accommodate students’ class schedules.
● Proactively manage company profiles on sites like Glassdoor by responding to reviews and sharing company updates.

While Amazon is currently the disruptive elephant in the room for the retail supply chain industry, there is more to come. Whether machine learning, flying warehouses, self-driving delivery vehicles or drone delivery, supply chain organizations must make it a priority to build a resilient talent acquisition team that can weather turbulence and help sustain a positive bottom line.