Solving fluctuating employee demand and seasonal ramp-ups for Distribution Centers
“If your product demand and volume through-put is variable then it stands to reason that your workforce should be as well.”
Many products now days have a high degree of seasonal demand while many others have a short product life. This situation is especially prevalent in many retail distribution centers (DC’s), direct-to-consumer (DTC) and e-commerce (e-comm) fulfillment centers, where upwards of 65% or more of annual dollar volume may be shipped in less than four months. For example, a retail DTC is likely to have an end of the year holiday seasonal ramp-up, while a DC in the lawnmower business may see volume increase for a few months in the spring or summer.
Internet and ecomm retail models have only compounded the challenge for such DC’s. Unlike decades past where consumer or retail DC’s might be shipping by the pallet or truckload to one destination, today an exponentially amount of volume is being sold direct-to-consumer (DTC) via the internet whereby the product is shipped directly from the DC to a consumer. So, many tasks that were once performed at retail stores such as returns and exchanges are now done out of the DC.
These scenarios bring about many new challenges for DC’s, one of which is matching appropriate staffing levels to the volume of through-put. In other words, the right person, in the right job, at the right time. For large DC’s, the “right person” might be in the hundreds and the “right time” might mean the additional labor is only needed for a few months. This is no easy task, especially if the jobs require any type of training. Keep in mind that if a DC needs one hundred new employees you will probably need to interview over two hundred candidates and take applications from over three hundred people just to get the one hundred needed. This is a huge strain on an HR department.
Once the employees are hired they must be introduced to the facility, scheduled, receive training, and be supervised. Chances are the employees will be spread over multiple shifts, requiring multiple new supervisors.
If your product demand and through-put is variable then it stands to reason that your workforce should be as well. An increasingly common approach to solving this challenge is by using temporary labor or staffing agency. Many DC’s have already adopted such business models whereby their core group of employees is supplemented with temporary workers during peak seasonal ramp-ups. This can free up HR staff and managers to focus on their core jobs and your core workforce. If you partner with the right staffing supplier and your volume needs are high enough, they should be able to provide experienced onsite management support for their workers while at your facility. This can be invaluable during a chaotic busy season or ramp-up.
If the staffing supplier is well established in your market or sector, they should already have the infrastructure developed and a foothold in the recruiting of employees around your facility to respond to your employment needs. If they are a high-volume supplier they may have orientation and training programs and facilities to help on-board newly hired employees. They may be able to provide OSHA certified forklift or powered industrial vehicle certification, safety training, or other client-specific training.
A qualified staffing supplier can provide a litany of services along with their core service of providing talent including behavioral interviews, drug-screens, skills verification, physicals/fit-for-duty, on-boarding, and ultimately off-boarding of employees.
A good staffing supplier should have technology in place to provide your managers with real-time usage data including work hours or dollars by shift, line, or time period or any mix of many variables.
The keys to success
Using temporary labor through an outside service doesn’t come without its own set of challenges and there are some things you can do to speed your success before jumping in, or in the case you are already knee deep, before your next busy season.
It’s worth noting that in most environments, a newly hired employee is unlikely to be as productive as a tenured employee. Therefore, it might be sensible to assign tasks to newly hired employees that are easily learned and leave the skilled jobs to tenured workers.
Be prepared to spend some time investing in the process. Better to find out up front if a supplier is capable of responding to your needs than to be in the middle of a busy season only to find out they are coming up short. Not all staffing companies are the same. Most do not specialize in logistics or manufacturing but will service the sector along with their core business unit. Distribution is a unique animal. If your vendor is staffing a bank one minute and your DC the next, make sure they really understand your needs.
Mobilizing and deploying hundreds of employees in a short amount of time is an entire different animal than sending a couple of workers to a warehouse to help out. If you only need a few extra hands on deck, this will not be much of a concern. However, if your workforce needs are approaching a hundred or more temporary workers your challenge requires an expert supplier to be successful.
Establishing a long-term relationship with one or two suppliers will yield better results than spreading orders across multiple vendors. This may seem counterintuitive but by concentrating your spend with one or two suppliers, you should be able to negotiate better pricing as well as receive more services for your dollar including onsite supervision. It’s important your supplier know your SOP’s, workflows, culture, and facility-specific needs.
There are some things to consider when you meet with a potential staffing partner. Who are you working with? Do they have extensive logistics experience? Do they seem knowledgeable about the logistics industry or recruiting employees in your market? If it’s too good to be true, in DC staffing it usually is. Staffing a DC is an imperfect business, so if what you are sold seems perfect you can be guaranteed it is not. We’re dealing with people, here folks and sometimes lots of them. Recruiting, interviewing, hiring, deploying, managing, and ultimately terminating employees is challenging enough – but it’s exponentially more difficult when you are dealing with hundreds of employees.
If your needs are high-volume consider visiting a company’s office(s), meet their people, call references, and learn their processes. Ask to visit a non-competing customer who has high-volume needs similar to yours. If they can’t show you a similar set-up they are proposing, chances are they won’t be able to service you properly.
Utilizing a flexible staffing arrangement during your busy season is one way to increase a DC’s efficiency while lowering costs and reducing risk. The key is outlining your needs up front, choosing the right staffing supplier, and communicating with them about your needs and wants.