Final thoughts on the Material Handling & Logistics Conference

There was electricity in the air at the end of Dematic’s 31st annual Materials Handling & Logistics Conference. Literally. Four songs into the closing concert by Joe Walsh, lightning lit up the mountains.

Without forcing the metaphor, a cloud over-head may have been fitting for where I think the industry is today. On the one hand, there is a feeling that the current automation boom is only one or two innings into a nine inning game. I think of the innovations I’ve seen in just the last eight or ten years, everything from goods-to-person picking, mobile robotics, shuttles, put-walls and now pocket sorters and the emergence of piece picking robots. It’s all so fabulous.

At the same time, I don’t imagine anyone running the lights out distribution center any time soon. For instance, Amazon continues to open new facilities at a break neck pace and what we hear over and over is that these DCs are designed to employ 1,000 to 2,000 associates. And, given that most of us operate in distribution hubs like Louisville, Indianapolis, Ontario and Columbus, they’re not alone in vying for talent in those already congested areas.

It comes as no surprise then that the cloud hanging over the industry – the electrical storm threatening to light up the mountains and shut down the party – is the inability to find enough associates to keep them running, at least at the wage scale we’re accustomed to paying. This is far from scientific, but let me share four anecdotes from the conference.

An engineer from a global manufacturer said that the goal for his facility was to minimize turnover in the warehousing and kitting operation that delivers supply to the line to 20% per month. Yet, some months, turnover was as much as 40%. He currently had just over 100 openings across three shifts in warehousing positions and couldn’t fill them.

The vice president of logistics for a consumer company told me that his company had just raised the starting wage in its facilities to $12.50 an hour – the first increase in starting wages since 2003. As a union shop, they offered first rate health and retirement benefits. And, he still couldn’t prevent turnover.

A Midwestern retailer said that the only way his company could compete with Amazon in its region was to raise the starting wage by $3 an hour. That sounded good until I realized that the old wage had been just $9.50 an hour, or less than my local Walmart pays starting associates to work in its stores.

During a round table discussion on maintenance, more than one manager pointed out that their best technicians were in their fifties and getting ready to retire yet they couldn’t attract enough young people into the profession. One unique tactic was a manager who said he’d begun attending Go Kart races, because the kids at those events had learned the mechanics of tearing down an engine and might be able to learn to service conveyors. More than one said they were implementing a CMMS system not just because it would streamline their operations, but also because it would capture that knowledge that experienced technicians carried in their heads. I began to think of a CMMS not just as a maintenance software application but as a risk management strategy.

On a positive note, there were more young people at this year’s event than I’ve seen in the past. Some were presenters. All that I spoke to were eloquent, engaged and excited about the projects they were working on in their facilities. Yet, I left thinking that our biggest challenge as an industry over the next three to five years won’t be crossing technical barriers, but finding the right combination of wages and benefits that will attract talent at all levels of the organization to give our industry a shot of electricity.