The Labor Challenge and DC Productivity

A recent article in the New York Times put a spotlight on the growing demand for warehouse and distribution center workers in US e-fulfillment hubs like the Lehigh Valley in Eastern PA. Shiny new ecommerce fulfillment centers built by Zulilly, Amazon and WalMart (among others) are creating thousands of new jobs in the shadows of long-shuttered manufacturing plants in places like Bethlehem and Allentown. But there is another side to this story that is illustrated by the scores of legacy DCs surrounding the new ecommerce facilities. Like the new ecom fulfillment centers, many of these established centers are adding workers and increasing wages.

A recent survey of DC executives found that 60% of US DCs have added hourly staff over the past year, and almost half of the respondents have increased wages more than 5 percent, compared to national hourly wage growth of 2.3 percent.

Beyond the hiring and wage data, the survey also sheds light on top priorities for improving labor productivity. Most DCs are putting their time and money into process improvement and software solutions. Those solutions range from traditional warehouse management (WMS) and labor management systems (LMS) to advanced mobile applications and mobile work execution software.

These software investments allow DCs to improve productivity while handling increased shipping volumes and shorter delivery schedules. A far smaller number of the survey respondents said they are investing in material handling systems and automation. The newer DCs are investing in software and automation, but as the Times article pointed out, these facilities still need hundreds of employees to work alongside the automation. Rather than killing jobs, automation is complementing them.

The net of this is that jobs are plentiful and productivity will continue to rise as new and old DCs bring in more technology. Software-driven productivity gains help support increased wages and they also preserve some of the advantages of using people versus machines. In particular, software solutions make it easier to ramp up throughput to meet peak volumes using seasonal workers, rather than building expensive automation systems that may sit underused for most of the year.

Want to get the full results of the DC Employment Outlook Survey? Join us on November 15 for a 20-minute webinar as we delve into the survey results, including the top investment priorities for improving labor productivity. All registrants will receive a copy of the Survey report, and a replay of the webinar will also be available if you miss the event. Register now.