The “year of the V.” This is the title Vincent Deluard, director of global macro strategy for financial services firm StoneX, gave to 2021. He predicted a year dominated by the virus, vaccines, and volatility. All true so far. Historic fourth quarter supply chain capacity constraints are carrying over into 2021. Vaccine distribution and new immunization approvals are tightening chains even more. Now confronting these increasing demands is another growing challenge: labor shortages.
The Wall Street Journal reported thousands of vacant positions attached to vaccine production and distribution, including in warehousing. While staff shortages are not new, the “three V’s” are amplifying the problem. Savvy warehouses are turning to labor management systems (LMS) in response. The technology will play a critical role in meeting the global vaccine demand of 6 billion doses by year end.
Labor Cost Controls
Labor typically represents warehousing’s largest expense consuming between 30-60% of the budget. Estimates show implementing an LMS can reduce labor costs by 10-25%. The system aggregates historic and current data to create predictive scheduling that avoids overtime and staff shortages. Integrating an LMS with a warehouse management system (WMS) provides additional information for smarter staffing decisions based on factors like inbound shipping delays, product surges, and outbound volumes.
The Biden administration is planning 100 million vaccines administered by the end of April 2021. This represents a 200% increase over current volumes. Although these vaccines are currently delivered directly to the front line facility, they will likely begin to move through a third party distribution system as the vaccines become ubiquitous. This will allow opportunities to reduce cost and improve efficiency by leveraging a company that uses an LMS to effectively expand vaccine cold storage capabilities without labor disruptions.
A sophisticated LMS monitors real-time output and reallocates staff to different tasks based on throughput needs. This may result in moving workers from picking for an hour to address inventory or assembly. Adjoining tasks based on fluctuating demands strategically maximizes warehouse employees.
Direct work hours compared to indirect hours also impact throughput. An LMS identifies inefficiencies by analyzing how employees spend their time. The information informs output goals and can improve warehouse layouts. Reconfiguring a floorplan can help staff process more orders. Adjusting layouts as a function of staff productivity will become more critical as warehouses work to create additional storage space.
Not all employees are interchangeable. When it comes to vaccines and other pharmaceuticals, warehouse associates undergo specialized training. The protocols for managing temperatures, handling drugs, and documenting data for audits are highly regulated. Labor management systems account for employee skills and talents to generate schedules accordingly.
The practice maintains pharmaceutical compliance while fostering opportunities for additional staff training. When people change jobs, they usually go to another company. According to The State of the American Workplace by Gallup, only about 9% of employees feel they have an opportunity to grow within their company. Skills-based scheduling creates new learning opportunities for employees and shows signs of upward mobility to combat turnover.
An LMS tracks employee performance to key metrics. The system can trigger managers to provide real-time coaching to workers struggling to meet minimum standards. The LMS can also trigger a coaching session for over-performing associates. This allows the managers to share the knowledge of these employees with workers who may be struggling to perform at standard. Gallup’s survey found about 75% of workers perform their jobs without meaningful input to help them learn and grow. Identifying issues isolates problems as they occur—an important tool for staff development and meeting quality guidelines.
The system also aids in identifying top performers. Positive feedback and performance incentives improve retention. The best way to combat a labor shortage is retaining the staff you have. Research shows when bosses recognize and reward good work, 99% of employees remain engaged. That is a powerful number, especially as lives depend on warehouses storing and distributing vaccines to the entire world.
Langham’s LMS Technology
Despite the many benefits, more than half of warehouses do not use an LMS. Many find them cost prohibitive, but the return on investment is meaningful. As labor shortages grow and the demands placed on warehouses increase, operations without an LMS will struggle in keeping up and maintaining margin.
Langham implemented ProTrack in 2020 to optimize warehouse labor. In addition to smarter scheduling, the system is improving budgeting, used as a baseline for pricing models, and generating data for employee incentive programs. One of the more significant modules of the system is the ability to determine whether or not work in an area will be done on time or if additional labor is required, based on individual performances. The investment—one part of Langham’s suite of logistics technologies—has the company positioned well to manage 2021’s rapid influx of COVID-19 vaccines and therapeutics.
Learn more about our technology investment strategy and how our forward-thinking approach makes Langham a logistics lifesaver.