Heading into the thick of the temp hiring period for holiday peak jobs at distribution and fulfillment centers, managers and directors find themselves challenged by a tight labor market and competition for workers.
John Challenger, CEO of outplacement consulting firm Challenger, Gray & Christmas, said there is definitely a heightened “war for talent” in distribution operations, given a stronger economy and more disposable income, lower unemployment, more competition in hot markets and the increase in ecommerce volume.
“Companies know they need more people this year,” Challenger said. “Generally most are not only seeing growth in consumer purchasing power this year over last, but the economy continues to be in expansion mode, with more people working. We’re also continuing to see a movement in growth from brick-and-mortar to direct-to-customer and ecommerce, which means more warehouses.”
Challenger said labor demand is particularly acute in markets that have distribution and fulfillment operations by massive players like Amazon or Walmart, or major carriers UPS and FedEx – which effectively means most of the country at this point.
One way that retailers are getting creative in dealing with labor management issues, plus increasing customer expectations of rapid delivery, is by setting up smaller fulfillment operations closer to urban centers as hiring in outer areas becomes more problematic.
“With so much competition in the big hub areas, they’re going to a micro hub strategy,” he said. “This not only helps them get goods to customers faster, but it solves some staffing issues pressing on them. They can find more people willing to do that work in city neighborhoods, who don’t want to do an hour commute to the exurbs or have transportation issues.”
A Multi-Pronged Peak Approach at Ascena Retail
Shane Williams, Vice President of Ecommerce Fulfillment Operations for Ascena Retail Group’s shared services unit, said he plans to roughly double his workforce this year from 625 to 1,200 at the company’s direct-to-customer DC in Greencastle, IN, outside Indianapolis. Williams said the headcount doubled last year as well, but from 380 to 750. This year the workforce has been increased because the facility is supporting eight brands instead of five, after the company acquired Loft and Lou & Grey a year ago and brought Ann Taylor’s operations in house.
“I essentially double my headcount at peak season for less than 20 days, then it’s back to business as usual, then we start planning again,” Williams said. “We do have a peak playbook, which is shared with all our support teams, from IT and HR to client technology services. We’ll do a peak hindsight, what worked, what didn’t, and what we’ll continue to do.”
Williams said he’s anticipating moving 1.1 million units on Cyber Monday, more than three times the average daily demand of 300,000. “It’s the old story, you build the church for Easter Sunday,” he said. “For those 25-30 days of the year, we do go through a process of maximizing (throughput) and carrying over orders, and we’re limited on the number of units we can process.”
To attract seasonal workers in an area heavy with DTC operations, including an Amazon facility 30 minutes down the road, Williams said he relies on a number of tactics including using a managed workforce group that delivers pre-trained workers, tapping temp agencies, hiring high school and college students on break and busing in employees from Ascena’s retail DC in nearby Columbus, OH through a talent sharing program.
“We’re also exploring the option of offering childcare in our facility to attract stay-at-home moms,” he said. “We go out in the market to see what items would make us an employer of choice and that’s a big piece of it.”
A Bilingual Program, Increased Automation Aid American Eagle
Christine Miller, director of operations for American Eagle Outfitters, said her company in June began a pilot program that removes the English language requirement at its omnichannel facility in Hazleton, PA, in order to attract more Hispanic workers.
“Right now it’s only in our DTC packing operation to start, and we have the capability in our WMS to switch to bilingual,” Miller said. “We have bilingual staff and our temp agencies support us with bilingual supervisors and coaches. The performance of that group is very good in terms of attendance, quality and accuracy.”
Miller said American Eagle is looking to expand the program by cross-training employees for work in other areas of the facility, with the hope of getting the benefit of a larger labor pool not only during the holiday but throughout the year.
Another way American Eagle is looking to address peak labor demand – when it will add 1,600 temps to its full-time staff of 330 – is by increasing automation. It will be testing two auto-bagging systems at its Pennsylvania facility through peak season for multi-unit orders as well as single-unit orders. “We hope to be able to trim headcount during peak by 150 with auto-bagging,” Miller said.
Regular Shifts, Cross-Training Help During Peak at The Golf Warehouse
Dana Thomas, Director of Operations at The Golf Warehouse, said competition from higher-paying aviation industry jobs nearby, including Cessna, Boeing and McConnell Air Force Base, force her to look for more non-compensation perks to draw seasonal help. This includes offering eight-hour shifts Monday through Friday, without weekends, a popular option for workers.
“We also cross train every full-time employee to do any job in the DC, whether it’s receiving, stocking or returns, so they can go where they’re needed,” Thomas said. “So then we can bring in temps to do packing only, training them in one place, which makes it easier to manage. We also don’t have to bring in as much peak labor as we used to with our Manhattan Associates WMS, which has improved efficiency and reduced labor requirements.”
For peak season this year, Thomas said The Golf Warehouse will bring in 20-25 temps starting in mid-November, up from 65 currently. In 2015 it hired 30 temps on top of 80 regular staff. The reduction, she said, happened through a combination of WMS efficiency gains and a decrease in business.