Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Peak season is upon us, and warehouse managers everywhere are revving up their fulfillment operations for the crush of holiday orders. The effort to slot, sort, and ship all that merchandise calls for a classic "all hands on deck" approach, including the hiring of extra workers to get the job done.
But for businesses planning for the 2019 peak, there's one major problem—the U.S. economy is in the midst of a historic labor shortage that's making it difficult for many DCs to find enough workers to fill their shifts. The U.S. Labor Department reported last month that the nation's unemployment rate had sunk to 3.5% in September, a nearly 50-year low.
At the same time, the demand for labor has never been higher. Burgeoning e-commerce demand is changing the nature of fulfillment work. In addition to filling the traditional bulk store-replenishment orders, warehouses today are increasingly called on to pack and ship individual consumer orders—a more labor-intensive process. And consumers accustomed to next-day delivery service expect those orders to arrive at lightning speed.
Caught between those two trends, warehouse and DC managers are turning to a number of unconventional approaches. Some are offering part-time shifts in a bid to tap nontraditional labor pools, like college students or stay-at-home parents working at night. Others are experimenting with flexible schedules, like four-day workweeks with 10-hour shifts. Still others are experimenting with creative ways to apply an old tool—their labor management software (LMS).
MORE CARROT, LESS STICK
Since its introduction decades ago, labor management software has become a standard tool for managing human resources within a warehouse or DC, offering companies a neutral method of tracking the work output of their employees. While the methodology hasn't changed much over the years, companies today are using the data collected by the software in new and different ways.
For example, in the not-so-distant past, employers commonly used their LMS data to identify underperforming workers so they could essentially cull the herd. "It used to be that every month, businesses would get rid of their bottom 10% and replace them with new people," says Peter Schnorbach, senior director for product management at Manhattan Associates, a developer of LMS and other supply chain software. "That doesn't work anymore, because you can't replace them."
Nowadays, the focus has shifted from performance improvement to employee retention. Among other things, that means warehouse and DC leaders are more likely to be using their LMS data to identify the top performers than the laggards. It's all part of a push to boost "employee engagement"—and by extension, retention. Workers identified as top performers are often rewarded with perks like prime parking spots, lunch with a top manager, or extra compensation. One Manhattan Associates customer brings a large wheel into its DC once a month, calls its top performers up to the stage, and lets them take a roulette-style spin to win various prizes, like the TV show "Wheel of Fortune."
But identifying those top performers isn't always as cut-and-dried as it might sound. In many warehouse operations, no two tasks are exactly alike, making it tough to draw apples-to-apples comparisons. For instance, it would be unfair to compare two workers on the basis of orders picked per hour if Worker A collected them all from a single aisle, while Worker B was forced to travel throughout an 800,000-square-foot DC.
In a bid to correct such inequities, a number of companies have begun adding warehouse "telematics" data— data collected remotely from forklifts and other warehouse equipment—to the mix, analyzing it along with the standard worker productivity measures.
"Everything is creating data these days," says Derrick Miller, enterprise solutions manager at The Raymond Corp., a lift truck vendor that also provides fleet management and labor management software. "LMS has traditionally been only about tracking how many pallets Carl touched, or how many crates Susan lifted. But you can also generate data from lift trucks and conveyor systems, or even track when employees use shrink-wrap machines."
By analyzing telematics data, warehouses can generate a richer, more detailed profile of their workers' activities than they can with basic performance measures. And more to the point, perhaps, this approach allows for a more nuanced comparison of workers' performance by factoring in variables like how far they traveled, how much weight they hefted, or how many locations they visited.
"People think of an LMS as an accountability tool only, to find underperformers and to drive margins, but that was before the labor crisis," Miller says. "Now, it can be used for rewarding people, giving them incentives, and retaining them."
SHIFTING LABOR LANDSCAPE
The recent shift marks the latest stage in labor management systems' ongoing evolution to meet changing business challenges, says Michael Wohlwend, managing principal with Alpine Supply Chain Solutions, a Chicago-based consulting firm.
In the early '90s, many companies used their LMS platforms to track workers' performance against "engineered labor standards" in an effort to gain leverage against unions that were pushing for less-stringent metrics, he says. Then in the late '90s, managers started using LMS software more strategically, implementing "pay for performance" programs that offered workers incentives to meet specific performance goals.
Today, warehouses are using their LMS systems—often in conjunction with their warehouse management systems (WMS)—to respond to a new challenge: meeting strict order-shipping deadlines. Many e-retailers now promise same-day shipping for all orders placed by, say, 5 p.m. However, fulfilling those promises often results in a last-minute scramble to get orders out the door, forcing managers to shift worker assignments on the fly. During these crunches, performance data from an LMS can help managers quickly identify the workers best suited to the tasks at hand, Wohlwend says.
If economic trends hold, the U.S. labor crisis won't be resolved anytime soon. But even in an age of increasing automation, most warehouses still rely on human workers to handle the growing fulfillment workload. And to help keep these valuable assets on board, more and more DCs are leveraging the data-collection and analysis capabilities of their trusty LMS platforms.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.