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More than 47 million American employees voluntarily quit their jobs in 2021 according to the US Bureau of Labor Statistics. It has been dubbed the “Great Resignation” while others may have called it the “Big Quit.” Baby boomers have been retiring early. Many working women left the workforce to care for their children during the coronavirus pandemic and have not returned. Families are moving to smaller cities in search of affordable housing. Coupled with high inflation, rising living expenses, worker burnout, and the potential for higher pay due to a tight labor market, employee retention is a serious challenge for many businesses.

Cause and Effect

At the writing of this article, the unemployment rate remains at 3.5%, the inflation rate at 8.5%, living expenses have been growing faster than incomes, food costs surging over 10%, home prices have climbed sharply, mortgage rates have jumped from 2.5% to 6%, and rental cost have hit record highs, outrageous prices for new and used cars due to computer chip shortages, and gas prices are still high. It is only logical that employees are demanding higher wages. In addition, employees also want autonomy and flexibility in their work schedules, improved working conditions, and remote positions to work from home. Even at local businesses, stores, restaurants, and coffee shops, employees have been unionizing to get what they are demanding. 

Many companies are offering better pay, benefits, and even signing bonuses, and yet employee retention remains low. Meanwhile, businesses are struggling with spikes in material costs, increases in supplier costs, supply chain issues and delays, increases in transportation costs with reductions in capacity, increasing utility costs, and increases in healthcare costs. With droves of baby boomers retiring early or gearing up for retirement in the next few years, the labor pool will continue to shrink, and companies will have an even more daunting task of recruiting and retaining their employees.

Material handling jobs in warehouse and distribution centers are particularly vulnerable since the work offered can often be mundane, tedious, and physically taxing. Overexertion from excessive physical effort and repetitive motion are the top causes of injuries. Lift and lower injuries are common. Walking and standing on concrete work floors all day leaves the associates sore, aching, and fatigued. The latest figures from the Bureau of Labor Statistics put the annual turnover rates for warehouse jobs at over 40%. The main reasons for such a high warehouse turnover rate include unsustainable productivity requirements and subsequent injury rates. With a labor pool that is limiting and a lack of qualified applicants, it is becoming increasingly difficult to incentivize people to come to work.

Path to Resolution

For distribution centers, manufacturing, retail, e-commerce, logistics, and transportation companies, it might be time to consider introducing or adding material handling equipment into their operations. It takes reflection and understanding what the pain points in the operations are.

How will adding material handling equipment be helpful?

• Reduces Operational Cost 
• Improves Productivity 
• Increases Throughput and Product Flow
• Reduces Workload
• Improves Safety and Having Few Injuries  
• Ease Of Use
• Increases Speed and Reliability 
• Improves Accuracy and Reduces Errors  
• Increases Workspace and Storage 
• Improves the Overall Customer Experience  

As a leader in your company, you may have to make justifications and provide the return on investment (ROI) for additional equipment, weighing labor costs versus the benefits. Typically, it can be a 3- or 5-year ROI. Or it may be a case for safety necessity; According to National Council on Compensation Insurance (NCCI) data, the average cost of an OSHA recordable injury in 2020 was $44,000 vs the national average salary of a warehouse material handler estimated at $38,000 by Indeed.com. Other key indicators that might be important to your company include the time product spent in the building, the turnaround time, process rate, or product throughput. 

Adding material handling equipment improves the working conditions for the existing workforce by taking the burden off physical labor while also saving costs. It is not just replacing associates through automation and material handling equipment but better utilizing their talents on tasks that add value to operations and to the company. Keeping your associates happy and healthy by providing work that is rewarding and satisfying. Without the constraint of finding a dependable workforce, you can focus on growing and sustaining your business.

In addition to providing maximum service and efficiency at the lowest possible cost, the optimal warehouse design and equipment will also have the flexibility to adapt to changing requirements and support long-term business growth. An experienced supply chain consultant can perform a thorough warehouse assessment to identify potential operational and process improvements. Contact us today to learn how we can use our warehouse design expertise to help you optimize your distribution operations and continue to thrive in today’s highly competitive environment.