If you were contracting for home renovation work, you might deal with a single general contractor to coordinate the project. But you’d like to feel confident that the people actually laying the tile, putting up the drywall, and attaching the plumbing fixtures have the experience and training to do a quality job.
The same holds true for the use of temporary labor for warehouse staffing. As a user of third-party logistics (3PL) services, you want to understand how your 3PL utilizes temporary labor and how that might impact work quality.
Temporary Warehouse Labor: Advantages for Shippers
Using temporary workers for warehouse staffing is helpful to shippers in a couple of ways. One, it allows 3PLs to respond, in an agile way, to fluctuating order cycles with a flexible warehousing solution. Sales spikes are good, but if your distribution arm can’t keep up with the demand it can lead to lost sales and unhappy customers.
Temporary labor also allows shippers to better manage costs. As the saying goes, you don’t necessarily want to build the church to accommodate the crowds on Easter Sunday. Likewise, you don’t want your 3PL to set account staffing levels to handle your biggest volume peaks – and charging you for that full-time labor. Most of the time, you won’t need it.
KANE recently recruited and trained 17 temporary workers for a new account where the shipper was not confident of forecast volumes. Over time, as volume levels and patterns became clear, KANE shifted to a more full-time account team, saving the customer significant labor costs at the start of the relationship, while still maintaining high quality levels.
Temporary Warehouse Labor: Advantages for 3PLs
Strategic use of temporary labor is also beneficial to 3PLs in a number of ways:
- Work continuity. Temporary labor allows 3PLs to keep staff employed on a continual basis, rather than have to lay off people if account activity slows down for a period of time.
- Work/Life balance. Overtime may be necessary occasionally, but you don’t want to burn out warehouse staff with a steady diet of overtime to deal with prolonged volume spikes.
- Recruiting of warehouse staff. Many 3PLs, including KANE, view temporary work assignments as great opportunities to identify candidates for full-time positions. And many temporary workers are looking for these “temp-to-perm” opportunities and appreciate the chance to see if the hiring company is a place they could build a career.
- Reduction in hiring expenses. Obviously, if you are hiring warehouse staff from a pool of existing temporary workers, you avoid the costs of recruiting and on-boarding brand new staff.
Warehouse Staffing: Questions to Ask 3PLs About their Use of Temporary Labor
When evaluating a 3PL to handle your business, chances are you would meet only with salespeople and executives on the operations and engineering sides of the business. In the end, however, those who have the most impact on work quality are the people you DON’T meet during the courting stage – those who pick, pack and check your orders. To the extent that these could be temporary workers, you want to make sure they are trained and able to deliver the quality work you expect.
Here are questions you can ask to assess a provider’s ability to effectively and efficiently process your dynamic order flow:
- What percent of your warehouse staff is temporary labor? At KANE, we like to keep this figure at around 20 percent. That gives us the agility we need to economically manage volume spikes, but also ensures that the vast number of associates on the floor have the attitude we look for in a KANE associate and will deliver on the expectations of the KANE Code. At KANE, we “hire for attitude and train for skill.” Be wary of 3PLs with a very high percentage of temporary staff.
- Do you share workers across accounts? 3PLs that cross-train associates on different account SOPs and can liberally share this labor can be a huge advantage for shippers. When volume spikes, instead of relying on temporary labor, the shipper get experienced, trained associates that know the account and the job function. That likely means the work gets done faster, with fewer errors. 3PLs that operate campus environments, with multiple warehouses at one location, are particularly able to delivery this cross-training advantage.
- Can you marshal the resources for huge volume spikes? You naturally want to minimize any risk for supply chain disruption, so it’s wise to think about a worst-case scenario (or best-case, depending on how you look at it) and evaluate what would happen if order volumes spiked 50–100 percent, unexpectedly. How many relationships does the 3PL have with warehouse staffing agencies? How strategic are those relationships? Would the pool of temporary workers be sufficient to handle the volume spike?
- Are you double-checking worker capabilities? Many 3PLs accept that worker skills and certifications are as represented by the staffing agency. It’s wise to double-check that this is the case, particularly for a position like a forklift driver, where inexperience can lead to product damage and serious injury.
- Are your relationships with temporary staffing agencies tactical or strategic? Here, it’s not a whole lot different than carrier relationships. If freight capacity gets tight, carriers will first support companies that have been steady shippers and have taken the time to build strategic relationships, right up to most senior executive level. At KANE, we have quarterly business reviews with our key staffing agencies to examine key metrics and address any concerns. Staying close to our partners helps ensure that, when warehouse staff is needed in a hurry, these partners will do their very best to support us during this critical time.
Addressing Warehouse Staffing Challenges – from the Inside Out
We’re facing a real talent gap in the logistic industry – not only for seasoned operators and engineers but for drivers and pick/pack associates. At KANE, we’ve tried to tackle this challenge, in part, from the inside out – identifying and nurturing our most promising associates and preparing them to tackle bigger assignments. In fact, our new Director of Operations for a major retail client began his career as a temporary associate in 2001. Today, he’s responsible for three large distribution centers that process hundreds of millions of dollars in inventory daily.
Use of temporary labor is not just a strategic play to economically manage volume spikes, it can lead to dozens and even hundreds of extended “job interviews” that result in the full-time hiring of qualified workers to plug the talent gap.