December 30, 2021

How the Labor Shortage Is Affecting the Supply Chain

The current labor shortage affects all industries, but none more so than the eCommerce fulfillment and trucking industries. E-commerce companies struggle to find workers to handle the ever-growing demand for package shipping. The driver shortage in the trucking industry also feels the squeeze, as they can't find commercial drivers to transport goods across the country. 
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The scarcity of labor is having several effects on businesses. Companies are forced to raise wages to attract workers, which increases the cost of doing business. The lack of workers is also causing delays and disruptions in the supply chain. In this blog post, we'll explore the causes and effects of the labor shortage and discuss some industry insights.

Causes of Labor Shortage

The eCommerce fulfillment and trucking industries feel the effects of the current labor shortage. There are various reasons for this, but some critical factors include demographic changes, increased benefits, and a lack of training programs.

The population is aging, meaning fewer working-age people to fill jobs in these industries. At the same time, unemployment rates have fallen significantly over the past few years. It means that more people are now eligible for benefits such as healthcare and childcare – which can take them away from the workforce.

Another issue is that many workers don't have the necessary skills for today's job market. The demand for skilled laborers has shifted dramatically in recent years, and many training programs haven't been able to keep up. It has led to a shortage of qualified workers, which will only worsen in the future.

The tight labor market has significant economic impacts. eCommerce fulfillment centers are struggling to find enough employees to handle the influx of orders, and trucking companies are facing higher shipping costs and longer delivery times. The situation is likely to worsen before it gets better, so businesses need to prepare now.

Effects of Labor Shortage

Your employees are your company's greatest assets. They play an essential role in the success of your business, especially when it comes to scaling operations and streamlining workflows.

When you encounter a labor shortage, it limits recruiting resources and impacts current workers' productivity levels. Every employee counts in keeping supply chains running smoothly - even interns. Here are just some ways that this is happening:

Delaying Delivery Time

Companies need products moved quickly into production or storage to begin their journey through the supply chain faster than ever before. However, with fewer manufacturing workers available to produce goods, companies have had to buy more equipment at additional costs, putting them behind schedule by days, weeks, or months depending on the product.

Resulting in Higher Prices for Everyone

With increased demand and restricted supply, businesses are forced to increase their prices to maintain a certain profit level. This inflationary pressure affects consumers and producers as they adjust to the new market conditions. The result is an increase in cost throughout the entire supply chain.

Breaking Down at Every Stage

Supply chains are incredibly complex structures that rely on multiple parties working together efficiently. When one part of the chain breaks down, it can have catastrophic consequences for companies worldwide. For example, delays in getting products from manufacturers to distributors have created a bottleneck in the logistics industry, such as warehouses, leading some retailers to run out of products.

Industry Insights 

The labor shortage is being felt throughout the eCommerce fulfillment and trucking industries. Companies are struggling to find workers to fill open positions, causing delays and disruptions in the supply chain. The situation is likely to worsen, so what happens with labor storage in each industry?

  • Transportation Industry: The trucking industry feels the heat from the labor shortage. The American Trucking Association (ATA) recently released a report that stated that by 2024, there would be a 330,000 shortage of truck drivers in the trucking industry. Rather than recruiting new drivers, you should focus on keeping the ones you have.
  •  eCommerce Fulfillment: eCommerce fulfillment centers are struggling to find enough employees to handle the influx of orders. Many centers have been forced to raise wages to attract workers. It has led to increased costs for businesses and longer delivery times for consumers.
  • Order Fulfillment: Order fulfillment is another area impacted by the labor shortage. Businesses are having trouble finding people who can quickly and efficiently pack products. It can cause a delay in getting products to consumers, leading to lost sales.

In addition, hiring difficulties are being experienced by both businesses and consumers in the retail industry. Not only is finding enough personnel a problem at all levels of the supply chain, but sourcing for warehousing, transportation, and eCommerce departments is also tight. This challenge will only worsen as retailers expand into new markets while still satisfying online customers' needs.

Businesses in all supply chain sectors need to take steps to retain their current workforce and prevent this issue from becoming even more severe in the future.

Conclusion

Many factors contribute to the labor shortage, but it is vital that management figures out a solution. Outsourcing could be one way for companies to meet their supply chain needs without increasing wages or hiring more employees. We have experience providing eCommerce product fulfillment services and can help you solve your company's labor problems with our knowledge of inventory management software.

The author BR Williams family-owned trucking, warehouse & logistics company. You can visit the author's eCommerce product fulfillment services website at https://www.brwilliams.com/e-commerce-product-fulfillment-services/ to learn more about how the labor shortage affects eCommerce fulfillment or to get expert assistance with your own company needs. We hope this article was helpful.

Photo by Paul Hanaoka on Unsplash.