Worker Shortage Limiting Firms’ Abilities to Innovate Supply Chain, Survey Finds

This story appears in the March 24 print edition of Transport Topics.

A survey of supply chain executives found that data analytics and multichannel fulfillment are the top priorities in the coming years among companies in a number of industry sectors, including transportation and warehousing.

However, a shortage of talent and a continued focus on cost reductions are making it difficult for companies to take advantage of innovations, such as the use automation in factories and distribution centers, the study found.

“No doubt, hiring, training and retention of workers are the most important issues facing this industry,” said George Prest, CEO of MHI, an association that represents the material handling industry. “More than 11 million people work in the supply chain, which is 8.6% of the nation’s workforce. However, a shortage of skilled workers remains.”

Factors contributing to the shortage include an aging workforce and a negative perception of manufacturing and supply chain jobs to young people.

But the need for people with new skill sets “is the biggest factor,” Prest said.

Results of the MHI Annual Industry Report were presented March 18 at Modex 2014 by Deloitte for MHI, a Charlotte, N.C.-based association formerly known as the Material Handling Industry of America. Modex is a biennial trade show in Atlanta for operators of distribution centers and transportation logistics and supply chain managers.

Nearly 80% of executives surveyed said analytics are “very important” or “moderately important,” and most plan to increase their investments in this area.

“That’s a good thing,” authors of the report said, “since our experience shows that, at many companies, the supply chain side of the house is a step or two behind the commercial side when it comes to tapping the full power of analytics.”

A convergence of forces — data proliferation, cheaper data storage, faster processing power, mobile connectivity and new software tools — is helping to expand the use of analytics to tackle problems, such as forecasting demand, managing supplier relationships and tracking products in the supply chain.

Another issue for many companies, especially retailers, is fulfilling orders for goods purchased online while keeping stores stocked with appropriate levels of inventory.

“In today’s fast-paced retail environment, products must be able to flow freely from receiving to shipping at high velocity,” according to the report. “Traditional wave picking may soon be replaced by waveless operations that more closely resemble tidal waves in terms of volume and velocity.”

A number of companies exhibiting at Modex offered glimpses of the future, with demonstrations of vision-guided forklift trucks and automated picking equipment.

Sales of automatic guided vehicles and systems rose to $140 million in 2013, a 39% increase over 2012, according to MHI.

“This was a record year for the AGVS industry,” said Sarah Carlson of Daifuku Webb and spokeswoman for MHI’s AGVS industry group. “The economy is improving, and more companies are looking to add automation to increase productivity and lower operating costs.”

In a video animation produced for Qimarox, a manufacturer of components for material handling systems based in the Netherlands, battery-powered drones are shown picking up boxes and depositing them on pallets.

Drones currently are limited in what they can carry, but company spokesman Tyler Phillips said that interest from companies such as Amazon will continue to drive development of higher-capacity batteries and new control systems.

In a related development, Julie Shah, head of the interactive robotics group at the Computer Science and Artificial Intelligence Lab at Massachusetts Institute of Technology, announced that she has developed a system that can rapidly reconfigure work schedules involving teams of robots. She said it is a breakthrough that will make it easier for machines and people to work together on the factory floor and in distribution centers.

Shah is slated to describe her work in “scheduling the choreography of robots” at a Crossroads 2014 conference at MIT in Cambridge, Mass., on March 25.

Technology for creating human-like avatars also could play a role in training workers for supply chain jobs, said Elaine Puri, director of workforce development at the American Society of Transportation and Logistics. She spoke at a Supply Chain & Transportation USA exhibition and conference held in conjunction with Modex.

“Online-learning software is extremely useful in training employees in circumstances where classroom training is not possible or where companies want to reduce training time and travel costs,” Puri said.

A recent study by Supply Chain Insight found that it takes an average of five months to fill supply chain jobs, with the greatest shortage being at the middle-management level. Turnover among supply chain employees averages 15% and appears to be on the rise, Puri said.