The COVID-19 pandemic has had a profound impact on logistics. Every company in the supply chain has felt the effects. Because of consumer behavior and stay-at-home mandates, some businesses have benefited. But for the same reasons, others have struggled. However, regardless of what side your business is on, there are some painful lessons that all warehouses must learn as a result of the pandemic.
Major Demand Shifts Can Occur Swiftly
Nearly every warehouse has some variability in required throughput. For some, it's based on the time of year. For example, summers might cause a bump up for some operations, while they might be a slower part of the year for others. Holidays also commonly cause fluctuations in demand. For many warehouses, even weekly variations are normal. It's not uncommon for Mondays to be the busiest day of the week, with activity tailing off toward the end of the week.
Warehouses are accumstomed to these types of variability in demand and are well-prepared to deal with them. However, as we've experienced recently, warehouses are generally not equipped to accommodate major demand swings – either upward or downward.
Indeed, warehouses that have been beneficiaries of the pandemic have had to face major challenges. Sure, they've welcomed the additional business, but it hasn't come without pain. In the words of an inbound supervisor at a large Fortune 500 medical supplies distributor, "We were on the verge of it being a catastrophic failure."
On the flip side, because certain types of businesses were forced to shut down as a result of COVID-19 mandates, companies that supply those industries were severely impacted. One example is restaurants. Sysco is the industry's largest supplier. As of the end of March 2020, Sysco had laid off or furloughed 33% of its staff. They employ nearly 70,000 people worldwide. And with 330 distribution centers and over 10,000 trucks in their fleet, you can imagine the carnage to their logistics workforce.
Supply chain businesses are accustomed to dealing with obstacles – from driver shortages to government regulations to bad weather. And they generally have strategies to deal with these types of issues. But the vast majority of companies aren't prepared for the disruption that a pandemic can cause. Yet, as we've seen, it can happen quickly, and the results can be disastrous.
It's Hard to Make Large Staffing Adjustments Quickly
Warehouses are experts at adjusting staffing levels based on their known labor needs. Once again, most warehouses experience some form of cyclical shift in demand. They commonly deal with altering staffing requirements by utilizing temporary workers, making short-term changes to existing staff roles or schedules, and implementing planned overtime.
But when a warehouse's throughput demand spikes unexpectedly – or suddenly drops – making swift workforce changes is tough.
For operations that deal with seasonal workers, they typically have standard training and onboarding programs in place. They know the jobs in which temporary staff can quickly be productive and safe, and place them into those roles.
But when a warehouse has to rapidly hire five times as many temporary staff as they normally would, and they need those individuals to be productive faster, the usual orientation processes may no longer be effective.
And while that's a challenging endeavor, in the case of an abrupt downturn, deciding what to do with staff is just as difficult. Warehouses know that if they lay off or furlough workers, they may never be able to hire them back. Or if they cut hours or decrease salaries, employees may look elsewhere. Finding, training, and maintaining top talent is critical to the success of a warehouse. So while letting people go is heart-wrenching, it's also risky for the business once demand returns.
Fear Levels Rise with Uncertainty
Your employees are aware of what's happening in the world. Not only are they concerned about contracting COVID-19, but they are also worried about losing their job. Getting released at a time like this could be devastating to the employee and their family because very few companies are hiring right now.
When your employees are fearful, it negatively impacts their productivity and increases their likelihood of making mistakes or getting injured. When someone is in an anxious state, they can't focus as well on the task at hand.
The COVID-19 pandemic has impacted every company in every industry, with businesses operating in the supply chain feeling some of the most intense pain. But with serious challenges come important lessons learned.
While parts of the economy are starting to open, the pandemic isn't over. And many warehouses are still struggling. The recent activity has provided hope, but it's going to be a long time before normalcy returns.
Nevertheless, even if it's not yet business-as-usual for your company, you can still apply some of the lessons learned from the pandemic. If nothing else, it will better prepare you for the next major challenge your business will have to face.