Distribution Center Site Selection (Part II)
Author: Brad Struck, SIOR
In Part I we discussed ways to identify the best specific locations within a MSA. Labor data analysis and local interviews were key components in ensuring an optimal location.Once a site is selected, the battle for warehouse labor has just begun. The site selection for your facility may have been very thorough, but your company may still face labor challenges if large distribution centers are built nearby afterwards (difficult to predict). The pressure is even more apparent during the holidays when consumer-driven companies are faced with peak orders and a significant increase in staff. Over the years, we have witnessed best practices from companies that address issues regarding recruiting and retaining employees. Below are some of the strategies that companies are using to create an optimal work force:
- Disabled workforce
Disabled can infer a multitude of different challenges (mental or physical). Unfortunately, they are not able to apply or be part of standard recruiting agencies. However, many times this workforce is very capable and produces high quality. Walgreens and Alex & Ani are pioneers and have stated these workers are motivated to work, attend consistently and have the skills to perform the required jobs. Many companies are not aware this workforce exists. In addition, there are available state programs which will fund training.
- Veteran workforce
Similar to disabled, this workforce may be forgotten or not top of mind. There are also programs to assist companies with training of Veterans making transitions out of the military. Walmart began a program in 2013 to hire a total of 250,000 veterans by 2020 across stores and distribution centers. Amazon is planning on hiring 25,000 veterans in the next two years.
- High School workforce
Some companies have created training programs and are proactively working with local high schools offering students an alternative path if college is not an option. This workforce has also been extremely helpful during peak.
Forty hours and benefits
Unfortunately, the typical labor pool of distribution employees will leave an employer to earn $.25 – $.50 more per hour at another company. Their vision can sometimes be very short-sighted with regards to the total employment package. Sometimes they learn after the fact that their new employer will not give them forty hours of work and therefore does not provide other benefits. We have noticed companies which offer forty hours and educate the value of the benefits are able to retain employees. Those workers that leave for a slightly higher wage rate often end up returning for the benefits or improved culture.
Technology which makes the tasks easier for the employees
In certain distribution environments the pace to fill orders is very demanding. With this high velocity comes mistakes and many employees are very prideful of their quality of work. If a company can provide technology tools such as pick-to-light, employees feel less pressure and are happier. Basically, the company is making it easier for the employee to succeed and meet their goals
A winning culture and engineered labor standards
We have seen companies engage consultants to develop engineered labor standards. The standards plus tracking production become very motivating for employees. Furthermore, some companies utilize large TV screens to track performance which can create competition between employees to excel.
Discounts on products for employees
Consumer product companies have been known to offer discounts on their products. This is an effective perk during the holiday peak season where workers can earn extra income and discounts for potential Christmas or other gifts.
In warmer climates working in an air-conditioned environment can be extra motivation to apply or to remain if hired. Sometimes employees will work for less wage to work in a comfortable environment. One very large retailer is installing HVAC in the warehouses of their entire DC network (10+ facilities) to help attract and retain labor
ESRP’s industrial team has successfully led several corporations through the site selection process while analyzing the total cost of occupancy. Our team of industrial brokers align with our Site Selection team to ensure extensive data and analysis is provided, allowing our clients to make informed decisions that ultimately positively impact the firm’s finances, operations, and culture.