Industries at Crossroads: The State of Operations 2022 – Supply Chain Drain
Rising demand, dwindling workforces, and unforeseen delays made for a difficult and frustrating peak season in 2021, where many companies struggled to meet their goals. With the next peak season starting in just a few months, let’s take a look at key statistics and the observations of supply chain and operations professionals for some important lessons to take into the coming rush.
The COVID Curve
Almost three years later and COVID-19 remains the usual suspect behind most challenges to businesses worldwide, including many of the chain disruptions and worker shortages that held operations companies back. The pandemic has a steep learning curve: 4 in 5 companies described themselves as more prepared in 2021 than in 2020, yet that year 80% of companies met their production and fulfillment goals while only 65% met those goals in 2021.
As COVID transitions from pandemic to endemic, companies must continue to account for the virus as a major economic factor and continue to adjust to its challenges. In the coming year, businesses should be more proactive about preparing for COVID-based disruptions, perhaps by switching from a headcount-based to a milestone-based staffing model, or preparing for social distancing, mask-wearing, and hand sanitizing to ramp up again when facilities become more crowded for the peak season.
66% of operations businesses could not fully staff the busiest days of the season in 2021, so recruiters must step up their game in in 2022. 40% of workers reported high stress, low pay, and dissatisfaction with working conditions were both top problems.
The need for better conditions and incentives for workers has never been more apparent, and employers can better reach for their milestones in 2022 by improving company culture and offering leading pay rates and benefits. The best conditions will attract the best talent, raising the overall level of performance and allowing businesses to rely on fewer but better employees to keep operations less crowded and more resilient to absenteeism.
Supply Chain Drain
Nearly half of employers listed the supply chain as a major hindrance during the 2021 peak season. Unpredictable shipments brought worker overtime up 25%. 41% of workers could not keep up with demand, and employers faced more customer and employee complaints as the season wore on.
While alternate suppliers may not be ideal in terms of cost or efficiency, the supply chain crisis shows no sign of easing up. To prevent worker burnout and fulfillment slowdowns during the upcoming peak season, it may be necessary to forge relationships with reliable alternate suppliers, to plan orders further ahead, or even make redundant orders in some cases.
Automation helped the operations industry survive the 2021 peak season, reducing workloads, streamlining procedures, and alleviating stress. 43% of businesses used automation in various forms, and 46% plan to use more moving forward, to mitigate the hiring crisis and streamline everything from tracking applicants to interviewing prospects and onboarding new hires.
Computerized platforms can handle paperwork automatically, helping busy leaders focus on coordinating work. Timekeeping, scheduling, performance tracking, and more can all become trivial for companies that embrace automation, so long as they do so strategically.
Companies looking to embrace automation more comprehensively in 2022 should have a clear and actionable plan for how to do so without disrupting operations. Mechanized systems introduced haphazardly could slow productivity before it ramps up.
The 2021 peak season was not all bad, and we can certainly learn from the experience. More companies are planning further in advance: 83% in 2021, up from 77% in 2020. Planning cannot completely nullify worldwide difficulties, but can mitigate issues in future seasons.
To deal with labor shortages, leaders should perform more extensive job training as well as cross-training to encourage upward mobility and flexibility for employees. When the next peak season rolls around, employers should work with staffing agencies while pursuing regular year-round recruitment. Increased pay, sign-on bonuses, and further benefits will improve hiring, retention, and job performance.
Today, 1 in 3 operations companies consider peak-season to be effectively year-round. Thus it is never too early to start planning, and always wise to expect the unexpected. Likewise, there is no shame in seeking out good partners, particularly staffing firms and primary and backup suppliers. Further investment in automation will help deal with rising demand and diminishing workforces. We can be sure that conditions will not return to the old status quo anytime soon, so as the official 2022 peak season comes on fast, successful companies will be those that know how to hire and retain staff, and to roll with whatever punches each peak season provides.
Carl Schweihs is President and Chief Operating Officer of PeopleManagement, TrueBlue’s workforce management division specializing in onsite and contingent workforces. He leads three staffing businesses — Centerline Drivers, SIMOS Solutions and Staff Management | SMX — combining innovative, technology-based solutions with workforce strategy to help bridge talent gaps and prepare tomorrow’s supply chain talent for the future.