Overcoming the Supply Chain Labor Crisis

In order for organizations to overcome the supply chain labor challenge, a new approach to hiring and retention is needed.


Employers across all industries are feeling the heat. The Department of Labor reports there are currently 10 million job openings with about 1 million fewer job seekers than there are positions available. Although some employers remain hopeful that next month’s discontinuation of supplemental federal unemployment benefits will help fill openings, supply chain labor shortages aren’t going anywhere.

Why? Because although the Coronavirus disease (COVID-19) exacerbated the issue, it didn’t create it. Frontline positions have been hard to fill for the last decade, and retention has gotten worse year after year. Lack of engagement, inadequate training and limited visibility into career growth all contribute to the problem.

In order for organizations to overcome this challenge, a new approach to hiring and retention is needed. Many leading enterprises aren’t waiting until benefits are up to ignite real change.

The driving forces behind the shortage

The disconnect between frontline workers and supply chain leaders is a tale as old as time. Hourly workers clock in and out -- sometimes without ever having a real conversation with their supervisor. With no roadmap for career growth, training to learn new skills, or any real feedback or engagement, employees feel expendable. As a result, folks are quick to jump jobs and try other lines of work.

How businesses hire for supply chain positions also fuels the shortage. Temporary employment agencies are often used because they fill hourly positions quickly and easily. This model yields poor employee/employer alignment and leads to short-term employment, sky-high turnover, lower earnings for workers and costly training. On the other hand, finding the right candidate on a job board can feel like searching for a needle in a haystack, and often, the match isn’t right or long-term.

The two paths forward

In response to the struggle, many businesses are working to address the shortage once and for all. Some have reacted by increasing pay scales for their hourly employees. Wages are being boosted by $3-5 an hour and sometimes more.

But, this path forward doesn’t address the root cause of the workforce shortage -- the lack of employee engagement. An extra hundred bucks in your paycheck might feel good at first, but the magic quickly wears off. The employee is still left with a job with no path upward, few new skills and little intrinsic motivation.

The other path forward is to fundamentally change the way you hire and retain. Here are a few steps to get started:

  1. Upgrade your way of hiring. Old methods of filling positions aren’t generating strong results, so why not do a hiring overhaul? Many leaders are turning to software solution providers that offer an outcome-oriented model. You don’t pay for clicks or for a monthly job post – it’s about retention.

Employers are also using software that aggregates relevant, skilled and engaged applicants. Innovative solution providers have a network of professionals that are looking for a long-term career. These folks are often found at vocational schools, or in training programs. The key is identifying and matching them with the right opportunities. Then, applicants are employed directly - a temp agency doesn’t garnish their paycheck.  

  1. Understand your drivers of turnover. Unless your organization can pinpoint why employees are leaving, it won’t be able to fix the problem. Perhaps it’s because they don’t have the tools and equipment needed to make their jobs easier, or maybe weren’t offered career pathways. No matter the reason, it’s critical to understand the organization’s shortcomings.

In order to identify the drivers, companies must collect honest and timely employee feedback. Ultimately, data drives retention management. Outcome data is another component of this puzzle. Compared against workforce feedback, employers can reach conclusions that drive an action plan toward better retention and more satisfied employees.

  1. Increase engagement between the frontline and management. In many supply chain settings, supervisors aren’t trained on how to properly manage an employee. Guidance on how to give feedback (and how often) or how to develop a professional development plan is not given or prioritized. As a result, managers are out of touch with frontline employees, and it affects retention tremendously.

Managers should be trained on how to better engage with frontline workers, starting with regular check-ins. It’s a simple change to implement that can make a world of a difference. In turn, the employee feels valued and recognized, and the workplace gets a longer, stronger employee.

Eyes on the prize: A stronger future

Supply chain’s workforce shortage won’t be solved when unemployment benefits end. However, with a smarter and more intentional approach to hiring and retention, organizations will be able to find and keep the right employees.

It’s a daunting task to handle alone, but outcome-based workforce management solutions can help. In fact, by ditching the agencies and job boards, you’ll not only get higher quality applicants – you’ll also free up resources, cut costs, and build brand reputation.

Regaining control of the driver’s seat when it comes to your workforce doesn’t have to be a battle. Take the steps now to optimize your strategy and put the power of people back in your hands.