Paula Hise - Sr. Vice President, Consumer Packaged Goods - Kenco - Chattanooga, TN
Key trends include:
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Receding order volumes, increased distribution costs, and labor shortages
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During COVID, order volumes for consumer packaged goods increased. Now, orders are receding.
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Today it costs more to ship the same product, and much of that increase is attributed to rising labor costs as wages are increased to retain employees during today’s labor shortage.
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Raising product prices will not help offset higher shipping costs because most consumer packaged goods are consumables with low brand loyalty among consumers. If prices go up, consumers will simply flip to another brand.
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Many of the major labor shortages in the CPG supply chain are apparent in these roles across the industry:
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Forklift operators
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White collar jobs that support warehousing and distribution, such as specialty roles in quality, regulatory and compliance.
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Business analysts
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Engineers
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Too much warehouse space and equipment: Again, because order volumes are down, many companies have too much warehouse space and equipment. Kenco is also helping customers find other companies to take over those commitments or redeploy the equipment somewhere else.
To help CPG providers manage the labor shortage and reduce their shipping costs, Kenco recommends that they:
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Use technology to make sure that the labor is as efficient as possible. For example, automation can reduce reliance on labor, and also help the labor we do have more easily manage their tasks.
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Offer flexibility. Flexible work hours are key, especially with more millennial and Gen Z employees entering the workforce. These generations do not want to be tied down to a 9-5 in the office every day or be unable to easily swap shifts. Kenco has introduced an app called Shift Swap, which allows our employees to put their shifts up for bid and swap and trade shifts with one another. This has increased our retention rate as employees are able to make all of their shifts.
Engage employees. Much of the turnover for employees across many industries comes in their first 12 months of employment. At Kenco, we know that if we can offer a positive, engaging work environment during that first year, our employees are happy to work with us for years. We have a first year experience program in which our leadership and management teams make sure that they're doing regular check-ins with their direct reports.
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