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Survey of supply chain leaders shows businesses across the globe are grappling with labour shortages
Photo: Trans.INFO

Survey of supply chain leaders shows businesses across the globe are grappling with labour shortages

A global survey by Descartes Systems Group recently found that 76% of supply chain and logistics leaders are experiencing “notable workforce shortages” in their operations.

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Gregor Gowans

Gregor Gowans

Journalist Trans.INFO

09.02.2024

A global survey by Descartes Systems Group recently found that 76% of supply chain and logistics leaders are experiencing “notable workforce shortages” in their operations.

Survey of supply chain leaders shows businesses across the globe are grappling with labour shortages
Photo: Trans.INFO
The survey was conducted late last year and saw 1,000 supply chain and logistics decision-makers across the manufacturing, distribution and retail sectors interviewed. Carriers and logistics services providers were also spoken to.

Besides the headline-making statistic above, a somewhat alarming 37% of respondents said they would characterise the shortage of human resources they are facing as “high to extreme”.

Moreover, the survey found that these shortages are impacting customer service performance, with 58% stating labour shortages had dented their service levels.

As for where these shortages are most acute, 61% of those interviewed admitted to shortages in transportation operations, closely followed by warehouse operations on 56%.

The shortages do not only concern manual workers or skilled manual workers either – 55% of supply chain and logistics leaders also said knowledge workers are the hardest to hire.

Commenting on the results of the study, Chris Jones, EVP for Industry at Descartes, said:

“With economies cooling and COVID more manageable, the general thinking has been that companies would see the workforce shortages of the past few years subside; however, this does not appear to be the case. The study shows that, post-pandemic, supply chain and logistics organisations continue to struggle getting the labour, knowledge workers and leaders they need to thrive. With business performance driven by both the quantity and quality of the workforce, supply chain and logistics leaders need to rethink not just their hiring and retention strategies but also how technology can help to mitigate current and future workforce challenges.”

According to the authors of the research, the impact of workforce shortages varies depending on factors like financial performance, growth, management’s perceived importance of supply chain and logistics operations, and the success of employee retention programs.

Interestingly, Descartes claims that there’s evidence that business performance is interrelated—and that the impact of workforce shortages “can be mitigated by business leaders understanding the full potential of their supply and logistics operations, and the importance of employee retention to supply chain and logistics performance”.

Professor Anna Nagurney, who currently holds the position of Eugene M. Isenberg Chair in Integrative Studies at Isenberg School of Management, recently touched on this during an interview with Trans.INFO on the issue of the labour market and supply chain management.

According to Nagurney, “there is synergy between productivity and people”. She notes that higher levels of productivity allow companies to reinvest in human capital, and that smart investments result in higher labour productivity.

When it comes to what these smart investments may be, Nagurney told Trans.INFO:

“What are some of these smart investments? Investments in labour productivity can involve investments in tangible assets in the supply chain, investments in intangible ones such as R&D as well as investments in human capital by enhancing the acquisition of skills and education. Also, as we saw in the pandemic, investments in workers’ health and safety in their work environments can not only reduce stress, but can increase workers’ productivity. Healthy workers are happier and more productive.”

Given the issues with shortages across the supply chain, what can be done to improve supply chain resilience in terms of labour supply?

In answer to this question, Nagurney told Trans.INFO:

“A supply chain network is said to perform “better” if, on the average, it can handle a higher demand for products, at a lower price. Resiliency that we then consider is of two types: resiliency in terms of labour supply and resiliency in terms of labour productivity. We find that, if labour is allowed to “move” (be reallocated) to different activities in the supply chain (assuming that workers have the right skillsets) then the supply chain network is more resilient in terms of disruptions to labour supply and to disruptions to labour productivity.”

Although it may not be something that major manufacturers and logistics companies would hear with great enthusiasm, Nagurney also emphasised the role that higher wages can play. The professor told Trans.INFO that higher wages can mitigate labour shortages to an extent by boosting productivity among other things:

“There is a lot of evidence that raising wages may increase labour productivity including in manufacturing. This may help to alleviate some of the labour shortages. Higher wages are also associated with better health and less illness, which enhances worker productivity. Also, we have found that higher wages can have positives on profits of manufacturers. Furthermore, our work shows the benefits for firms who are willing to pay higher wages to their workers in terms of their profits and even lower demand market prices for consumers!”

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