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What Are Growing Labor Shortages That Could Affect Supply Chain

Even in a strong economy, disruptions can be difficult to overcome. Some challenges are in fact rooted in the strength of an economy. Labor shortages pose unique tests in a globalized world. In most industries, the effectiveness of supply chain management depends largely on the productivity and skill of the workforce. And while supply chain industries are booming, the skilled workforce is shrinking.

Students enrolled in the University of North Carolina at Pembroke’s MBA with a concentration in Supply Chain Management online explore emerging topics such as a disruption in the supply chain due to labor shortages. This is combined with in-depth coursework on subjects like managerial economics and theory, operations management within global systems, and strategic planning and decision-making. Students develop a comprehensive understanding of the complex effects of disruption as well as essential strategies to adapt quickly.

What Causes Today’s Labor Shortages?

Unemployment is historically low, resulting in a shortage of workers to fill vacant positions. New technologies are developing rapidly, as are increasingly globalized markets, demanding new, highly skilled workforces. Organizations are restructuring to accommodate changes in product demand, customer requirements, supply and delivery. Siloed organizational structures and narrow job responsibilities are giving way to positions requiring a range of advanced skills.

Many of the most experienced and highly skilled workers of the baby boomer generation are retiring. The younger generations entering the workforce lack the knowledge coming from years on the job. This can lead to a talent gap, where even existing and potential workforces do not fill the employment need in numbers and skill.

How Do Labor Shortages Affect Supply Chain Management?

Rapid growth in e-commerce has produced equally rapid growth in distribution centers dealing with extremely elaborate global logistics. Job growth and talent levels of those entering the workforce are outpaced by the number of warehouse and distribution workers necessary to meet demand. Hence, the labor shortage and talent gap limit the ability of the industry to keep up with that demand.

Similar problems arise across many components of the supply chain, from management to manufacturing. This has the potential to disrupt from various angles. These disruptions can be further compounded when considering global supply chain management and volatility in labor markets and economies around the world. 

What Can Supply Chain Professionals Do to Reverse the Trend?

Supply chain management professionals can address the issue in various ways, both immediate and proactive. As an example, it is essential to consider labor availability as part of the site selection process when developing a distribution center. The size of a market’s available workforce, the quality of that workforce, the employment rate and cost of labor all factor into this.

But securing an advantageous market location alone is not enough. The competitive job market can create difficulties in employee retention. High employee turnover means a less skilled and experienced staff, more time and cost for training, and more resources spent attracting talent.

To improve retention, employers are increasing wages and adding internal employee development. They are also investing in local education initiatives and industry apprenticeships, building a more sustainable and talented future workforce.

Integrating automation into various aspects of operations can also boost employee productivity and is essential to the modern supply chain. Plus, younger generations entering the workforce are generally more technologically competent than their predecessors. This new workforce is uniquely suited to facilitate automated technology integration. 

Labor shortages are certainly challenging and disruptive for supply chain management professionals, and the talent gap of the available workforce can cause further difficulties considering the complexities and demands of modern business developments. Careful, educated decision-making and proactive strategizing are necessary to build and retain the skilled workforce needed to meet their supply chain demands.

Learn more about UNCP’s online MBA with a Concentration in Supply Chain Management program.


The Wall Street Journal: Warehouse Hiring Soars in a Growing Rush for Logistics Workers

Datex: How the Supply Chain Industry Is Addressing Labor Shortages

MH&L: Labor Shortage Hurts Logistics Industry

Datex: Labor Shortage in the Supply Chain Workforce

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