Across the UK, distribution centres are a crucial component of the country’s logistics and supply chain infrastructure, and they are facing a significant challenge: manpower shortages.

This issue has been exacerbated by a combination of factors, from Brexit and its impact on immigration to the increasing demand for e-commerce fulfilment and the evolving nature of work. As businesses strive to adapt to these changes, addressing manpower shortages in distribution centres (DC’s) has become imperative. However, tackling this challenge requires a multifaceted approach, balancing immediate solutions with long-term strategies.

So, what are the root causes of manpower shortages in Warehousing

1. Brexit and Immigration Policy

One of the most prominent factors contributing to the manpower shortage in UK distribution centres is the post-Brexit shift in immigration policy. Before Brexit, many distribution centre operators in the UK relied heavily on EU workers, particularly from countries like Poland, Romania, and Bulgaria. These workers often filled lower-wage, physically demanding roles in distribution centres, where British workers were less inclined to take up such positions.

The end of free movement between the UK and the EU significantly reduced the influx of foreign workers, leading to a severe manpower vacuum. This sudden gap in the workforce has been challenging for operations that previously depended on EU manpower, especially as demand for logistics services has surged in recent years.

2. Increased Demand for Services

Another key factor driving manpower shortages is the surge in e-commerce and the need for faster, more efficient delivery systems. As online shopping boomed, especially during the COVID-19 pandemic, the demand for logistics services has skyrocketed. This shift to e-commerce meant that DC’s were not only handling more volume but were also required to deliver goods at unprecedented speed and accuracy.

This dramatic increase in demand placed immense pressure on operators, who were already struggling with manpower shortages. The demand for immediate and efficient fulfilment has resulted in an increased reliance on workers, further straining a workforce that was already stretched thin.

3. A Changing Workforce

The UK warehousing sector is also grappling with a shift in the workforce demographic. Younger generations are often more reluctant to take up manual, physically demanding work, and there is a growing trend of workers seeking more flexible working conditions, remote opportunities, and higher wages. Logistics operations, which are often seen as offering lower pay and high physical demands, has struggled to attract a younger, more diverse workforce.

Additionally, the COVID-19 pandemic prompted many individuals to reconsider their work-life balance, leading to higher turnover rates within sectors like logistics, where the work can be pretty physical and of course cannot operate any kind of hybrid working.

With the above in mind, what impact are manpower shortages having on logistics operations?

The manpower shortage is not just an inconvenience—it has tangible, far-reaching consequences for businesses and the economy at large. The most immediate impact is on the ability of distribution centres to meet rising customer expectations. With fewer workers available, distribution centres may face delays in order fulfillment, leading to slower delivery times and potentially unhappy customers.

Moreover, manpower shortages lead to higher wages and increased operational costs as companies compete for a limited pool of workers. While offering higher wages can help attract staff, it also places a financial strain on businesses, especially those with thin profit margins. In the long term, the inability to meet customer demand, delays in deliveries, and rising costs could result in reduced competitiveness.

Therefore, the question is, how can you overcome the manpower shortage?

Given the complexity of the issue, it is essential that businesses and policymakers work together to find effective, sustainable solutions. Here are several strategies that could help alleviate the challenges detailed above:

1. Investment in Automation and Robotics

One of the most promising solutions to address manpower shortages is the increased adoption of automation and robotics. Automated systems, such as pick assist robots, numerous goods-to-person solutions, free moving point to point automated guided vehicles (AGVs), alongside the more traditional storage and retrieval systems, conveyors, and sorters, can really help distribution centres balance their dependence on the ever changing levels of manpower needed for repetitive, physically demanding tasks. In particular, the fluctuating ‘temp’ labour used to manage peak days demand.

While automation can (but not always) require significant initial investment, the long-term benefits are undeniable. It can help improve operational efficiency, reduce errors, and mitigate the effects of manpower shortages. Moreover, automation can alleviate the strain on workers by enabling them to focus on higher-level tasks, such as problem-solving or managing systems, rather than performing manual tasks. It is worth noting that many solutions can now be leased, reducing the CAPEX required to make this change.

These solutions work collaboratively with your core workforce allowing you to do much more without the challenges of high levels of temporary, unmotivated workers.

2. Rethinking the Role of Technology in Workforce Management

Alongside physical automation, digital technologies can be leveraged to streamline DC operations and reduce manpower demands. Warehouse management systems (WMS) and inventory management software can improve order accuracy, optimize storage space, and predict manpower needs more effectively. By using these tools to forecast peak periods, DC managers can better plan staffing level fluctuations and avoid overworking employees during quieter periods.

Investing in workforce management software also allows companies to better match workers with tasks based on their skills and preferences, leading to increased worker satisfaction and reduced turnover.

3. Reskilling and Upskilling the Existing Workforce

To address the skills gap, businesses can invest in reskilling and upskilling initiatives for their existing workforce. Where some staff are displaced from manual tasks, in particular seasonal / peak time staff, providing training programs that equip employees with the skills needed to operate advanced technologies and handle more complex tasks can benefit both the workers and the business.

By upskilling current employees, distribution centres can fill the gap left by manpower shortages without relying on a constant influx of new / temp workers. Moreover, employees who feel that their skills are being developed are likely to remain in their roles for longer, reducing turnover and improving retention.

4. Improved Worker Conditions and Pay

In a competitive manpower market, ensuring that the whole package offered to staff is strong can help attract and retain workers. This includes offering better pay and working conditions, but showing staff that a career can be developed makes a big difference too. Many distribution centre jobs are physically demanding, companies that invest in creating safer, more comfortable work environments and offer attractive pay / benefits packages may find it easier to recruit and retain staff. The use of technology and automated solutions is a great example of how you can upskill the operators roles, making them much more productive, therefore justifying improved conditions and pay (offset by the reduced level of manpower needed). Offering flexible working hours or even remote roles (where possible) —especially in roles related to administrative and planning work—could also help to address worker shortages.

Additionally, fostering a positive workplace culture that values employees and invests in their well-being can go a long way in improving morale and reducing the high turnover rates associated with the sector.

5. Collaborative Solutions and Government Support

Finally, government intervention could play a crucial role in alleviating manpower shortages across the logistics landscape. The UK government could introduce policies that make it easier to recruit foreign workers in critical industries like logistics, particularly through visa schemes that facilitate the entry of skilled workers from the EU and beyond. Although at this time, there are no concrete moves in this direction.

Additionally, fostering partnerships between educational institutions, industry bodies, and distribution centre operators could help create tailored training programs that ensure the next generation of workers are equipped with the skills required in an increasingly automated and technologically sophisticated industry.

For this to happen, influential businesses need to make their feelings known to the Government at every opportunity

Conclusion

The manpower shortage in logistics operations is a multifaceted challenge, influenced by a combination of economic, political, and social factors. However, by embracing automation, leveraging technology, improving worker conditions, and investing in the development of a skilled workforce, DC’s can build resilience against these challenges.

The key lies in adopting a holistic approach that addresses both the immediate pressures and long-term workforce needs of the sector. By combining innovation with a focus on worker welfare and skill development, DC operations can not only navigate the current manpower shortage but also position itself for future success in an increasingly dynamic global market.

Beyond Darwin can support you to build solutions to overcome these challenges from concept to implementation.

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