In the midst of working on a new Supply Chain Academy (SCA) course, I took a trip to Toronto for what I thought was a totally unrelated event. It turns out that the two topics—employee retention and warehouse automation—complement each other.
That seems a bit counterintuitive. I have always thought about automation as a substitute for labor. With automation, retention wouldn’t be a major concern as your warehouse staff would need to shrink anyway. Right? Read on to learn how wrong my thinking was.
Let’s start with the labor retention topic. As I have worked on the SCA course, I have come to realize that retention is not just a management issue. It is a challenge to find, train, and retain quality frontline logistics employees, regardless of the economic conditions. Combine that with the aging workforce in many industrialized countries and there is a real imperative to minimize turnover of your transport, warehouse, and customer service personnel.
One of the course lessons focuses on the very topic of retaining frontline logistics personnel. It requires a multi-pronged strategy to keep the employees engaged, satisfied, and motivated. The strategies include:
- Resource management: Managers must provide the right tools and technologies to employees to efficiently and safely perform logistics activities.
- Respectful relationships: Leaders should adopt a management style that fosters interaction, positive attitudes, and trust.
- Growth opportunities: Companies would be wise to establish programs that develop the skills and talents of frontline employees.
- Internal marketing: Managers must actively promote an atmosphere where employee productivity and contributions are recognized.
That’s pretty straightforward and logical, but what’s the connection to automation? It’s right there in the four retention strategies. During the 2010 WITRON Retail Congress, I had the opportunity to tour the Sobeys Logistics Support Centre (LSC) outside Toronto earlier this month. As we were guided around this impressive facility, I heard many of the same issues being discussed—employee productivity, safety, satisfaction, and positive attitudes—as benefits being gleaned from the automated distribution center.
The LSC is a highly automated 500,000 sq. ft. facility that has been in operation just over a year. The automation begins at receiving. Product is received, inspected, palletized, and inducted into a high bay storage area. As product is needed, it is automatically retrieved from storage, de-palletized, and transferred to trays. Each tray holds a single case of product and is held in the selection area of the automated storage/retrieval system. When a store order is placed, the system identifies, picks, and transfers each case to the shipping areas. The transfer process coordinates the flow of products, with goods being palletized by store aisle and shrink wrapped. Receiving and shipping dock activities are the main activities that are not automated.
My description hardly does justice to the amazing synchronization of LSC activities, the labor savings, and the system accuracy. To see the automated system in action, click the link to view the Sobeys LSC video.
As you’ll see in the video and the graphic, automation of the LSC also facilitates excellent results. After more than a year of operation, the LSC has not had a single lost time accident. That is a remarkable feat given the fact that the facility ships over one million cases of product per week with employee productivity exceeding 500 cases per hour.
The facility is pristine and quiet, the employees are engaged in problem solving and external relations (the tour was largely run by Sobeys LSC hourly staff), and the atmosphere throughout the facility was very positive. All this adds up to excellent service to the stores, improved LSC performance, and low employee turnover, not to mention greater long-run profitability.
These types of results have also been achieved by The Kroger Company, a leading U.S. grocery retailer. Kroger has similar grocery distribution centers in Arizona, California, and Colorado. While the facilities required a major capital investment and process discipline, Kroger has achieved similar benefits to Sobeys. Human issues of repetitive motion injuries, labor turnover, and order picking errors have largely been eliminated. Also, the distribution center personnel have been freed up to do more value-added activities, according to a 2009 Modern Materials Handling article. Click here for details regarding Kroger’s southern California facility.
It appears that the title question has been answered. Automation and employee retention are not mutually exclusive strategies. As high-volume retailers Sobeys and Kroger have shown, the strategies can be complementary. Automation can have a very positive impact on labor retention and organizational success.