Chain of Thought

Talent gap: both challenge and business model.

Material handling isn't the good old boy business it used to be. Whether you're a third-party logistics service provider dealing with constant regime change on the client side or a shipper who's answerable to a sea of faceless e-commerce clients, doing business is less personal and driven more by the terms of a contract or agreement rather than a handshake. And it's more metrics driven.

Maybe that's a good thing. As I found out in writing a piece on 3PL/client relationships for MH&L's upcoming June issue, 3PL contracts are more often three-year terms with a 30-day-out provision. That's why 3PLs are focusing on hiring sales people who are more knowledgeable about their clients' businesses and the numbers that drive them—and they're focused on keeping those clients for longer terms. That's not an easy task, so a lot of energy is spent recruiting for the sales side.

Another article in that issue is on the lift truck business and it explains why finding sales talent is so tough on the material handling solutions side. One equipment dealer I spoke with said customers can expect more consolidation among lift truck dealers, with the survivors aiming to be one-stop shops carrying multiple lines. To offer the needed capabilities to work on a wider variety of equipment, dealers will need to recruit better talent, and dealer staffing is a big concern, even among top dealerships. “The industry still suffers from our inability to attract younger people,” the dealer told me.

That's a challenge 3PLs, equipment dealers and shippers have in common. It's what's making automation such an attractive option among all three. Lift truck OEMs are getting more into automating lift trucks and even offering automatic guided vehicles because their customers are challenged with not only finding labor but paying them—especially as more businesses adopt e-commerce and the necessary high-speed fulfillment operations to keep up with the demand of “want it now” consumers.

Mitch Rosenberg, vice president of marketing and product management for Kiva Systems, makers of those robotic drive units used in some high-profile order fulfillment operations like Office Depot, told me that conventional warehouse processes are challenged to keep up with the complexities of today's demand without sacrificing speed, efficiency and accuracy. These are three of the skills it's getting harder to find in today's labor pool on the shipper side.

“The average pick operator walks anywhere from four or five to up to 15 miles a day picking orders and the average age of a warehouse pick operator continues to go up due to the aging population of today's workforce,” Rosenberg said. “With labor costs increasing and an aging workforce, the use of an automated materials handling solution leaves the heavy lifting and miles of walking to robotic drive units instead.”

This brings us full circle to the 3PL world, because although they're challenged with finding talent too, one 3PL CEO I know is embracing automation and using his company's sales savvy to convince potential clients that they can fill their logistics talent vacancy.

Bruce Welty, CEO of Quiet Logistics, characterizes his company as one of the new generation of 3PLs taking advantage of mobile robotic material handling technologies like Kiva's and combining it with improved outsourcing business models based on offering higher levels of each picking services.

“These new operations are multi-tenant [multiple customers in one facility] and share the costs of the technology and automation required across multiple customers,” he said. “By outsourcing to this new class of 3PL, both retailers and brand manufacturers are no longer limited by their physical distribution each picking competence. The implementation speed of this new automation, together with the packaged approach of the 3PLs, enables increased volume throughput, inventory/order accuracy, specialized packaging and product care to be put into operation within a matter of weeks, not the traditional months.”

See? I told you these 3PL guys are getting more sales savvy.

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