Three quarters of companies in supply chain and logistics affected by labour shortage

labour shortage

As many as 76% of supply chain and logistics companies are affected by the labour shortage. In fact, 37% of them indicate that the impact is high to extremely high. This is according to research by software provider Descartes Systems Group among 1,000 supply chain and logistics leaders in Europe and North America.

The labour shortage has a negative impact on various supply chain and logistics activities of companies. Transportation activities (61%) and warehouse activities (56%) suffer the most, according to respondents, followed by transportation planning (51%), inventory and distribution planning (51%), customer service (42%) and demand planning (37%).

Although transport and warehouse operations are highly labour-intensive, the findings also show that 55% of supply chain and logistics leaders say knowledge workers are the hardest to recruit. They are also becoming more important as supply chain and logistics activities become more technology-dependent and data processing gains importance.

Peak-season performance negatively affected

Labour shortage also has a negative impact on the performance of companies during the peak season (70%). Furthermore, respondents noted that the performance of logistics partners is negatively affected by the labour shortage (64%). The shortage also has a negative impact on customer service levels (58%).

“With economies cooling and Covid becoming more manageable, the general expectation was that companies would see the labour shortages of recent years disappear. However, this does not seem to be the case,” says Chris Jones, EVP Industry at Descartes. He says the research shows that supply chain and logistics companies are still struggling to get the employees, knowledge workers and leaders they need to thrive.

“With business performance being determined by both the quantity and quality of the workforce, supply chain and logistics leaders need to rethink not only their recruitment and retention strategies, but also how technology can help mitigate current and future workforce-related challenges,” Jones adds.

Coherent business performance

The survey results also show that the impact of the labour shortage depends on financial performance, growth, senior management’s perceived importance of supply chain and logistics activities, and the success of employee retention programmes, among other things.

According to Descartes, there is also evidence that business achievements are interrelated. As a result, the impact of labour shortages can be mitigated if business leaders understand the full potential of their supply chain and logistics operations, and the importance of employee retention for supply chain and logistics performance.