LABOR LOGISTICS

MINA WILLIAMS

To cope with the labor shortage in most areas of their operations, supermarket companies are using every trick in the book. But when it comes to warehousing and transportation, they have to write an entirely new book.

"The issues today are different than they used to be," said Richard Kochersperger, director, Center for Food Marketing, St. Joseph's University, Philadelphia. "Today's work force doesn't see a warehouse as a place for long-term employment.

"Operators don't have much of a choice. Companies have to take a different strategy to get things done. They have to evaluate getting and keeping employees and they have to explore mechanization as a means of removing the human element from some steps to reduce head counts."

People in today's labor force want to make decisions and have control over their day-to-day tasks, human resource experts told SN. Operators that involve workers in decision-making processes find this fosters improved team performance. Goals tied directly to productivity and expenses are also helping reap benefits for operators as teams work harder, with little or no damage, and increase accuracy levels.

Associated Food Stores, Salt Lake City, recently opened a new distribution facility for all categories in a building that used to belong to a drug chain. The new facility is 60 miles from existing dry grocery and perishable warehouses and 120 miles from the wholesaler's general merchandise/health-and-beauty-care warehouse. The process of opening the facility was accomplished over seven months, which added to the stress level of associates.

"Only 15 of our 90 associates chose to stay with the company," said Russell Dailey, human resource supervisor. "The work force that we tapped into to open the new facility was the work force of the drug chain's facility. We talked to them about possible advancement with us. We also have taken advantage of other local companies' layoffs and we are reaching out to those employees."

At the core of Associated Food Stores' labor management strategy is treating employees as individuals. "We try to make team members feel valuable and that their production is important," Dailey said. "And we understand that they are individual people. You have to treat people like people. We are trying to create a different feeling at our company."

The wholesaler has been forced to take a look at new directions in attracting and retaining warehouse and transportation employees. Upon evaluation, the company discovered that these workers presented an 80% to 100% turnover rate in Utah, where unemployment is 3%. "Additionally, the skill level of applicants is slipping," Dailey said. "Then we discovered that we can't keep them long enough to give them the skill level necessary to be effective."

As a result, the wholesaler intentionally overstaffed the warehouse so that the shifting numbers of those on the learning curve and those leaving the company would not impact service levels to members. "Being overstaffed and under-producing was not the situation we wanted to be in," Dailey said.

The wholesaler has since shifted its training initiatives, focusing on retention to solve the inefficiencies. Associated Food Stores created a pool for training where new hires spend time in each area of the warehouse -- grocery, frozen, meat, deli, general merchandise/HBC -- with a specified trainer and the manager of the area.

"When they are done with that rotation, the new hires really bring with them the best practices from each area," said Dailey. "When they finish they are able to request which area they are interested in and they are placed with mutual agreement between the manager and the employee." Half of the trainees request to be placed in the frozen area, he noted.

Associated Food Stores also put goals on pull rates and tied them to the training program. The wholesaler's goal was that, following the four-week training process, new hires would pull 90%. Within two weeks, the company asked that the new hires bring that production percentage up to 100%. With the program still in testing the wholesaler has boosted its retention rate to 75%, and in addition, these trained employees are pulling above average.

In getting the most out of on-site labor, supermarket executives find that they don't have to rely on new warehouse management system programs alone to boost production. Incentive programs are being used to assist labor teams in working smarter and better.

"Operators have to come up with a measurement of what they really want to be accomplished," said Paul Mahoney, consultant, Gross & Associates, Woodbridge, N.J. "If they are in the business of picking and packing, the expectation has to be clearly laid out. If the operation is based on productivity, such as shipping out 10,000 cases, set a number of hours within which that goal is to be accomplished. That way, measurements of each person's productivity can be made and operators can reward high producers. This process can be put to work in setting up individual incentive programs," he said.

"Incentives tied to order selectors are not it," said Kochersperger. "You have to get everybody involved and get them to buy into the program. You need their contributions and involvement with decisions."

At the foundation of a successful incentive program is having the operator set precise goals, which could be as simple as saving time or increasing shipments, he said.

In the past, operators have offered benefits and incentives to motivate people to come to work and stay on the job. In today's environment, retail and wholesale human resource executives are adding new benefits and incentives to motivate the new work force. Compensatory time, overtime and retirement plans are being eyed by potential employees, along with bonus benefits, tilting the employment decision scale in the favor of those operations that offer creative programs.

"It all depends on the mix of people in your marketplace," said Mahoney. "Executives have to keep in touch with potential employees and current associates, and engineer jobs to fit what motivates them. Management has to get out and walk around and talk to associates. Don't guess on benefits. What you think is a good benefit may not be in the eyes of your workers."

Some operators are discovering by talking to associates that the new work force has new ideas about benefits. One discovery is that when teams produce at the peak performance levels of 110% to 120%, associates are not seeking 5%, 10% or 15% more pay as their reward for efficient work. Rather, the associates are looking for time off. As most warehouse operations in the grocery industry perform with a relatively small work force, industry observers say that this fact-finding communication is relatively easy to accomplish.

"Time off is the biggest benefit being offered today. There are severe conflicts in the grocery distribution environment today, with workers not wanting to work nights and weekends," Kochersperger said.

"People in our marketplace still make decisions based on money," said Associated Food Store's Dailey. "Most have families, and health and dental packages are a big part of our recruiting strategy."

At Laurel Grocery Co., London, Ky., the very nature of the wholesaler's business has given it a leg up in attracting and keeping truck drivers.

"We have few overnight stops, and we deliver into a set area," said Kenton Reynolds, director of transportation. "Other transportation companies have a lot more stops and deliver to a much larger area." As a result Laurel Grocery has a high employee retention rate. Last year, the wholesaler lost only one out of its 30 drivers.

Reynolds is quick to point out that in his marketplace there is only a slight problem attracting drivers because of other companies closing facilities in the area. "We don't have anywhere near the problem others have, just because of where we are," he said.

Around the country, operators are feeling the labor crunch and are looking for ways to shed their long-term, full-time mentality to mold themselves to the marketplace. They are creating flexible opportunities both in shift times and in part-time options.

"It is 180 degrees opposite of what has been our mission," Dailey said. "As we go through generational changes, our company has to stay on top. How we market ourselves going forward will be different. The operators that will be successful will be those that leave the norm."

Other operators are adding facilities and resources to attract and retain associates. For example, Supervalu, Minneapolis, has a physical therapist on staff and has also installed exercise equipment focused on back strength and conditioning, according to sources.

Elsewhere, operators are adding weight rooms, basketball courts and other recreational facilities to encourage physical well-being and deepen employees' sense of having fun at work.

"Many investments are made to keep employees longer," said Kochersperger. "Part of that program involves initiatives to deliver fewer work-related accidents."

Recruiting employees also depends upon benefits packages. "Flexible hours are big with today's work force. They are looking to work four 10-hour days. But the motivations vary from person to person," Mahoney said. "To meet a flexible schedule it takes a dedicated manager to make the commitment. It is hard to adjust hours when you have 15 people in the pool and 12 working on any given day."

Warehouse operators and transportation managers, once they have a full staff, continually seek new ways to get the most from the work force. Technology is an increasingly important tool in elevating productivity.

"Technology is more affordable," said Mahoney. "In the last seven to eight years labor has been short, labor costs have been up and technology costs have come down."

Technology is being used in warehouse management systems, with the addition of more computing power streamlining operations. However technology may not be the silver bullet sought by bottom-line-oriented executives.

"Technology has to be applied intelligently," said Mahoney. "Operators need people with experience to implement the technology. Operators may have to look for outside support if they don't have the time or the resources to get the biggest bang for their buck."

Operators report that it is a mistake to add technology for technology's sake. "You have to know what you are trying to accomplish before you just add technology," said one Western operator. "Select technology that helps you to achieve what you are targeting.

"Often the most advanced, cutting-edge product is not what will help you do your job better. Technology is more affordable, but if applied incorrectly it will cost you more than you can afford in both money and production."

Automation is one method being examined as executives grapple with labor shortages and high turnovers. Operators are looking at systems that reduce the labor hours allocated to warehouse functions.

Cross-docking is one means to that end, operators reported. However, unit-level operations and buying functions need to be in concert with warehouse operations to strip costs and labor hours out of the distribution system.

"Long-term operators have to look at ways to take the human being out of the picture," said Kochersperger. "The strategic goal remains how to take the fingerprints off the boxes, removing the number of times items are handled. We need to change the structure of how we get products to stores. There are still too many incentives to be inefficient."