Some Companies Adding Relaxation Zones, Pizza Stations, but ROI is Unclear

It’s no secret that the labor situation in warehousing and distribution is tight and getting worse, sending wages soaring for DC workers and leaving many distribution centers simply unable to find and retain the workers they need.

Supply Chain Digest Says... “While there will be short-term financial costs, there will be potential upsides in the longer term in terms of worker retention, productivity, and reduced absenteeism,” Guevarra says. What do you say? Click here to send us your comments Click here to see reader feedback

Case in point: In September, FedEx said on its quarterly earnings call that a lack of workers cost it an extra $450 million in operating costs, as it raised wages, saw excess overtime, expedited transportation and was forced to reroute parcels.

Despite the rising wages, led by Amazon at over $18 per hour in some markets, retention of DC associates is a major issue for most operations. But what can be done besides offering ever-higher pay to keep up with the Joneses – or rather make that Amazon?
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Research by warehouses staffing firm Prologistix has found workers highly value more schedule flexibility, so that’s one perhaps low cost place to look. (See Prologistix's Tips for Reducing Absenteeism in Distribution.)

But now real estate firm JLL (formerly Jones Lang Lasalle) offers ideas for another approach – adding additional amenities to the distribution center itself.

“With the talent war heating up amid labor shortages, human-centric design has become a priority for logistics companies trying to attract and retain top talent,” JLL writes in a new blog post.

In addition, Peter Guevarra, Director, Regional Research for JLL, says that “Across modern logistics facilities, more wellness amenities are being incorporated into building design including food offerings, childcare centers, gyms and improved in-building connectivity.”

JLL sites a couple of examples of companies actually adding these types of features and services to a facility.

A new DC under construction by Frasers Property Industrial in Australia will feature a full-sized basketball court.

Apparel company ASOS has a one million square foot distribution center Georgia that is home to two basketball courts, a soccer field, a gym, a pizza and grill station, and even a pop-up nail bar.

JLL says its research shows that relaxation spaces, healthy food services and outdoor spaces top the list of health and well-being amenities that employees want in their physical workplaces.

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“Only the larger logistics occupiers and developers are incorporating human-centric design now, but more players will follow,” says Guevarra.

But JLL notes human-centric design in the DC goes just beyond nice amenities.

JLL says it also means considering how technological advancements can improve employees’ well-being by reducing physically demanding tasks such as excessive lifting – and that can mean more use of robots.

According to a JLL, a human-centric design approach to distribution operations boosts productivity by deploying robots to perform repetitive or injurious tasks, while workers focus on more value-added roles such as order fulfillment and problem-solving. (SCDigest notes some might debate how much value-add there is in order picking.)

JLL notes that the cost of DC robotics continues to fall, from an average of $27,074 per unit in 2017 to an estimated $10,856 by 2025, which should greatly accelerate adoption.

But Return on Investment Unclear

Despite a strong case for investments in amenities and human-centric design, the ROI is still not clear, JLL says.

“While there will be short-term financial costs, there will be potential upsides in the longer term in terms of worker retention, productivity, and reduced absenteeism,” Guevarra says.

As a final note, SCDigest wonders how much companies will be willing to invest in amenities for DC workers when they can invest in more robots that reduce the need for human workers.

What do you think of adding these kind of amenities to DCs? Let us know your thoughts at the Feedback button section below.