sc digest
October 25, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The Great DC Labor Crisis bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest/Green Supply Chain
bullet Cartoon Caption Contest Winners bullet Trivia      bullet Feedback
bullet New Expert Column and Supply Chain by Design bullet On Demand Videocasts




12th Annual Gartner-SCDigest Supply Chain Study!

One of the Most Popular and Respected Studies in the Industry Each Year

Survey Respondents Receive Complimentary Gartner Research - a $300-500 Value

first thought


Supply Chain Graphic of the Week
Which Companies Participated in CSCMP 2018 and Past Three Years


Walmart Building New Highly Automated DC

US Manufacturing Chugging Along after Tariffs
Trucking Capacity and Demand Now Balance, ACT Says
Consumers Still Value Free Shipping Over Fast


September 5, 2018 Contest

See Who Took Home the Prize!



Feature Story: Walmart to Build New Highly Automated Grocery DC in California


Weekly On-Target Newsletter:
October 24, 2018 Edition

Last Chance Cartoon, New WMT DC, Top Trucking Priorities, More


Common Forecasting Myths Debunked: Part 1 - One Forecast is Enough

by Karin Bursa
Executive Vice President


CSCMP Edge - Nike Quote: "It is All an Art Project Until you Get it on Someone's Feet"

by Dr. Michael Watson



Day 1 Day 2 Day 3


In what year was peak US manufacturing output achieved?

Answer Found at the
Bottom of the Page

The Great DC Labor Crisis

We all know about the significant truck driver shortage. Are we close to that scenario for distribution centers as well?


The bottom line is that if you are hiring in the $12-14.00 per hour wage range, in this environment, if you can find anyone at all, you are getting fair at best or even pool quality candidates.


Send us your
Feedback here

In September, I moderated an excellent panel discussion on DC labor issues at the Fuel user conference of supply chain consulting firm enVista, as recounted in my trip report on the overall event.

I kicked off the discussion with a set of slides that I think nicely illustrated what the landscape is right now, and I am going to largely use those slides to drive my discussion here.

First, I will note the labor shortage is also acute in manufacturing, with many companies desperate for shop floor employees.

And that is in large measure because of the historically strong jobs environment. As evidence of that, the Bureau of Labor Statistics reports that since March there has been a rarely seen labor market "inversion" of sorts in which, as seen in the graphic below. It shows there are more US job openings now then there are unemployed workers, a historical anomaly.

And in fact the gap is getting larger in recent months, as you can see. The bottom line is that it is hard for every sector to attract workers, made worse in distribution because of the tremendous growth in DC jobs.




                                                         See Full Image

As can be seen below, DC jobs in the US have soared 50% since early 2014, to some 900,000, up from 600,000 in four years.


                                                          See Full Image

And it doesn't let up. Amazon is hiring some 50,000 holiday fulfillment center workers here in 2018, 3000+ in just the Dallas area alone, sucking up the labor pool, especially with the new $15.00 minimum wage recently announced by Amazon.

That demand for workers has finally started to have an impact on wages - frankly belatedly. As can be seen in another chart, DC wages stagnant from 2002 through 2013, before starting a rather steep jump. Meanwhile, the cost of living kept moving upwards, leaving DC workers behind. The flat wages from 2002-2013 were really something of an aberration, and no one should be surprised by the recent sharp jump, which will only be exacerbated by the Amazon wage hike.


                                                       See Full Image

The bottom line is that if you are hiring in the $12-14.00 per hour wage range, in this environment, if you can find anyone at all you are getting fair at best or even poor quality candidates.

I will note here that at the enVista conference, panelist Tim Short of grocery chain Wegmans noted that it takes his company 30-40 recruits to wind up with one hired. It wasn't said, but I assume drug testing issues are a big factor in that ratio - but that is also surely reflective of the quality of the candidates.

But obviously, the dynamics vary - dramatically - by market. The graphic below from real estate firm CBRE charts major US metro areas along two dimensions: warehouse labor supply and warehouse labor costs:


                                                     See Full Image

It's a little hard to see, but very well-positioned markets include Louisville, Indianapolis, Atlanta, Nashville, and especially - standing far from the pack - Memphis. Worth noting for your new DC decision.

So until the recession finally comes, with the continued growth of ecommerce (14-16% year over year each quarter still) the demand for DC workers should continue to expand, perhaps causing a true crisis in the supply of labor.

The wild card: automation of course. While the trucking industry looks to autonomous trucks to solve its driver labor crisis, that technology is surely years away from any meaningful adoption.

But highly automated DCs are here right now. Walmart just this week announced plans for its first highly automated grocery DC, scheduled to open in California in 2020, which it says will deliver 40% more throughput than its traditional DC designs. Not specified, but I am sure it will require a lot fewer workers per case out the door.

Interestingly, Walmart is also touting the fact that the automated DC - which will brings goods to pickers - will make the job for DC workers better. It even says it will generate a number of higher level STEM type jobs to keep all that automation running.

But you obviously have to have tremendous scale to afford that kind of automation. For the rest of us, expect wages to continue to head higher, labor availability to become a key driver of location decisions, and still lots of mediocre candidates unless you send wages north of Amazon's $15.00.

Any reaction to Gilmore's summary of the DC labor market? What are you seeing? Let us know your thoughts at the Feedback button below.




On Demand Videocast:

Digital Transformation's Value to the Supply Chain

The Future of Order Management

This videocast breaks down what digital transformation is and how automated order management solutions equate to supply chain benefits.

Featuring Dan Gilmore, Editor along with Esker's Dan Reeve.

Now Available On Demand

On Demand Videocast:

Digitizing the Order Management Process

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

This videocast discusses breaks down all the ways in which orders can arrive, the downstream challenges associated with each, and the benefits of digitization.

Featuring Dan Gilmore, Editor along with Esker's Sarah Joiner.

Now Available On Demand

On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand


We received a number of emails on our various coverage of the CSCMP Edge conference. A selection is below. More next week.

Feedback on CSCMP Edge 2018:


Since the company upgraded its security, SC Digest was getting trapped in "junk" mail folder.

I recently released them from the folder. SC Digest, and your columns, are anything but junk. Indeed, SC Digest is one of the few bulk emails that I enjoy reading.

Though not able to attend the CSCMP conference, your column, as always, was informative and refreshing. You deserve much credit and courage for suggesting realistic and practical ways the conference can be improved. I have been to other conferences where it seems the vendors have hijacked the format either through monopolizing the agendas, duration of sessions or spouting product attributes as 'thought leadership.'

I understand there needs to be balance in these conferences and recognizing the companies willing to share their stories is the a good message to the conference organizers.

Thank you.

Jerry Saltzman
Director, Global Supply Chain Processes




On Monday's Panel with Amazon, IBM, and Nike, I had a few more observations to add to yours.

First, in your video you pointed out that Amazon (Bozeman) had a great saying that you should "strive for a boring factory." And, at the end of session, his first take-away for the audience was to study "lean manufacturing" techniques. Even with advances in technology, the "lean" movement teaches us a lot of about operations. It is interesting that GE announced its first outside CEO and he comes with a very strong lean manufacturing background.

Second, Nike (Brewer) had a quote that supply chain and operations folks should treasure: "It is just an art project until you get it onto someone's feet." Just a great quote to stress the importance of the supply chain. But, I think the quote is deeper. It reminds us that the whole business is connected. The "art project" has to be good for the operations to even exist.

Third, both Nike (Brewer) and IBM (Wright) pointed out that with the pace of change, if you aren't leading it is easier to fall further behind.

Michael Watson
Opex Analytics






First, thank you for you coverage of CSCMP. It was oustanding as usual.


I was unable to make this years' event. Your videos and trip reports made me almost feel like I was there.


I completely agree with you that the conference format is stale and needs a refresh. Your suggestions are good ones. Maybe there are other suggestions out there.


But events like species must evovle and react to the environment, and that is not happening.


Still a good conference, but needs "new blood," for lack of a better word.


Name withheld by request

Consumer package goods industry



Q: In what year was peak US manufacturing output achieved?

A: 2007, according to the Federal Reserve's index.

© SupplyChainDigest™ 2003-2018. All Rights Reserved.
PO Box 714
Springboro, Ohio 45066