December 7, 2021

Why Labor Supply Shortages Are Detrimental To Supply Chains

Almost two years into the COVID-19 crisis, companies across industries continue to hang between ties caused by the widespread shortage in manpower supply brought about by pandemic burnout and fatigue. Recent data from BLS shows that there were 10.9 million open job posts at the end of July 2021; however, only 6.7 million were hired. Additionally, around 930,000 voluntary separations happened in the same month. The manufacturing industry is one of the most affected sectors with an employment drop of nearly 400,000 since pre-pandemic. Hence, the negative disruption of supply chain, transportation, and logistics in varying industries, especially now that online retail has gone heaps and bounds over the past year. The question is, why is labor shortage so detrimental to supply chains? Here’s our take:

The effect of fluctuating pandemic surge

Just when everybody thought the pandemic was nearing its end with more relaxed restrictions and mass vaccinations taking place, another COVID-19 variant took the world by storm and succumbed many countries into regionalized outbreaks and lockdowns once again. With this, the supply chain of many companies was severely affected – forcing immediate shutdowns in shipping and manufacturing hubs. The resurgence of the pandemic resulted in disruption of operations in ports and warehouses and lack of labor, which affected the transport of the items from point A to point B. While online retail has seen a massive rise during the pandemic, the industry struggled to source enough manpower to meet the increasing demand. Clearly, the pandemic has affected more industries than one and while there seems to be no end in sight just yet, companies are left with no choice but to adjust according to the ever-changing business landscape.

Holiday shopping woes in the pandemic

Shoppers have begun to buckle up for the holiday season and while we are still in the pandemic era, the holiday goods and gifts may have to wait a little longer. Given that the supply chain is greatly affected by the resurgence of cases brought by new variants, there is a higher possibility of delay in the delivery of your holiday gift items. Analysts stressed that people should already prep up their holiday shopping lists and buy them right away so it would come in just in time for Christmas and New Year. Moreover, since the demand is high during these times, customers who prefer rush deliveries might have to pay more. Meanwhile, food manufacturers and suppliers have increased their prices as they face challenges with the processing, production, and delivery of food given the shortage in labor.

Quick solutions, easy work-arounds

Companies have seen the increasing demand over the past few months, especially now that we are approaching the holiday season. With this, some of them have decided to extend operating days and hours to be able to keep the goods moving. The private sector is also urging the government to supply additional funds for labor training programs to fill in the vacant job positions in the supply chain, logistics, and manufacturing industries. This way, urgent manpower will be provided and at the same time, customer demands are met.

Industry Switch

Many employees move to a different line of work and opt for job positions that are recently thriving in rising industries as they choose to become more proactive in their respective careers, especially now that the pandemic has brought so much uncertainty in the world. For one, the tech industry is one of the fastest growing industries in the global economy and there are no signs of slowing down. Moreover, it has attracted more talents than ever across different fields as it has experienced an uptick in consumer demand during the course of the pandemic. Some of these are e-commerce, web and IT, software and services, and more. The healthcare industry is also one where employees flock because, evidently, the need for manpower supply in this sector has massively risen since the beginning of the pandemic. With this, companies in other industries must make sure they get in touch with a credible labor supply company and secure the right talent for highly critical functions in the organization to effectively manage the mid to lower ranks.

The Issue of Skills Gap

The introduction of new technology to the supply chain and manufacturing industry has adequately disrupted the way companies operate which, in effect, blurred the line between white and blue collar workers. Today, the industry is searching for new-collar workers, a newly coined term to describe a talent that has a mix of technical, physical and soft skills, to effectively work in a technologically-advancing environment. These new requirements and the shortfall of job candidates who meet them have created the issue of skills gap. To address this, it is best for companies to develop training programs for new employees, interns, and more importantly, the existing internal employees so you can slowly help them develop the skills required for your industry and eventually, you won’t have to hire another talent to do the job.

For your manpower supply needs, get in touch with us at World Star Manpower.