The 2020 Mid-Year Economic Update_long

The Great Pandemic Paradigm Shift

From protecting their employees in the workplace and using this time to plan for the future to maintaining a strong culture and positive morale, PathGuide Technologies's Eric Allais addresses themes emerging from the pandemic.
Managers walking through large warehouse controlling goods distr

New routines, structural changes, and a massive shift in consumer behavior are topics most of us are reading about since the COVID-19 pandemic started spreading across the globe and throughout the U.S.

It’s no secret that the pandemic and resulting economic fallout have affected every business and industry in some manner, but I wanted to gain a better understanding of how the pandemic is impacting distributors. We recently surveyed our customers, asking about their overall business and staffing changes, what steps they’re taking to respond, and their outlook for the future.

The overwhelming number of responses continues to reveal itself and is quite enlightening. The ensuing pandemic impact reaches far, wide and deep. Some distributors have had to furlough or cut half their warehouse staff while others are continuing to experience a surge in business where they can’t hire new employees fast enough. For example, one Midwest distributor that ships for Amazon and Walmart has been one of those businesses thriving in the current environment. In another instance, a manufacturer and distributor of personal protective equipment is experiencing similar demand since the start of the pandemic.

Even for the less fortunate distributors during these difficult times, I was struck by the steps they are taking. From protecting their employees in the workplace and using this time to plan for the future to maintaining a strong culture and positive morale, I noticed several themes begin to emerge. The following actions outline some of the most common ways that many distributors are taking in response to these unexpected events.

Where did they go right?

1. Divide and Conquer

While social distancing guidance from the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) and the U.S. Department of Health and Human Services’ Centers for Disease Control and Prevention (CDC) encourages employers to explore options such as telecommuting and delivering services remotely, these options simply are not feasible for warehouse workers. Instead, we’re hearing from quite a few distributors that are splitting warehouse crews into two (or more) groups, so if someone on one team is exposed to or experiences COVID-19 symptoms they still have the other team that is able to keep operations going.
This is a smart approach, as it not only limits the number of employees in the distribution center at the same time, but it also inherently increases the physical space between employees. As an added benefit, this tactic provides flexibility for workers with children participating in online schooling or facing childcare constraints.

2. Rethink the Flow of Your Space

Several distributors have shared with us that they are actively taking steps to implement floor markers and similar measures for distance control to reduce risk of virus spread in the warehouse. While CDC and OSHA health and safety measures are creating a fair amount of headaches and confusion for warehouse managers, we’re hearing that some of the most common features of a warehouse management system (WMS) have become extremely valuable in this new normal.

Even during more typical times, you don’t want all of your pickers in the same aisle at the same time. A quality WMS should provide essential tools, such as zone picking, to minimize congestion and encourage social distancing. This ensures that your workers remain spread out in a specific zone throughout the day to avoid congregating and minimize close, physical interactions during order fulfillment.

3. Focus on the Long Game

We’ve heard from a number of businesses that are using this time to plan for recovery by contacting customers, investing in marketing and ramping up inventory levels. In another instance, one distributor is taking steps now to ensure they are prepared with the products and personnel in place to make sure they are able to serve the customers’ needs when business rebounds.

This is the third economic downturn that we’ve experienced in the 30-year history of our company. What we have found in past recessions and we’re hearing again this time is that distributors – often out of necessity – use these slowdowns to prepare for the future. With the infusion of government stimulus in recent months, these companies are steadfast that now is not the time to close shop. Instead, they’re prioritizing steps they can take today to come out the other side stronger, leaner and more efficient.

4. Use this Time to Organize

Similarly, several distributors have shared with us that they are taking time to organize the warehouse or even arranging the transfer of inventory between warehouses. Not only is a well-organized warehouse important to employee safety, but it also leads to better customer service through improved inventory management, fast receiving, put-away, picking and shipping times. For distributors considering using this time to organize the warehouse, picking is a great place to start as it is generally the most labor-intensive and time-consuming task within the warehouse.
The biggest obstacle to making improvements, however, is realizing the warehouse environment could be a lot better. As one distributor noted, “Leading companies don’t hide, stay put or wait things out. Leading companies take action. They leverage their strengths and address their weaknesses.” Organizing the warehouse is a fantastic way to better support customer service initiatives.

5. Protect Your Most Important Asset

Not surprisingly, an overwhelming majority of the distributors we’ve heard from are requiring masks, gloves and other personal protective equipment for their warehouse workers. In addition, many are having janitorial crews perform more thorough cleaning of common areas, light switches, door handles, bar code scanners, etc. While these simple measures are now mandatory in many jurisdictions, they should be part of standard operating procedure in all warehouses and distribution centers.

6. It’s About More than the Bottom Line

I’ve long been a proponent of providing incentives for warehouse and distribution center workers to reward individuals and teams for the least errors, most on-time shipments or other important metrics. While Amazon may be able to afford to pay bonuses and hazard pay to their warehouse workers, that’s not realistic for most of the distributors I know.

That said, doing the little things to keep up employee morale during these challenging times has been a priority for some distributors. For example, one distributor is making an impact by doing small, simple things like bringing in prepackaged sandwiches, burgers, ice cream, and the like just to let the team know they appreciate what they are doing. These may seem like small gestures but to workers confronting the chaos of COVID-19, you may be surprised to find that it can go a long way to maintain warehouse productivity and employee satisfaction.

These are, of course, just a few of the actions we’re hearing about that distributors are taking now to make the best of the COVID-19 chaos facing all businesses. These coming months will continue to test distributors, but those that resolve to adapt and innovate are most likely to emerge from the pandemic prepared for an even brighter future.

Eric Allais is president and CEO of PathGuide Technologies.

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