How Supply Chain Disruptions Are Altering Hiring Practices Across Industries
The labor shortage in the U.S. has many contributing factors—including those related in one way or another to the COVID-19 pandemic. In addition to workers being out sick both for the short- and longer-term, various quality-of-life dynamics related to work also contributed to the Great Resignation that saw employees quitting their jobs at historic rates.
And in a bit of a chicken-or-the-egg dynamic regarding causation, supply chain disruptions are also disrupting the ability for companies across industries to hire the employees they need to reach business goals.
Hiring Practices Altered
According to a recent survey from The Harris Poll, commissioned by Express Employment Professionals, 61% of hiring decision-makers (61%) say their company “has altered their hiring practices because of the national supply chain issues and report it will negatively impact their company’s growth.”
To deal with the hiring challenges, 56% of respondents said they have “relaxed their hiring requirements due to the supply chain issue” and 32% said they “have hired specifically for logistics/supply chain positions this year.”
Additional findings include:
“Companies with 100-499 employees are more likely than those with less than 50 and those with 500 or more employees to say supply chain issues will negatively impact their company’s growth…”
“The same companies are also most likely to say they have relaxed their current hiring requirements…”
In manufacturing, “74% of hiring managers say their company has had to alter their hiring practices because of the national supply chain issue”
In service industries, 71% reported the same
Two Express franchise owners quoted in a press release about the survey described some of the challenges employers are facing. One was Mike Brady, who owns a franchise in Jacksonville, Florida.
“We have a broken supply chain system with the high cost of containers and goods driving up demand and consumer prices. But some companies cannot pass along the higher costs of goods and wages, so they are producing less,” Brady said, adding that the shortage of qualified workers is an ongoing issue.
David Robb, an Express franchise co-owner/managing partner in Grand Rapids, Michigan said materials shortages continue to be a challenge for his clients—a dynamic that seems to be consistent across many types of industries.
“Every company we talk with says that hiring, retaining and supply chain are the top three challenges they are facing,” Robb said, “Companies are desperate to hire people, but sometimes due to supplies, they can’t give people enough hours or hire the few people that are available as quickly as possible. This can hurt retention, and ultimately company growth when they need it the most.”
Both said that some companies are trying to fill the gap by relaxing hiring requirements to meet the demand.
“A common theme we’ve heard is that employers are open to hiring people today they would not have hired two years ago,” Robb said. “Employers understand that getting someone is better than no one, so they are willing to work with a wider variety of people and know they will need to provide training to get them where they need to be.”
In the release, Express Employment International CEO Bill Stoller also weighed in: “Many businesses are ready and willing to grow in 2022, but can’t until something changes…The U.S. economy is caught in this perfect storm where the breakdown in supply chains is just the start. When you combine that with the scarcity of workers, companies are doomed to stay in this holding pattern for the foreseeable future.”
The Supply Chain Impact of the War in Ukraine
In a March 17th article for Harvard Business Review, “How the War in Ukraine is Disrupting Global Supply Chains,” David Simchi-Levi and Pierre Haren described the impact, writing that the invasion and resulting sanctions are “affecting industries ranging from semiconductors to cars to food. It almost certainly will accelerate the shift from global to regional sourcing that had already been underway due to the China-U.S. trade war and pandemic- and climate-related events.”
They also note that “The Ukraine war and closer alignment of China and Russia will modify profoundly the exchange of energy, raw materials, industrial parts, and goods between the Western world, China, and Russia and promise to accelerate the reshoring trend.”
Citing a variety of impacts, they close the article with a grim prediction: “About the only thing certain right now is the challenges to global supply chains are going to increase for the foreseeable future.”
Other analysts agree.
Quoted in an article for Supply Management, Katie Tamblin, chief product officer at data company Achilles Information, gave a “conservative” estimate that even if the war ended right away, the inflationary effects on global supply chains could last for another 12 months.
“I've worked with procurement supply chain professionals for almost 20 years and I can't think of a time in which there has been this magnitude of disruption for this prolonged period,” Tamblin told Supply Management.
The publication notes that research from Achilles’ Supply Chain Resilience Report indicated that global supply chains “had begun to show signs of plateauing following two years of Covid-19 disruptions.”
But then the world was again turned on its head.
“Russia then invades Ukraine, energy prices go back through the roof, as well as commodity price volatility that we thought would be easing off all of a sudden goes back on to high alert, and that just throws everything back into a tailspin. It's pretty dire,” Tamblin said.
Additional Supply Chain Disruptors
Additional supply chain disruptors that have recently emerged include lockdowns in critical manufacturing regions in China in an effort to get a COVID-19 surge under control—including a week-long shutdown of Shenzhen, China’s third-busiest port for processing containers. A March 22nd Container News headline captured the ongoing supply chain challenges in the region: “Shanghai Covid-19 outbreak raises congestion concerns.”
In North America, Teamsters Canada Rail Conference (TCRC) announced on March 21st a “lockout” at Canadian Pacific Railway (CP) after contract negotiations broke down, threatening more disruptions—especially to commodities supply. Fortunately, according to a March 22nd CP news release, the two parties reached an agreement “to enter into binding arbitration,” which allowed services to resume.
Then there are the ongoing and heightened cybersecurity issues supply chain stakeholders are facing, as well as the contract negotiations on the horizon between the International Longshore and Warehouse Union (ILWU)—which represents dockworkers—and the Pacific Maritime Association (PMA)—which represents 70 member companies that include cargo carriers and terminal operators for West Coast ports. The last time the two sat down for negotiations, the rocky dynamics resulted in significant disruptions at the ports.
Risk Mitigation Priorities
Even in the midst of new and ongoing supply chain disruptions, Tamblin also added some good news, telling Supply Management that global supply chains are in a much better position to deal with crises now.
“We're in unprecedented times. But I think supply chains are better equipped to deal with these large disruptions than they probably ever have been, because so many of them are digitised, and there's so much information flowing off the back of globalization,” she said.
But even with digitization to help manage the challenges, Tamblin said there are still issues related to supply chain visibility that create increased exposure to risk.
“While I want to be optimistic that we're in a decent position to manage it, I think it's going to be a very bumpy, rocky road over the next 18 months while we try to manage how this crisis then compounds on all of the disruption we saw off the back of Covid,” she said.
To help mitigate risk, Tamblin recommended that procurement teams focus on several priorities:
Visibility—to gain better insight into tier one suppliers and beyond to understand what vulnerabilities and risks may be involved.
Installation—which involves “putting plans in place to manage disruption” once vulnerabilities and risks are better understood.
Agility—which involves being “agile and open to responding to quickly-changing circumstances and disruptions.”
Nearshoring—which will likely increase due to ongoing disruptions and can “aid visibility and stability efforts.”
Companies who are able to prioritize such strategies may increase the potential to stabilize their supply chains—and improve their hiring prospects as they do.