The warehousing industry has seen major changes driven by evolving consumer behaviors like rising eCommerce demand. This has increased the need for scalability in warehouse staffing needs because labor shortages can severely affect operations. Thankfully, new workforce models are emerging to help warehouses adapt; the gig economy has already taken many industries by storm.
Its flexibility, cost-saving benefits, and access to industrious workers are too great for the supply chain industry to ignore. Keep reading to learn how embracing flexible gig work can help warehouse managers meet demand fluctuations and staffing challenges.
What is the Gig Economy?
The gig economy refers to a free market system in which flexible work arrangements are common, and organizations contract independent workers for engagements. Key characteristics include:
- Flexible, short-term work arrangements between companies and independent contractors. Workers are free to choose their hours and jobs while allowing companies to staff positions as needed.
- Being hired on a project-by-project basis, which enables gig workers to take on multiple opportunities as they arise rather than being permanently employed in a single role.
- Digital platforms facilitating matching workers with jobs have transformed how flexible work is conducted. They enable convenient real-time connections between the supply and demand for labor via smartphones and the Internet.
Statistics show gig work is becoming more popular in transportation, food delivery, and warehousing. The rapid growth in transportation has been driven by the success of ride-sharing, and food delivery boomed as apps made restaurant orders portable.
Warehousing operations have also been able to expand and keep up with increased online shopping demands. They've achieved this by having the ability to quickly match their immediate labor needs with a flexible workforce that is available for on-demand work.
The Evolving Nature of Warehousing
Warehousing has evolved greatly over the decades to meet changing demands. Traditional warehouses relied solely on human labor to receive, store, and ship products, but now more warehouses are using automation and robotics to run warehouses. The hourly staffing model came about as a reaction to fluctuating staff needs, aimed at providing a more adaptable, responsive approach to workforce management and changing technology trends.
Today, technology has been introduced mainly in repetitive picking and packing tasks. At some distribution centers, automated sorting and routing systems now handle the distribution of goods inside warehouses, quickly routing packages down conveyor belts to their correct destinations.
Visual recognition technology combined with RFID tracking provides real-time visibility of inventory levels and item locations to optimize workflows. Advanced order and shipping data analytics enable demand to be more accurately forecast, thus reducing unnecessary stock.
These automated technologies have transformed warehouses into highly efficient distribution hubs, able to handle greater volumes of goods with fewer labor costs and shorter turnaround times. But warehouses can still benefit from gig workers, and here's why.
Advantages of Integrating Gig Workers in Warehousing
Warehousing has seen a shift towards integrating gig workers to adapt to changing market dynamics. Again, this shift has been driven by the need for greater labor flexibility and efficiency in response to fluctuating demands. This can be due to seasonal variations, evolving consumer preferences, and the rise of eCommerce. For example, during holiday seasons, there's a surge in demand for certain products, which requires warehouses to quickly adjust their workforce to meet the increased workload. Learn why the productivity pay model may potentially lend itself to gig work:
- The productivity pay model incentivizes workers to increase their productivity by paying them based on the number of tasks they complete—this leads to greater workforce efficiency.
- From a cost-savings perspective, leveraging independent contractors on a pay-per-task basis eliminates fixed costs of benefits and paid time off for full-time employees while only paying for labor as it's used.
- Gig work platforms allow warehouses to optimize resource utilization through just-in-time staffing. Fine-tuning staffing levels to match shifting workloads eliminates under or overstaffing.
- Workers can leave early and pursue other opportunities/side hustles once they complete their tasks satisfactorily. This allows them the flexibility to maximize their time and income.
Overcoming Gig Workforce Management Challenges
While the gig economy model has numerous advantages, there are challenges in managing a flexible workforce. To address this, warehouse managers need robust onboarding and training processes. Technology should also be a cohesive part of gig workforce management.
For example, warehouse management systems (WMS) can be integrated with a company's platform for automated task assignment and tracking. When used correctly, mobile apps enable real-time communication, scheduling, and monitoring of workers. Warehouse HR managers should use data analytics to access insights into peak periods and productivity metrics for predictive workforce planning.
Ensuring Legal Compliance and Ethical Considerations
As gig work continues to expand, warehouse managers have a responsibility to enforce and uphold relevant labor laws and regulations. To avoid potential misclassification issues, clarifying worker categories will help determine which statutes apply.
Although gig workers are non-employees, providing access to benefits such as workers' compensation or liability insurance protects both the company and workers and helps ensure compliance with regulations. Remaining compliant in these areas allows warehouses to capitalize on the opportunities of the gig economy while mitigating regulatory risks.
The Future of Gig Workforce in the Warehousing Industry
The gig economy is not slowing down anytime soon. Emerging technologies like artificial intelligence, automation, and the Internet of Things will transform warehousing operations. This increases the need for an agile labor force with specialized skills.
To stay competitive in this dynamic landscape, warehouse managers looking to adapt their operations must consider the advantages a flexible gig model that a light industrial workforce agency can deliver. Benefits of using these include improved ability to scale operations, reduced costs through the productivity pay model, and optimized utilization of labor resources.
How Eclipse IA Can Help
Partnering with a leader in supply chain workforce solutions like Eclipse IA ensures access to on-demand talent and expertise in optimizing operations through scalable warehouse solutions. We offer a cost-per-unit productivity pay model that allows workers to be paid based on the amount of work completed.
This means HR can quickly adjust staffing levels to meet fluctuating demands while minimizing over- or under-staffing. Eclipse IA's full suite of workforce solutions helps warehouses focus on core operations while we ensure labor optimization. Contact us today to learn more about our services.
