Labor shortages have been an ongoing problem across industries during COVID-19, and logistics has been one of the hardest hit. So, what can businesses and 3PLs do to secure the seasonal labor they need to meet the demands of a busy peak? Mike Venditti, the VP, Western Region at Whiplash, has some answers.
Brian Weinstein: Welcome, everybody, to Sippin’ & Shippin’. I’m your host, Brian Weinstein. We’ll be kicking it here every other Thursday, quenching your thirst for an insider’s take to enhance your customer’s experience. Grab your drink of choice, kick back, it’s Sippin’ & Shippin’ time.
All right. Welcome, everybody, to another episode of Sippin’ & Shippin’. I’m your host, Brian Weinstein, and I’m here as I am all the time, because she can’t get rid of me, my partner in crime, Caitlin Postal.
Caitlin Postel: Hey.
Brian Weinstein: How are you today, Caitlin?
Caitlin Postel: Hey, Brian. I’m well. How are you today?
Brian Weinstein: I’m doing well. I’m doing well. Still in this sweltering heat here in New Jersey. Today we have with us our very own former Cy Young Award winner, Whiplash VP of ops on the West Coast, Mike Venditti. How are you, Mike?
Mike Venditti: Thanks, Brian. I’m glad to be here. Hi, Caitlin. Good to see you. And Brian’s right, you haven’t been able to shake him, I see.
Caitlin Postel: Hey, Mike. Thanks for agreeing to come on, sparing me being alone with this guy.
Mike Venditti: I understand completely. I understand completely.
Brian Weinstein: HR, that’s a joke, just to-
Mike Venditti: Yeah.
Caitlin Postel: 100%. This is a morning episode, right? No drinks to be had here.
Mike Venditti: That’s right. That’s right.
Brian Weinstein: Yeah, no drinks. Exactly. We all have our coffee.
Mike Venditti: Great.
Brian Weinstein: So good. Mike, tell us a little bit, you’ve been with Whiplash now for three years.
Mike Venditti: About three years. Yeah.
Brian Weinstein: Nice.
Mike Venditti: Yeah, I’ve been doing this for probably more years than I care to count. But started in retail grocery distribution, and then morphed into the 3PL world, spent some time with Amazon, temperature control. So it’s been quite a journey. Now I find myself out on the West Coast for the last 17, 18 years. Just when you think you’ve seen it all, we see what 2020 brought us.
Brian Weinstein: Exactly, exactly. And it’s funny because I know we were in a meeting the other day, and I called us salty old dogs, which I kind of find is a term of endearment.
Mike Venditti: Yes, yes.
Brian Weinstein: That just means we’ve seen a lot of shit over our time.
Mike Venditti: Yes, yes. And it’s interesting, right? Just when, as I said, you think you’ve seen it all, you walk into a pandemic. And anybody who says they’ve got this figured out either is very new to the business or is really delusional at this point, I believe.
Brian Weinstein: Yeah. Yeah, absolutely. And the pandemic has brought on things that I don’t know that we necessarily thought… At one point, we didn’t know if we were going to have any business. Well, actually, we didn’t even know if we were all going to live, right? So we were all worried about living.
Caitlin Postel: A good place to start, living.
Brian Weinstein: Right.
Mike Venditti: Yeah. Yeah.
Brian Weinstein: And then we were worried about how we were going to continue the supply chain without putting any of our associates at risk. So we had to battle that. Then all of a sudden, the service industry, which is hotels and airlines and restaurants and all that, they were closed. Which you would think injected more people into the workforce for supply chain, but that really wasn’t the impact, right?
Mike Venditti: No, it wasn’t. And as you said, right, living was the first priority of the day. I think Maslow nailed that at the bottom of his pyramid of motivation, right?
Brian Weinstein: Right.
Mike Venditti: I think he knew what he was doing. But you’re right, you would think that there would’ve been an influx of labor available. I think if the market left to its own, it may have been, but when you factor in, and not to get too political, but when you factor in the government reach on this and what that caused, right? When folks in warehouse roles, as we’re discussing, have the opportunity to make as much or more and stay home, that’s a safer option, obviously. And then you factor in the ability of parents that were working and no longer had daycare available because their kids were at home, you throw that wrinkle into it. And look, I mean, we were already dealing with challenges of labor in the supply chain, right? I mean, the 16 to, say, 60 demographic was actually shrinking for the first time to begin with, right?
Brian Weinstein: Right.
Mike Venditti: That labor pool. Transportation was shrinking, right? The driver shortage issues. So you take all those constraints and then you go ahead and layer in this little thing called the pandemic, and you’ve got the recipe for a perfect storm, right?
Brian Weinstein: Right, right. And I could tell you firsthand. My wife is a principal at a middle school, and she knows firsthand with the students being remote, how much that impacted a lot of parents who depend on dropping their kid off at school so they can go to work.
Mike Venditti: Right.
Brian Weinstein: Right? So that definitely contributed as well. Because if you don’t have that, your only alternative is to go to private daycare, which costs money, which you don’t normally have to pay for. And when you’re talking about in the environment that we’re in, not everybody can afford that. So that keeps people away as well.
So now fast forward. We go through 2020, we get through that period. eCommerce continues to have record growth, right? And I know we’ve talked about this in the past. We had April and May of ’20 had more volume than we had in November, December of 2019 by far, right? So we’re exceeding peak. That never stopped, right? That continued to progress. So here we are now in 2021, and that labor still hasn’t fully returned nationally.
Mike Venditti: Right. And you bring up a great point. Just even within our organization, we probably pulled forward that third leg of the omnichannel stool about two years, three years, right? From a growth standpoint. I affectionately tell my wife, I guess this internet thing may stick around for a while. I guess it’s not a fad after all, right? Yeah.
Brian Weinstein: Salty old dog.
Mike Venditti: Yeah.
Caitlin Postel: The internets.
Mike Venditti: Exactly. Yes, yes, yes. I want to Googles things. But yeah, it’s really interesting. So now you have a scenario where folks are shopping at home. They’re at home longer. Then let’s take the other factor of pumping trillions of dollars into the economy where we’re really not making or producing anything more, so people want to spend that money. So now you’ve got the demand is just running rampant. Now, that would be challenging enough to deal with if we didn’t have all the unevenness in the supply chain, right?
Brian Weinstein: Right.
Caitlin Postel: Mm-hmm.
Mike Venditti: I mean, we have all those factors that are playing into this. I mean, I remember having this talk internally as far back as March and April, saying… And again, maybe I’m just a glass half empty at the time, I don’t know. But I said, “As challenging as 2020 was, I don’t think we’ve seen anything yet for what 2021 on the back half is going to bring,” because… I mean that from the standpoint of the unevenness of things. And I think we lived off the balance in 2020, so we didn’t have the massive container shortages, we didn’t have… Yeah, we had pockets of issues and some unevenness. But right now, we are so disjointed. Chassis, containers, things getting out of China, things getting into the port, things getting out of the port. So even if a customer is able to nail their forecast, still there’s so many hurdles staring at us right now that I don’t think we had to even deal with as much in 2020.
Brian Weinstein: No, no. I would tend to agree. I mean, just everything within the supply chain right now is just so complicated. For us in our industry, getting material handling equipment, getting PCs and computers and printers and everything is so delayed, that there’s a lot going on just to try to get that in on time to be able to furnish our distribution channel, our fulfillment centers, right?
Mike Venditti: Yeah.
Brian Weinstein: So there’s a lot there. And fortunately, and I’m going to go back to your comment, you started having these conversations in February and March. And let me just for anyone listening, if you’re doing your own fulfillment in-house or if you’re at a 3PL and the conversations have yet to start or are even just beginning, you are already way behind, right? There is no way that you are going to make it up this year. You cannot improvise. It’s not going to happen. If you don’t have a solid plan to have your facilities staffed, by the time you hit peak, you are already behind the eight ball.
And this year, I’m hoping, and this is probably a lot of wishful thinking, that when schools start to go back and stimulus money starts to run out, that there might be a little bit of an influx of people. But I think that’s just me being an optimist. And now I’m going to turn it back to the glass half empty guy, self-described. Mike, can you talk a little bit about what you’re doing to get out in front of this labor situation for this upcoming peak?
Mike Venditti: Yeah. It’s interesting. You brought up a couple things though that I think are worth… You brought up basics, things that we took for granted even coming off of the immediate lockdowns a year ago. An iPad, a computer, things that are chip-related that you can’t get right now. Or the lead time is so long, right? Mr. Bezos is able to get a rocket into space, but we can’t get a chip right now to run my iPads. So-
Brian Weinstein: Well, they all may be in the rocket, by the way.
Mike Venditti: That’s a good point.
Brian Weinstein: That may be part of the problem.
Mike Venditti: I didn’t think of that. That’s a great point. But you take a step back and say, “Okay, different times call for different types of thinking,” right? So like a lot of companies with this D2C growth, especially the D2C growth, not to say that the retail wholesale is going away, but I’m just talking about that D2C segment. What did we see in 2020? Well, we didn’t see that Black Friday, Cyber Monday proverbial hockey stick as much as we would’ve seen, right? We saw customers pulling demand or stores pulling demand or buyers pulling it forward. So we saw volume in October. We saw it in November. We saw it into early mid-December.
You brought up the word hope, and I know everybody likes to say that’s not a strategy, but you know what? At times, that’s the best you’ve got, right? So I’m hoping that that repeats itself, right?
Brian Weinstein: Right.
Mike Venditti: That’s number one. Number two, you know what? This whole thing has forced, at least me personally, to do is revisit my own paradigms. What I mean by that is I used to think of seasonal support or added staffing as a all or nothing proposition. What I mean is it’s a 40 hour type of proposition. Well, maybe not. Maybe I need to take a step back and reevaluate that and say, “What’s wrong with having a gal or guy that wants to come in and maybe only work one or two nights a week?” Or maybe they have a full-time job and want to just work on a Saturday. Or maybe somebody wants to work on a Sunday.
So in the past, we would’ve said, “That’s crazy. We don’t want to do that, the training and this and that.” Well, understood, but it’s especially heavy D2C growth. Nobody’s okay with placing an order on Friday and not seeing it till the following Wednesday, right? So we’re essentially now a seven day operation and we have to think like one and we have to broaden our hours. That means looking at all avenues of labor, right? So it’s something that I’m looking at with another company and I’m intrigued by the idea and I hope we can make it work.
Brian Weinstein: Yeah, excellent. That piece, obviously there’s a training component. If you’re only bringing somebody in once a week, or that’s a little bit different than if they’re coming in three or four hours of their choosing several days a week. But I think you’re right. I mean, I think we’ve gotten to the point where we have to explore those kind of opportunities and give people the flexibility that they might need, because you know what? We’re already operating. To your point, we’re open six, seven days a week and multiple shifts. So if we can supplement that workforce by having these people just come in temporarily, I think that’s a great plan. What are we doing in order to get out in front of more of the full-time folks?
Mike Venditti: There’s a couple things, right? I guess the first thing you have to ask yourself is, are you looking to bring people on as just the seasonal hired guns? So you have to ask yourself, are you bringing people in to work for eight weeks, 12 weeks and then look to part ways. I think in this day and age, that could be a real challenge too, right? So my thought is we need to try to find a way to bring people in and let them know that we have a home for them, right? This isn’t just a, “Hey, thanks for the support, and we’ll see you next year. Leave your contact info and badge at the door.” We’re trying to get beyond that, right?
Mike Venditti: So the other thing that I’m noticing, and if you drive around the Southern California area… I was laughing when you said the heat in New Jersey, and I’m thinking, “What, was it 78 degrees? Seriously?” I mean, it’s been like 105 out here.
Brian Weinstein: We have humidity, Mike. We have humidity.
Mike Venditti: Okay. Got it, got it. Fair enough. You’re right. I forgot, being a former East Coaster. But if you look around, what I find interesting… And you’re seeing it manifest itself in a lot of ways, right? Brian, you see this every day. Commercial real estate going through the roof. I mean, they’re literally getting 10 offers, writing contracts on the hood of cars. It’s crazy, right?
Brian Weinstein: Yeah.
Mike Venditti: We’re seeing pallets that used to cost six bucks, now costing 15.50. Containers that used to cost 2,200 from China are costing 16, 17, $18,000. So you’re seeing runaway costs.
Now, you’re also seeing that cost pressure going over into the labor market, right? I just read a study not too long ago where wages are up like 10.4, 10.5% on average from 2019 this same time period. But when you drive around the California market, you see people with no warehousing experience, and people are being asked to come in and make $2, $3, $4, $5 over minimum wage with signing bonuses. At the risk of quoting our CEO, Mr. Wolpov here, I do believe there’s a risk of throwing money at a problem, right?
Brian Weinstein: Right.
Mike Venditti: And I truly believe there are companies out there that are making a mistake in the sense that they think that money is the root of everything, and that’s going to solve their labor issues. They’re going to put themselves in a precarious situation.
Brian Weinstein: Well, I mean, isn’t that a little bit about what you read with Amazon, right? So they pay more than everybody. That’s their reputation. They go into a market, they go in and they pay up, which is fine, but then their reputation is that they chew you up and spit you out.
Mike Venditti: Right.
Brian Weinstein: So I wonder where we are now, and I’m sure you can speak to this, that money’s important. I mean, these are not high paying jobs. These are hourly wage jobs. I mean, we pay competitive to market, as everybody should. But I’m sensing more and more that people are going back to the, “Hey, I want to be proud of where I work, proud of who I work for. I want to-
Mike Venditti: Correct.
Brian Weinstein: … feel part of something.” Are there things that you’re currently doing to ensure that we get that message out to our workforce?
Mike Venditti: Yeah, it’s a great question, right? The one thing historically that you try to do is the very things that you touched on is what is that environment. I think people want to come to work on a daily basis. Yes, they need to make a competitive wage. No ifs, ands, or buts. But, right, study after study, after study, after study says that usually in the hierarchy of things, that’s usually third, fourth, fifth, depending on what it is, right? It usually boils down to, “How are they treated? How are they valued? Is there growth opportunities for me? Is there an opportunity for me to go from maybe an hourly person to a lead to a supervisor, et cetera?” And as it is in our organization, and I’m very happy to see this, I probably take more pride in seeing folks that have come through the ranks and have had an opportunity to grow.
It’s funny. I’ve done some sensing sessions with our associates over the last couple of months, and you would think when I ask folks, “What are some of your challenges or complaints?” you’ll get, of course, somebody saying, “Well, I’d love to make $27 more an hour.” Of course. I get it. But you know what’s funny? Almost every time I’ve asked that question, it comes down to, “Well, I wish my supervisor would listen to me a little more,” or, “I wish I had more supplies. I always have to be looking for a tape gun or a box cutter.” So it’s so many things that are within your control that you don’t necessarily always have to throw money at the issue to solve. Or at least minimal amount.
Showing appreciation, right? For your folks, saying, “Thank you.” I mean, I know it sounds cliche and so simple, but it’s amazing how far those things go.
Brian Weinstein: Yeah, and interestingly enough, the first points that you said, my supervisor listening, having more equipment, what they’re asking is, “Geez, I wish I had the tools to do a better job.”
Mike Venditti: Yeah.
Brian Weinstein: Right? So again, you’ve got associates who want to have an impact, because they want to speak to their supervisor and be heard. They want the right tools that they need to be more successful at their role. So again, there’s always going to be the money factor-
Mike Venditti: Always.
Brian Weinstein: … but I think realistically, everybody knows there’s only a certain amount that you can make at a level. And then, to your point, you mentioned it earlier, giving them the opportunity to advance.
Caitlin Postel: Well, also, I think it sounds like creating that sense of community and building that culture so that they’re not just thinking, “Okay, we’re going to bring in…” I liked what you said about leave your badge, see you next summer, see you next winter, whatever the case may be, right? What is that? What is the next step? How can I maybe make a little bit more? Which I think is a great strategy in retaining the labor, right? Because once you have them, don’t you dare let them go.
Brian Weinstein: Right.
Mike Venditti: Well, you bring up a great point, Caitlin. I always tell people, “Look, I think it’s important as an organization, we have to invest in our folks to get them to stay.”
Now, that said, there always is an inherent risk that you could invest in folks and there may be an opportunity that they just can’t pass up and it’s too good to go. And in which case, my feeling on that’s always been, “You know what? I’m going to wish you nothing but the best.” Hopefully, you know what? As everybody on… As we’re talking here, this is a really small industry, right?
Brian Weinstein: Mm-hmm.
Mike Venditti: The proverbial family tree does not fall very much, right? So everybody knows everyone, and sometimes your paths may cross again. The best word of mouth, frankly, is that they speak highly of your organization wherever they go. Wow, they gave me great opportunities to learn and grow, and I really appreciate that.
So what does that mean for us? Well, we’ve invested in a company to have… We’ve created learning tracks, not only for managers and supervisors, but for leads, for hourly folks to learn and develop their skills, because they’re out there on the floor day to day and they’re really making things happen. So we want to continue to put back and invest in them. It’s been met with a lot of positive response from the folks that have been involved. And I’m really excited because now the leads are going to be part of this. And I think there’s going to be other key folks that are out there on the floor that maybe don’t have a title, but they say, “Wow, look at how Sally’s developing,” or, “Look at how Joe is doing. I really want to take that next step.” The company looks like they want to stand behind us and give us the tools to be successful. So I’m really excited by that.
Brian Weinstein: That’s awesome. That’s awesome. So Mike, if you had to sort of sum up your key points of how to really get out in front of this labor coming into peak, what would be your key pieces of wisdom that you would impart to anybody listening?
Mike Venditti: Yes, wisdom.
Caitlin Postel: Don’t give it all away, Mike. Don’t give it all away.
Mike Venditti: Yes, wisdom. Wisdom. I never thought I’d be asked anything around the term wisdom in the same sentence, but hey, here we go. I would think the first thing you have to do is different times, as I said earlier, call for different thinking. Challenge all your existing paradigms around staffing and how you operate today. Again, does it have to be full time? How do you cover? Are there remote work possibilities that you need to tap into? Does everybody have to be sitting here in the building at the time, especially during peak periods?
I would say the environment. We touched on that. Really consider what you’re bringing people in for. Is there opportunity to keep people? Because that’s really your differentiator, right? If everybody and their brother’s just looking to hire people for 90 days and cut them loose, then you’re into a price and it’s a commodity play. Everybody’s going to be throwing dollars at it.
The other thing is, this term gets used a lot, customer intimacy, right? I think that you really… If the expectation is that your customers are going to be able to tell you what they think the volume’s going to be, much like your comment earlier, Brian, about being prepared, you’re going to be sorely disappointed. The customers will do the best they can do, but you’re going to have to use a little bit of what the customer gives you, a little bit of what you’re seeing in your market, a little bit of what you’re seeing currently going on in the market, kind of mash it all together and at least gets you somewhat down the road to a what I would call a Q4 forecast.
And then on top of that, go ahead and put a fudge factor of about 50%, because that’s about as accurate, I think, as you’re going to be able to be. And if the expectation is you’re going to staff for only what the customer tells you, I think you’re going to be in a lot of trouble. It’s always easier to get labor out the door during peak season than it is to try to draw it in.
Brian Weinstein: Yeah, absolutely. All right. Well, this has been very informative, Mike. I appreciate you taking the time. You and I have been doing this for many years, and I think just the eCommerce and how this cyber week has turned into such a spike, then factor in the pandemic and everything else, it’s sort of changed the game a lot.
Mike Venditti: It really has. As I said, we lived off it, Brian, last year. We were ahead of the curve a little bit because of what was already in place. But you can throw that out the window this year, I think.
Brian Weinstein: Exactly, exactly. All right. Well, that’s Mike Venditti, VP of operations on the West Coast for us here at Whiplash. Appreciate you coming on today.
Mike Venditti: Well, thank you, Brian, thank you, Caitlin, for having me. I appreciate it. I’ll send some of my heat your way. You can keep the humidity too. How’s that?
Brian Weinstein: All right. Thanks, everybody, for tuning in. Caitlin, walk us out.
Caitlin Postel: Sure. Thank you, Mike. Sounds like you have your work cut out for you this year, but we’re confident. Everyone, thank you for joining. Check us out at sippinandshippin.com or on your favorite podcast platform. We’ll see you two Thursdays from today. Thank you, guys.
Brian Weinstein: Yeah, take care. Bye.
Mike Venditti: Bye.