How To Deal With Labor Driven Supply Chain Disruptions

In recent years, our complex global supply chains have been stressed by material shortfalls, shipping delays, and labor shortages. Let’s find out how to deal with labor driven supply chain disruptions.

This article is written by Rudi Stalmans and featured in the 2024 Tank Container Supplement of Tank News International. 


Labor is crucial to running resilient supply chains but is facing growing pressure from elements related to the environment, social issues, and governance.

Labor shortages continue to have an extensive effect on supply chains and often are the result of skill shortages. With baby boomers moving into retirement, younger generations provide fewer people to fill vacant roles. According to the World Economic Forum, stereotypes about what manufacturing work is like, a mismatch of skills needed versus skills possessed, and increasing pressure for young adults to pursue college degrees in lieu of entering the workforce, all contribute to the lack of workers in critical jobs. Initially, labor shortages were seen as a problem of developed countries, but nowadays developing countries are also experiencing a discrepancy of skills that threaten various sectors.

The gap between job openings and unemployed workers shows that many countries have a surplus of job opportunities but lack sufficient workers. In some countries, there would still be many vacant job positions if every unemployed person were to find a job. This labor market dynamic was caused by the pandemic’s great resignation when millions of workers resigned to find a better work-life balance, compensation, flexibility, and a positive company culture.

Labor shortages in the chemical industry

The chemical industry and supply chain is also facing labor shortages. Labor shortages happen when employers have difficulties filling job vacancies because of a lack of people applying for the jobs.

That can happen in specific regions or occupations with special skill requirements, such as chemical factory workers or truck drivers. A tight labor supply will also shift the negotiating power from employers to employees, resulting in rising wages in these competitive industries.

These labor shortages could also affect the competitiveness of a country’s chemical industry in the international market. High labor costs could make chemical products more expensive than products from other regions with lower labor costs. These higher labor costs could result in higher production and supply chain costs and thus affect chemical pricing. An increase in production costs inevitably is passed on to consumers through higher prices for finished goods. In the end, these higher prices and inflation could affect demand and lead to reduced production capacity.

On the other hand, higher wages will most likely improve labor supply when it becomes more attractive to work in the industry, while businesses may feel the need to increase their investment in technology to cover the lack of workers or move production overseas where there is more supply in the workforce.

Needless to say, skilled labor in the chemical and hazardous goods industry is required to protect people, the environment, assets, and reputation.

Solutions to mitigate labor-driven supply chain disruptions

Below are four solutions that can mitigate labor-driven supply chain disruptions.

Make use of technology

At an accelerated speed, technology companies are launching new automation tools to pull us through labor shortages. Innovative technology has an important place in the chemical industry and supply chain. Investment in technology can pick up manual and repetitive tasks to increase the productivity of workers. Employees can then acquire the skills to manage technology and acquire the expertise to optimize operations and support supply chains.

Embrace Artificial Intelligence

AI-powered solutions for the chemical supply chain and logistics industry are rapidly developing. By leveraging machine learning algorithms and data analytics, these systems can optimize scheduling, track shipments, and predict potential issues before they arise. As for the trucking industry, self-driving vehicles are going to revolutionize transportation. That can potentially help truck platoons of electric-linked trailers that follow the movement of a lead truck with a human driver. AI technology in trucking could help reduce fatigue and improve fuel efficiency and road safety.

Upskill your workforce

That is another important focus area. A skilled and trained workforce that can work with innovative technologies and AI-powered solutions will be key to success.

Create a positive work environment

A positive company and business culture provides a place where workers can voice issues, receive opportunities, and are happy to work. Such an environment will foster retention and hiring.

Example: Shortage of truck drivers in the chemical industry

The World Road Transport Organisation IRU’s 2023 driver shortage report has found that over three million truck driver jobs are unfilled, or 7 percent of total positions, in 36 countries studied. With the large gap between young and old drivers growing, it will become worse over the next five years without significant action.

The shortage of skilled truck drivers in the highly demanding dangerous goods and chemical sector is a well-known problem that needs to be tackled by both shippers and logistics service providers.


To keep drivers, increase their productivity, and attract new ones, chemical shippers should recognize drivers as crucial chemical industry representatives. This approach will align drivers with the business, elevate performance, and increase commitment. Recognition can come from providing excellent on-site waiting facilities, improved communication about the operation, and offering training. Shippers should also focus on better order management, scheduling flexibility, and improving truck turnarounds.

Logistics service providers should also take many initiatives to mitigate the problem through increased driver flexibility, equipment pooling, load exchanges, better communication, and improved transport planning. Strategic partnerships with specialized liquid bulk and hazardous goods drivers will facilitate providing training, integrating the needs of drivers in the planning process, reporting dangerous conditions, and offering development opportunities.

The whole chemical industry should actively promote the importance of transportation in the chemical supply chain and the crucial role that drivers play in the hazardous goods and chemical sector.

Conclusion

You need a process that helps you implement a resilient supply chain and focuses on continuous improvements. Following our ener8 Supply Chain Resilience Proof Method, three ingredients are required to build a supply chain resilience strategy. Businesses should develop a responsive supply chain around people, processes, and technology. Supply chain experts are needed to guide a company to navigate challenging business conditions and stay ahead of market trends. Organizations need process reinforcements to optimize forecasting, inventory management, supplier relationships, sourcing, and market awareness. Finally, technology is required to enhance and improve these processes.


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