Temporary Warehousing Support – Food Retail

Key Features Demand Management, Staff Retention, Quality of Talent, Pay-rate benchmarking
Company Overview:  Client: Food Retail, Staffing Types: Order Pickers, Drivers, Number of Employees

Company Overview

Our client is one of the top food retailers in the UK, employing 70,000 people across the country.

Blue Arrow enjoys an established relationship with this food retail company and is the sole supplier of industrial staff to meet warehouse-based vacancies in 13 strategically located depots responsible for supplying 2,500 stores nationwide. The requirement is primarily for Order Pickers (99%) but includes Drivers in selected locations. We supply around 1,200 temporary workers on a rolling headcount, rising to 2,000 in peak seasons. These include summer (covering the barbecue season and major sporting occasions) and Christmas (November through December).

This equates to an annual temporary worker wage bill of circa £20 million.

With a number of depot locations struggling to attract and retain workers, competing with other local employers looking for similar skillsets, Blue Arrow undertook a Market Review to understand the factors affecting attrition rates, worker productivity and overall efficiency, which were responsible for an increase in training costs.


Through local market insights and  quarterly benchmarking exercises we are able to help our client shape a competitive proposition to attract the best talent during recruitment drives. 

Warehouse Employee scanning boxes

The Challenge

The challenge of recruiting and retaining temporary warehousing staff is highly dependent on local market forces, with regional fluctuations affecting some depots more than others.

Serving the South West, Avonmouth is a good example with a high number of warehouse and logistics companies based there. With agency labour budgets in 2019 limiting pay to National Minimum Wage levels at that time, this food retail company found their competitive position was compromised. 

A lack of labour availability due to a thriving UK economy and record levels of employment led to an attrition rate of 24%.

 

The Solution

To reduce attrition and attract order pickers of a sufficient quality, it was deemed necessary to pay workers a higher rate than the current budget allowed for.

To prove the current rate was not competitive and to demonstrate how an increase in pay could be offset for the client by removing the indirect costs of attrition in terms of recruitment and training, Blue Arrow undertook a benchmarking and analysis exercise to inform the joint decision-making process.

Money 3 pound coins on top of a 5 pound note
Bar graphs and pie charts with laptop and phone on a desk

The Journey

Pay rates were measured using a variety of sources, including ONS reports and statistics, combined with “live” local competitor analysis. This was backed up with Blue Arrow’s own market intelligence as one of the sector’s largest recruitment suppliers.

End of contract surveys for temporary workers and their managers were revisited to drill-down into the specific reasons for leaving. This additional research focused on early leavers (within the first 12 months of employment). Causes examined included better conditions and rates of pay elsewhere, as well as worker under-performance.

The survey revealed better pay to be a major reason for leaving, while exposing a surprising level of under-performance from lower quality workers. 

The Blue Arrow team then looked at the indirect costs of attrition, considering training and onboarding and the loss of more productive staff. Working closely with the client finance team, it was established that the cost of attrition amounted to £0.60 per hour.

 

Quote: "Requesting rate increases is common in recruitment. What is less common is the lengths Blue Arrow go to in order to prove the market forces we operate within and what changes are required in order to succeed."
The Results

Following the full cost assessment and provision of market analysis, a £0.60 per hour pay lift was implemented. In just three months, attrition rates were cut by two thirds to 8%, resulting in an estimated per annum saving of up to £24,000 in indirect costs at this location alone. As a result of the changes, attraction rates, quality of staff and fulfilment were increased, enabling intake requirements for an ongoing requirement of up to 70 temps to be met. The improved retention of trained workers delivered a 9% increase in productivity. Following the successful implementation of the salary uplifts at Avonmouth, the initiative has since been rolled out to other client locations where similar results were achieved up to the start of the Covid-19 outbreak.

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