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The Datacor Blog

How Technology Can Ease the Labor Shortage Burden

July 21, 2022 by Jinelle Park

Supply chain bottlenecks, surging oil prices, COVID-19, and the ongoing labor shortage have combined to create a particularly tough economic environment of late.

Despite exposure to many cyclical end-use markets, the chemical distribution and process manufacturing sectors have continued to show considerable resilience. Yet shrinking margins and spiraling costs have forced many to reassess their spending and look for ways to protect margins.

Chemical Industry: Economic Outlook

According to ITR Economics, real GDP growth in the U.S. is slowing into the first half of next year and will be flat at the bottom of the cycle. Forecasts suggest it will then pick up in the second half of 2023 and into 2024 as inflation comes down, the supply chain improves, and disposable income reappears.

“We’re seeing maybe a 1–2% contraction for U.S. chemical production activity [at the bottom of the business cycle in 2023], which is pretty mild – an inflection point – slowing and dipping briefly but rising again in 2024,” says Eric Post, ITR’s Director of Research and Development. “We think of this as a speed bump in the road.”

With interest rates relative to inflation fairly low and attractive, now is a good time to plan for growth and invest in the future, he suggests.

The best – albeit most daunting – time to implement change is at the bottom of the cycle.

Insight into the Labor Market

Increasing investment in technology and software can help businesses improve their operational efficiencies and ease the pain caused by challenges such as the difficulties in hiring new recruits.

“Right now, the U.S. unemployment rate is really low at 3.6% on a seasonally-adjusted basis for May, which is basically back to where we were pre-pandemic in early 2020,” says Post. “There’s been an astoundingly robust recovery in the labor market, with two job openings for every unemployed person. That’s wonderful math if you're looking for a job but horrendous if you're an employer. If you lose a worker, it means there’s not necessarily someone else who will walk through the door.”

The savvier, forward-looking businesses are confronting this challenge with creative solutions that include software and automation.

“Our advice right now is to run, rather than walk, to the bank and borrow. We are going into a softening economic period so of course you mustn’t be reckless, but people should be investing in things that will improve their profitability and fix their costs as much as possible,” Post adds. “If you’re able to invest now so you can save money over the next few years, that makes a lot of sense.”

Due to the issues involved, the modern marketplace no longer accommodates a “business as usual” approach. In this type of labor market, margin pressures are forcing participants in the traditionally more labor-intensive industries to rethink the way they function.

The baby boomers are retiring, leaving a huge void in the talent pool. Fewer skilled people are coming into the workforce, and even when the right staff can be found, the associated salaries and employment costs are climbing rapidly and proving prohibitive.

The acute skills mismatch is also a factor nationwide, Post says. With close to a million manufacturing job openings on average over the last 12 months alone and a lack of effective training programs to steer people toward these careers, the labor crisis shows no sign of easing anytime soon.

Ultimately, businesses are having to do more with fewer people, and the pressure is constant to get everything out the door more quickly. Productivity needs to climb, and costs need to fall.

At Datacor, we believe technology provides the perfect solution.

Technology doesn't get COVID-19, ask for a four-day work week, or take vacations. Once a little time and money is invested in the initial set up and getting everything up and running, software works in perpetuity.

Alleviating the Labor Gap with Technology

Effective software means entire workflows can be streamlined, with time-consuming processes and manual tasks replaced to free up man hours and allow staff to be assigned to more useful, skilled activities.

With decades of experience developing powerful tools to help chemical distributors and process manufacturers, Datacor understands the needs and nuances of the industry.

Taking customer orders, for example, can be an extremely labor-intensive process, but everything can be done far more quickly through a dedicated web portal. If you’re able to achieve a 50% adoption rate, that lowers your customer service requirement by 50% and eases pressure on your staff. Your customers effectively become your customer service agents.

With integrated systems like ours, details are accessed instantaneously and data can be shared across teams. With less need for different departments to maintain and reconcile their own spreadsheets, the risk of duplicated or outdated information is eliminated.

If you’re using barcodes, you can also easily track the bin locations where you store product so you can identify its location quickly and without physically searching the warehouse. This also helps with cycle counting and physical inventory.

Keying in multi-digit serial numbers takes time, and mistakes are easy to make. Why risk errors when simply scanning a barcode logs it in your system and you’re correct 100% of the time?

Software offers significant time and cost savings related to freight and logistics as well. Whereas you may previously have had to contact five different freight companies to source quotes and wait for call backs, automating this time-consuming practice with API tools means prices can be collected with the simple press of a button. No hassle, no fuss, and always the best result.

Technology allows orders and invoices to be electronically sent back and forth, and payments collected without delay. Rather than having your accounts department chasing collection calls or requesting checks from customers, you can instead arrange instant payments by credit card whenever an item ships.

If you're buying items from suppliers, paper purchase orders no longer have to be physically entered into the system and stored. By implementing barcoding, you gain real-time information and that data entry burden is removed.

Among other exciting new options on the accounts payable side is our new AP invoice automation tool. Most customers receive an invoice from their supplier via e-mail with an attached PDF. This powerful tool scrapes the data from that attached document and, if it matches the purchase order, queues it up for payment automatically. If there’s a variance, you can set certain rules and it can be easily reviewed before approval. We expect this tool to lower the accounts payable burden by 50-75%.

And these are only some of the features and tools we have available!

The chemical industry is finally becoming less wary of technology and it’s realizing it has to move with the times to remain competitive.

It may be a daunting in the current climate to make that investment, but doesn’t it make sense to spend a little now so you can save a lot in the future?

To learn how Datacor can help your company streamline operations and increase efficiency, sign up for a personalized demo today.

Topics: Industry Trends

Jinelle Park

Written by Jinelle Park

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