October 31, 2007

Taking on the aging work force

A presentation on "Disruptive Demographics and the Supply Chain" at the CSCMP conference revealed how the aging of the baby boomer generation is a serious issue for both businesses and economies.

By DC Velocity Staff

If you're a speed reader, a half dozen or so people in the United States will have turned 61 by the time you finish reading this story. (Average readers can tack on a few more new 61-year-olds.) Statistics show that somebody turns 61 every 7 seconds in the United States, a trend that might have serious ramifications for companies that don't start to prepare now.

A presentation on "Disruptive Demographics and the Supply Chain" at the CSCMP conference revealed how the aging of the baby boomer generation is a serious issue for both businesses and economies. Within the next 10 years, 14 percent of the U.S. population will turn 60. For logistics businesses, the aging of its workforce is even more dramatic. For example, CSX Transportation, a major U.S. railroad, will see 40 percent of its workforce turn 60 over the next 10 years. Replacing those workers as they retire will pose serious hiring challenges for the railroad, said Dale Lewis, assistant vice president for labor relations at CSX. Compounding CSX's recruitment problems will be the difficulty finding women to fill the often rigorous jobs on its 23,000-mile rail network and the company's policy against hiring high school students because of the physical risks entailed in rail operations.

However, CSX is out in front on the aging issue. For starters, it has found a new recruiting source, namely people returning from active military duty. More than 20 percent of its new hires have military experience. CSX is also employing unique training and education programs for new hires, designed to lessen the injury rate and keep employees healthy. As a result, CSX's injury rate has dropped from 3.76 percent in 2003 for new hires with less than two years experience to 0.5 percent in 2007. To date, 40 percent of its employees have graduated from its training center, and the company expects that 82 percent will come through the training program by 2011.

"We're changing the whole paradigm for how we recruit," said Lewis. He called the graying workforce "a big opportunity, not just a big threat."

Like CSX, drugstore chain CVS is also finding employees in unique places. The company filled many vacancies at its Texas distribution center by working with SER National, a non-profit organization that helps place mature Hispanics in jobs. CVS is also working with the United Way to capture the interest of career changers. The company hired 1,000 people to fill positions in its distribution network last year, and 10 percent were over age 50. Kevin Smith, senior vice president of supply chain and logistics for CVS, said that 25 percent of the company's 8,000 DC workers are over age 50. By 2017, that number will grow to 33 percent, when the average CVS worker will be just under 44 years old.

"We have been quietly … adapting our distribution network for an aging workforce," said Smith. Specifically, CVS is relying more on automation to bring goods to order pickers, therefore lessening the walking that they need to do. The drugstore chain is also employing pick-to-light and voice-directed picking. In addition, it has implemented process changes to make it easier to move carts and dollies of products, and has staggered hours to accommodate older workers.