With Trade and Economic Uncertainty, CPG Companies and Retailers Need Staffing Flexibility

The last few years have shown how unpredictable business can be. On again/off again tariffs between the U.S. and China—and Mexico and Canada and the European Union (EU)—have made it next to impossible for consumer-facing companies to accurately plan costs and supply chains. By the time the United States-Mexico-Canada Agreement (USMCA), the replacement for NAFTA, was ready to finally clear Congress, it had been up in the air for more than a year.

The U.S. economy has been largely positive and consumers, via their spending, have maintained their critical 78% of GDP growth. But job expansion may be reaching its logical end—there just aren't enough people with the right skills available to fill critical positions. After all, the unemployment rate is below 4.0% overall and around 2.0% for some professional positions. And the labor force participation rate, which is the percentage of the population 16 years of age and older either working or looking for work, remains stagnant at 63%, meaning not much talent is reentering the workforce signaling a weak labor market.

Slowdowns in domestic manufacturing, according to a leading indicator from the Institute of Supply Management, is another troubling sign. Do manufacturers know something that many consumer product goods (CPG) and retail companies haven't seen yet? Similar measures in the EU and China have been doing even worse. All this might mean supply issues and tighter pricing.

And then there's normal seasonality. Too many people assume that means holidays at the end of the year. But you know that’s only a small part of the picture. Some part of the industry is always gearing up or down, either going into a seasonal bump or coming off one. Summer apparel makers had better be in high gear in winter, with ordering well underway and logistics and warehousing planned out. In 2019, signs of 2020 Valentine's Day promotions were already in sight before the final hours of Christmas shopping. By spring, buyers are looking toward fall.

So, what does all of this mean? How should your company respond?

Getting Control

There are multiple actions your company can take. Inventory control, although that depends on having a tight enough grasp of demand. Exquisite management of the inbound supply chain, with the nerves of steel necessary to balance it as tightly as possible. You could push down on costs to open margin and make more room to maneuver, but that is getting tougher, and how would you go about it? Even if your processes become as sharp as a newly honed knife, how much more can be done? Maybe shift to e-commerce if you haven't already (although you probably have). All are measures you can take and not one is a silver bullet.

This is where staffing expertise comes in. You need as much flexibility in all the different operational aspects of your consumer-focused business as possible. Warehousing, logistics, sales, IT, manufacturing, accounting, marketing. You've got core employees you will always need. But, no matter what the function, there is always a part that could float. Things get busy and you need more help. Business slows and fewer people puts less strain on payroll. Staffing companies know how to navigate the constant peaks and valleys.

Traditional hiring models can't keep up. You create bad morale when people who landed "permanent" jobs learn they might find themselves unexpectedly on the street from a layoff. Plus, there is the resulting strain on the HR department. Constant shifts make it impossible for them to attend to broader parts of their responsibilities, such as regulatory filings, training, employee relations, compensation, benefits, and development. That leaves one answer: partnering with an experienced and capable temporary staffing firm, or firms. No matter what type of employee is in question, you can reap major benefits by opting for the temporary employment route:

• Bring in experienced people only when you need them
• Outsource a portion of recruiting, giving HR opportunity to do other important work
• Quickly add capabilities and skill sets for new initiatives
• Try out potential hires before bringing them on permanently
• Use the flexibility as a cost-cutting, bottom-line boosting strategy

Now is the time to develop your temporary employment strategy as part of your larger cost containment and operational efficiency goals. If you're not working with a staffing partner, or not getting the service to the degree you need, find a partner with the resources to build the efficient and flexible contingent labor program your consumer goods business needs.