[00:00:00.000] Hi, Stéphane. Hey, David. How are you? Very good.

[00:00:02.970] It’s Friday.

[00:00:03.510] It’s Friday, a real Friday. It’s now for a podcast. It’s the end of the week. And this week’s edition is the one we call Behind the Headlines, where we take an article and basically talk about it and think about what the impact is on our world and the world of our clients, which manages supply chains. I don’t I don’t think you need a presentation anymore. No. You’ve done enough of these. And for those who meet Stéphane for the first time, he’s a partner here at Lid and has the most experience among everyone here. All right, so we’ll jump in right away. The article that you found this week is on a retail dive. It’s called, Here’s how Retailer are stifing up for the 2024 holiday Season. And this article, if I can just quickly… And this is an article, but we could find so many articles on this topic of peak seasons, holiday season coming up, where retailers have to staff up.

[00:01:16.330] Staff up, absolutely.

[00:01:17.590] To deal with the rise in demand. And this specific article, it talks about year over year, because as consumers are tidying up their wallet in recent times that it predicts a moderate growth of 2.3 to 3.3 year-over-year growth, with the E-Comm, the direct to consumer or e-commerce sales being more around the 7-9, which is still growth, right?

[00:01:50.810] Yeah, absolutely.

[00:01:52.140] So in order to face this growth, like every time, like every year, retailers have to staff up. And In this article, they basically state very large retailers, nationwide retailers, and the number of temporary workers that they want to hire, not only for their stores, but for their fulfillment centers.

[00:02:19.410] Stores and the Caesar fulfillment center in the US, in Q4, is around half a million people. So 520 1,000 people.

[00:02:31.620] Across the country, just to- Across the US.

[00:02:34.670] Yeah, that’s across the US. So we can anticipate the number to be equally in Canada as well, because we have the same peak season.

[00:02:46.320] You mean proportional? Proportional to. Yeah, of course. But that’s a good-size city. It is.

[00:02:53.440] Absolutely.

[00:02:54.240] It’s a lot of people. And just to state a few, Amazon has a huge number. They claim a quarter million of people full and part-time.

[00:03:07.630] Yeah, just Amazon was 250,000 people. That includes transportation in the Macy’s, as they grew their footprint on last mile delivery centers and DCs. So that’s 250,000 We’ve got Target with 100,000 people.

[00:03:34.410] And then the Macy’s, Bath & Body Works, Cole, are all in the range of 20, 30, 40,000 people that they predict that they’ll need to hire in order to be able to fulfill demand. Those are gigantic numbers. Yeah.

[00:03:53.630] And those are pretty sophisticated big box retailer we’re talking about here, which also means and brings into the conversation the fact that they’ve already started their automation journey years ago. For some of them, forever.

[00:04:16.280] Yeah, they’ve been the first one doing it.

[00:04:18.120] Yes. So funny to see that they still need a lot of people.

[00:04:26.390] They still need a lot of people to face those peak. A business may want to level the workload throughout the year, throughout a season, throughout even a few weeks. But there’s only so much you can do. The demands drive everything, right?

[00:04:50.250] Yeah.

[00:04:50.650] Only maybe grandparents will think about, what will I buy my grandkids? And they make that purchase seven months in advance because they found something great. But otherwise, last minute people like probably you and me, have just with the ease of purchasing last minute, we do so online. And therefore, That peak will just never go away.

[00:05:17.660] Absolutely. And that brought us in our conversation, it brought us to, okay, so they’re increasing their staff, but where are they with automation? Where are with other way of coping with that peak, with that volume coming in? And we read and saw some companies are throwing millions, if not billions of dollars into whether it’s automation purely or retooling what they had as automation. So they’re trying to bring that automation in even further into… So they don’t need as many people, basically. Because they’re all chasing the same people. Everybody’s chasing the same staff.

[00:06:12.410] Yeah. And then there’s only so much that you can pay a certain labor to attract them. Otherwise, well, it doesn’t make sense financially. So you’re probably referring to this Walmart who is, as you said, taking a 25-year-old facility in Arizona and a 35-year-old facility in Arkansas to, as you say, retool, right? Maybe when you’re building a green a real facility and want to go fully automated, it’s easier than having to do it with an existing facility. But they’re doing so because ultimately, the main objective is to improve efficiency. And And by improving, they claim that they will double it.

[00:07:03.210] They want to double their productivity in those regional facility, which are already fairly automated.

[00:07:13.280] Exactly. So basically, and it’s not the first time, this is a common theme, right? When we talk with our clients or even here on the podcast, that labor, labor availability, labor shortage, peak in demand that warrants more labor is directly tied to the industry having to automate. I’ve heard you say so many times, it’s not if you automate is when you automate.

[00:07:43.230] It’s when you’re going to automate. Because Because we’ll have… I mean, distributor, retailer will have to because we’re all going for those same people, and there’s so many. And there are signs that I’ve I’ve recently seen a distributor moving from one building to the other. And as I was driving by the old building that’s now vacant, the sign-We’re hiring. We’re hiring was still on the building. That made me laugh. But this is what it is. I mean, this is what’s happening right now is everybody’s trying to find people.

[00:08:23.260] Those signs are held permanently on facilities.

[00:08:26.840] They’re black and white because they’re fading. The sun is taking away their colors. But that’s what it is. They have to find other way to cope with those peak. And I think automation is absolutely one of them.

[00:08:45.300] And so, again, we’re like a broken record telling people that they need to consider the automation. But maybe we can just put the emphasis on what it means in terms from a planning, just from a perspective of timeline, because we have sometimes clients that are very optimistic and say, I realize this holiday season is coming, it’s going to be Black Friday, Cyber Monday, then it’s going to be Christmas, and there’s this peak in demand for the coming months until the end of the year. And it’s, Oh, yeah, we’re not ready for this one, but we’re going to start and we’ll be ready for next time.

[00:09:29.960] But chances are, it’s not going to be the next one. It’s most likely going to be the one after.

[00:09:38.750] If you start now.

[00:09:39.910] Yeah. If the planning has started, the And you know where you’re going. If you’re already up to speed with technology, then you can plan. Then if you plan, then you’re going to go to suppliers that are overwhelmed with… Their capacity is to the roof. Everybody wants to be part of it. So they have the same challenges as everybody else. They’re trying to find people, new skilled people, and they’re all going for the same staff. So they’re challenged. So you’re challenged, they’re challenged. So It’s most likely an automation project from planning to, let’s say, go live from planning to execution is…

[00:10:40.480] More than two years.

[00:10:41.330] Well, yeah. I mean, you’re not going to be ready this year. You’re not going to be ready next year. You may be ready the following peak season, if Christmas is your peak season. But regardless of when your peak season is, it’s not a 12-month project. Project.

[00:11:00.400] No. And you touched on the important point is if you’re up to speed on technology, because you may start planning for automation, which touches so many things, physical and digital, but you may realize that in order to achieve what you want, there’s from small adjustment to a full-blown integration of either your ERP or your warehouse management system that may occur, which either you do it in parallel, you do that planning, but also different… Some very large organizations obviously have their departments for large departments for engineering and technology. But there’s many organizations out there where it may be the same group of people. So there’s only so much you can take on as a transformation, as a change. So that’s why we’re saying-There’s other need in the company.

[00:11:58.620] And there’s other needs in the company as well.

[00:11:59.610] And there’s That’s the need in the company. So that’s why you’re saying, even if everything goes well, you plan, you justify your automation project, you get in line, the line of the suppliers, to enter their order. I have only the French engineering and order process. Entering their order process. The window for delivery on on any given automation project is a year to two years. Yeah. Add some IT preparation for that. That’s why, as you’re saying, it is still very optimistic to think that while you may have to cope with this labor issue or its full magnitude for this coming holiday season, it’s optimistic to think that it would be entirely resolved the next one.

[00:13:01.720] So chances are we’re going to have that same discussion next year, talking about the same number of people needed in our industry because between this year and next year, yes, of course, it will change, but not that much.

[00:13:20.750] Exactly. Because whether you’re talking about 3% or 7% year over year, let’s say you do Start that process and improve your productivity or your ability to ship much more. Let’s say you do resolve this for the next two It would be ready in two years or so, two and a half years. Well, you’re still then compounded that growth is in significant volume compared to where you are today. It is. So you can imagine that the challenges you have right now may be increased by that order of magnitude.

[00:14:05.320] Wanted to add some very nice ID came out of Home Depot, not to name them, where they’ve ordered their corporate staff to come and work one day in their store.

[00:14:23.080] One day a year.

[00:14:23.760] One day a year in their store. And funny enough, I’ve heard the same thing here with with a company that brings their office employees in their warehouses and DCs. Not on a regular basis, but they do. So that’s another idea for short term to, again, be able to get through those peaks. Yeah.

[00:14:53.170] Well, absolutely. And the benefits are also two-fold in the sense that, well, those corporate staff also get exposure to what it is and what it means from a practical standpoint of not having the ability to ship. So that results either in lost sales or unsatisfied customers.

[00:15:20.470] Absolutely. Yeah.

[00:15:22.040] All right. Anything else you want to add?

[00:15:23.580] No. I think we’re good. And this is It’s absolutely necessary for us and our client to look into what’s going to happen in the next little while and make sure that we’re aware and that we’re planning for it.

[00:15:47.100] Yeah. And I’ll add that when we talk about planning and planning, we use the word automation. For us, it’s a common word, and we understand the nuances in that world. And then we say planning, planning. The reality is that even before planning or part of your planning is education. Because when we talk about automation, this cannot be perceived as automating everything. It’s just getting in the game of automating parts of your processes or functions within the distribution center. And that requires a form of education, just to know what’s out there, what it’s used for, why you should consider some solutions and not others, depending on the profile of your inventory, of your orders. The goal is not to scare people with the automation, but rather get curious about it, start looking at what’s out there so that you can then start planning and move on. Absolutely.

[00:16:52.620] Agree.

[00:16:52.940] All right.

[00:16:53.480] Well, thank you, Stephan. Thank you, David. All right. Thanks.