The FMCG sector is facing multiple challenges, including global supply chain struggles, the rising costs of raw goods and materials, and demands around new factory builds. We examine what it all means for the talent market.
With soaring costs and supply scarcities impacting industries across the UK, one of the most pressing issues facing FMCG companies is the smooth running of the many new factory builds and production lines they are juggling. Shortages of raw materials and equipment, combined with supply chain disruptions (global shipping capacity has reduced by 25% since the start of the pandemic), have seen the price of fabricated steel production rise by 53% in the year to May 2022. According to compliance and risk management accreditation body, CHAS, 80% of polled members reported construction projects cancelled or postponed over the past two-plus years, while almost 70% said that they weren’t always able to get the goods and services they needed to carry out work.
We talk to two FMCG companies to find out how they are coping with these demands and look at what companies can do to ease the pressures.
By his own admission, a Senior Project Manager at a well-known UK based food manufacturer says the company is more fortunate than most. A new multi-million pound factory build and fit-out project “will” be open in time – but that’s only because the retailer had the foresight to realise that supply chain disruptions and subsequent price inflations meant production line expansion had to be started a lot sooner. “When you’re now faced with a 12-week lead time just to get steel – which is also rising in price month-on-month – and as much as 52 weeks for processing equipment, it’s easy to see that the ripple effect from a single hold up can be massive. The only answer is to start planning earlier,” he notes, adding that project costs have risen by 20-25%.
Other FMCG companies have been far less lucky. “For a sector that’s one of the most innovative in the UK, the last few years have been torrid,” says Yasmin Bunn, Senior Principal Recruitment Consultant at Real Staffing. “Demand for new products also means demand for new project lines. But supply chain issues are such that project costs are ballooning and equipment is so scarce that brands are turning to the second-hand market. But this in turn, can be a false economy as older parts may break, and require longer fitting-out times.”
Resourcing for uncertain deadlines
Compounding all this is the impact on how companies staff these projects. Bunn describes it as a very “testing time” for the FMCG sector. She explains: “When project completion is so up in the air, resourcing for them has become far more complicated. If a delay hits, potentially dozens of engineers expecting to go on-stream are suddenly idle, for example.”
She says brands face having to keep paying these contractors, just to retain them and prevent them joining other projects, adding that “strong demand for more just-in-time talent is pushing up wages and what people could potentially jump ship for.”
“We already have projects that have been pushed back until next year,” notes Lee Holman, Head of Projects at jam and jelly maker Hain Daniels. “This is because of difficulties getting end-of-line packaging – particularly servomotor equipment – and getting it installed. The knock-on has been trying to work out at what point people get phased in to support this, which is tough when deadlines can so easily move.”
Turning to contract resource
Both companies say the only solution is to rely more on contract placements. But even this isn’t as simple as it seems. “Not only is the market very difficult now – in terms of finding people that aren’t signed up to other brands, but the number and quality of people available reduces if you don’t get in early,” says the Senior Project Manager.
“This leaves you with a choice – do you decide to pay less, but then you might only get a ‘D’ or ‘C’-standard team [i.e. those with less experience, and who may take longer to do their job than planned]; or do you try and pay more to get the A-team?”
Bunn agrees that contractors can be a sensible option and urges resource managers to avoid the even pricier consultancy route. “Consultants aren’t incentivised to stick to timelines, and actually love it when projects are pushed back,” she explains. “Interims have more of a service delivery mindset, because they want to ensure projects are completed properly.”
According to the Senior Project Manager, many new product line projects in the FMCG sector are mid-way through and can’t now be mothballed because they’re too far advanced. “But if planners knew back then what they know now, it’s likely some of these projects might have been killed off before they even started,” he says.
Anticipating delays
So, how else can businesses respond in a tight labour market? Companies need to better foresee these delays, advises Bunn: “We implore brands to try and plan for these delays and anticipate their engineer needs, with plenty of lead time.”
With the big backlog of projects waiting to be started – those that were initially put off but now need to begin, this will only pile more pressure on the hunt for top talent. And with more people now wanting to work locally, companies are also fishing from a much smaller pool, says Bunn.
For Holman, planning will be quite tough for the foreseeable future, he admits – a problem not helped by Brexit. But he believes it’s not insurmountable, if the people elements are considered earlier in the process: “There’s generally not enough skills in the sector, we all know this. But the interim market can fill in where permanent positions are harder to find.
“Companies have already pressed the button on their capital investment, so that’s not often the problem. Labour costs are probably rising 15% – less than the cost of materials, but still significant. So it’s now about how you manage acquiring talent to put this into fruition.”
He adds: “If brands want to keep the same teams, which is good for consistency and avoids further delays down the line, this is an investment cost. For example, we’ve just told a team of people to stay at home for two weeks because of delays to putting in a sprinkler system. But we’d rather be keeping them, than letting them go, and potentially not being able to get them back again.”
As Holman concludes: “Sometimes it’s about looking at the lesser of two evils: spend less on talent, and you could have to spend more sorting out issues further down the line.”
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