Angry workers, empty shelves put Woolworths in a bind

Woolworths is caught in the ultimate pincer movement. Pitchfork-wielding politicians are blaming it and its competitor Coles for fuelling inflation, suppliers and customers are fed up with prices, and the competition watchdog is accusing them of gilding the lily on discounts.

Unfortunately for Woolworths, workers at its distribution centres have joined the conga line of malcontents.

The workers, mainly from Victoria, have taken issue with the pay, worker health and safety on offer at the warehouses, in particular measures taken by Woolworths to monitor the speed of their work.

Woolworth workers form a picket line outside the Woolworths Melbourne South Regional Distribution Centre (MSRDC) in Dandenong South on Monday.Credit: Luis Enrique Ascui

For consumers, this means some shelves at Woolies are either thinly stocked or empty – a situation that no doubt revives the ghosts of the COVID-induced toilet paper famine and the pasta paucity.

The industrial action has certainly galvanised the attention of consumers given we are only three weeks shy of Christmas. The worker stoppages are hitting the 11-day mark and with every product shortage labelled a crisis, Woolworths can’t afford to let this fight drag on.

There are bigger issues at stake for Woolworths, the supermarket sector and indeed any industry using large-scale warehousing, distribution and complex supply chains.

Supply chain management and warehousing have been turned on their head by the technology revolution of the past decade, and the pace of change has accelerated in recent years.

The likes of Amazon have upended the productivity of this piece of the overall supply chain infrastructure, and in doing so reduced the number of workers needed to run a warehouse. The nature of tasks has also changed.

Future inroads by AI will only make things worse for workers.

Post-pandemic, the public has become used to instant gratification when buying a whole range of products including supermarket groceries. Both Woolworths and Coles have spent hundreds of millions in recent years injecting technology into their warehouses to meet that demand.

Shortages of product will upset customers. Credit: Rhett Wyman 

So the only future for the warehouses is further automation. Supermarkets will rightly argue that these investments in productivity ultimately reduce costs, which in theory allows them to invest in lowering prices for consumers.

The automation will certainly allow supply chains to become more efficient and more responsive to stocking levels on the shelves. All of that is good for consumers.

But workers at the distribution centres believe they are the ones paying for that convenience. At the heart of this dispute is the claim by workers that Woolworths’ framework model puts them under pressure to complete tasks in certain periods, with their performance measured and rated against that of fellow workers.

The United Workers Union (UWU) says it is a health and safety issue because staff have reported feeling pressured to cut corners and work unsafely or lose their job if they don’t work at higher speeds.

The pay issue, which also forms part of the industrial dispute, is relatively simpler, and the Shop, Distributive and Allied Employees’ Association (SDA) has already reached an agreement with Woolworths. For its part, the UWU is looking for uniformity of pay rates across all the Woolworths distribution centres, and it admits that scrapping the framework model is a higher priority.

Woolworths, however, needs the millions of dollars it has invested into warehouse productivity to deliver a dividend. So it is difficult to see how Woolworths will accept UWU’s demand to scrap any form of measurement on the warehouse floor.

The supermarket operator controls one of the largest supply chains in the world and is required to build resilience into its distribution centres to accommodate for disruptions caused by anything from floods to railway track damage.

But for customers, the friction between workers and Woolworths isn’t their concern. They just want the shelves stocked with their favourite pasta and toilet paper.

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