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Despite the continuous improvement in the ratio of inventory to gross domestic product, the total supply of industrial warehouse space in the USA has increased steadily over the years. As of matter of fact, the total supply of industrial warehouse space in the US reached nearly 6.5 billion ft2 in 2000 ([15] Delaney and Wilson, 2001). A gradual increase in industrial warehouse space may be due in part to a rapid growth of third-party logistics (3PL) markets and the increased establishments of mega warehouses across the USA. In 1999, the average annual growth rate of the warehousing industry was approximately 15-20 percent and some 3PL companies grew at rates of up to 50 percent ([33] Ruriani, 1999). As a result, the number of wage and salary jobs in the warehousing industry is projected to grow 11 percent from 1998 to 2008 ([40] US Department of Labor, 2000). The flip side of this trend is the increasing difficulty of finding and retaining qualified labor, as evidenced by the relatively high employee turnover some warehouses have experienced.
For example, Kenco Group Inc. reported having an annual warehouse employee turnover rate of 75 percent or higher in recent years ([28] Mullins, 2002). According to the 1999 survey conducted by the Warehousing Education and Research Council (WERC), nearly half (44.1 percent) of the surveyed respondents indicated an average annual turnover rate in excess of 20 percent among entry-level warehouse positions, whereas median employee turnover in the USA was 8.4 percent ([46] Wilson, 2000; [12] Bureau of Labor Statistics, 1999). In some cases, it is reported that as much as 75 percent of all warehouse workers leave their jobs within one year of employment, costing thousands of dollars for replacing those departed employees ([16] Gooley, 2001; [7] Autry and Daugherty, 2003). Another recent survey revealed that the most challenging problems facing warehousing operations are finding high quality employees and retaining effective employees ([35] Speh and Maltz, 2002).
Pressured with chronic employee shortages, some firms such as the UPS Supply Chain Solutions, GUESS?, Global Sports Interactive Commerce, and Dixie Warehouse Services have recently raised their warehouse employee wages and compensations. Indeed, in recent years, most positions dealing with warehouse functions received moderate pay hikes. For instance, storeroom/warehouse supervisors received...