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Digi-Key undertakes herculean task to bring more than 4,000 employees back to the office in phased approach

The phased approach will help determine what the future of work will look like for the electronics supply company; initiates controlled launch of its new distribution center.

Digi-Key
Digi-Key Electronics employees are seen in the company’s Product Distribution Center in Thief River Falls, Minnesota.
Images: Courtesy of Digi-Key Electronics
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Thief River Falls, Minnesota-based Digi-Key Electronics has a herculean task – bringing thousands of employees back into the office after working remotely for two years.

It’s a good thing the company, which ships electronics supplies all over the world, is up to the challenge. It couldn’t do it without a plan, and according to Shane Zutz, the company’s vice president of human resources, Digi-Key has a great plan.

Zutz said Digi-Key has around 5,100 employees worldwide, with most of them – about 4,400 – just in Thief River Falls. With so many employees in one location, the company has found the best way to bring employees back into the office is with a phased approach. But even so, he said, it will continue to be a hybrid work environment – one of the things the pandemic changed for many companies, no matter their size.

“We're less concerned about where the work is done” because employees have proven “they can get the work done remotely,” Zutz said. “But what we feel we've lost by being fully remote, except for our distribution center, is the connection that helped our company really build on a sense of community and some of that high-level collaboration. That really just takes place when you're in the workplace.”

Zutz said the best way the company has found to reintroduce employees to the office is in phases, which it started to do earlier this year by first bringing its management team back into the office. Next, in April and May, it had employees return to the office for five days a month. In June and July it will have them come into the office for 10 days a month. Employees will rotate days so not all are in the office at the same time.

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“We're using (the phased approach) as a kind of testing ground to help us understand what our true future of work will be,” Zutz said. “We know we're going to be hybrid, but how are we going to operate in that hybrid environment?” He said at this point there remains a lot of unknowns: “Are we going to have schedules that are static or flexible so employees can come in on the days that work best for them? Is it a combination?”

The company will be finding answers to these and other questions over the next several months.

Zutz said the company also is revamping space to make the work environment more conducive to a post-pandemic environment, and it is ramping up the services of its expanded distribution center, which was completed in April 2021.

‘Like a Bank’

Digi-Key has locations in China, Germany, Israel, Japan, Netherlands and two in Minnesota, including Bloomington, Zutz said. It also has distribution operations across the state line in Fargo, North Dakota. But its headquarters is in Thief River Falls, the hub where most of the activity takes place.

Much of that activity is at its Product Distribution Center, which recently completed a massive expansion – some 2.2 million additional square feet of multi-story space. Formerly, the center was roughly 800,000 square feet.

Digi-Key2
Digi-Key's new Product Distribution Center in Thief River Falls, Minnesota, is more than 2 million square feet.
Image: Courtesy of Digi-Key

Three-million square feet – that’s a lot of space. The building, built by McShane Construction Co., is large enough to fit 22 football fields and includes shipping and receiving docks and airlocks, multiple breakrooms, employee engagement areas and site walkways to encourage fitness. A steel bridge connects the expansion to the company's current headquarters.

“We've grown so exponentially that we had to design and build a new distribution system,” Zutz said, noting the facility is approaching its launch in phases.

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“We're in what we call our controlled launch, which means we're moving some orders out of there. We're inducting inventory, but we're doing it on an extremely small scale,” he said. “It's almost pressure testing the system.” Processes will ramp up as it passes “proof points” that show the system is ready for large-scale work.

“It’s unbelievable,” Zutz said of the new building. “It’s bigger than the Amazon building.”

A fitting gesture, since Digi-Key’s website touts the company as having the “World’s largest selection of electronic components.”

“We have a tremendous amount that we ship, some 27,000 to 30,000 packages a day,” Zutz said. “If we put all our stuff in a system and it doesn't work, that's a tremendous risk to our business and customers that depend on us. We’re just going to be very, very careful about (how we do this).”

The plan is to be at full-scale by sometime in August.

As with other businesses, Digi-Key has felt the straps of the supply chain, and the rising costs of products, but perhaps not as much as other companies. That’s due in large part to its massive inventory, which he likens to a bank. But over time it started to feel the pinch.

“We had the inventory, but now we're (challenged) just like everybody else” on some items, Zutz said.

New Positions

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Zutz said the distribution center, at this point in time, will likely not create a lot of new jobs, but it will allow for new kinds of positions that employees can transition into.

“Our work is different than it used to be and some of the inefficiencies we have currently, they'll go away and different roles will be needed to take their place,” he said. He mentioned automation and the kinds of jobs needed to oversee that.

For now, the company is working on “reprogramming” the office space at headquarters.

“It’s not so much about social distancing and more about reprogramming our facility to meet the needs of our future ways of working,” he said. “We’re looking at more collaborative space, more open spaces that allow for fewer (in-person employee) collisions, fewer cubicles, because people aren't going to be here all of the time.”

Employees can reserve work spaces. The company is considering putting games in the facility, such as ping pong tables that employees can use on breaks, and amenities such as flavored water and other creature comforts that people have gotten used to while working from home over the past two years.

“It's a pretty simple recipe, but it's really reprogramming the facility to meet our new way of working,” Zutz said. “How we were set up before, that wouldn't work now. We didn't have much collaborative space. We just had meeting rooms, tons and tons of cubicles.”

Andrew Weeks is an award-winning journalist who has reported for a number of newspapers and magazines. He currently is the editor of Prairie Business, the premier business magazine of the northern plains. The magazine covers various industries and business topics in the Dakotas and western Minnesota.
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