Executive Briefings

So Long, Baby Boomers. Who Will Take Your Place?

If you're a supply-chain executive struggling to control costs, please your customers and cope with unstable demand in a punishing recession, the last thing you want to hear about is a big shortfall in skilled managers. Too bad: it's coming.

So says John Shaw, director of education service with BravoSolution, a vendor of software and services for procurement. In fact, he believes his discipline will be especially hard hit by the talent drought.

Blame it on the Baby Boomers. That massive pool of workers is nearly due for retirement, and their numbers won't be easily replaced. According to the U.S. Census Bureau, more than 60 million of them will exit the workforce by 2025, but only 40 million new bodies will enter. It doesn't take a math genius to figure out the impact on business.

The problem cuts across all industries and job descriptions, so why single out procurement as a particular source of concern? According to Shaw, it has to do with the highly specialized nature of the discipline. Even today, companies have trouble finding and keeping talent in that area. Skills tend to be acquired from lengthy on-the-job experience. Remember Ken Steers of Freight Solution Providers, who said in my previous post that it takes three years of training before one of his salespeople gets up to speed on selling airfreight-forwarding services? For procurement, make that 10 years, says Shaw - and that's for experts in sourcing a single commodity. For those dealing in multiple commodities and high-level strategizing, the learning curve can be as long as 15 years. What do you do when one of those individuals takes the gold watch and lights out for the golf course?

In times of tight budgets and wholesale cost-cutting, procurement takes on a vital role. Managers must be able to group items according to their value to the organization, and potential for savings. (Which ones require long-term relationships with specific suppliers, and which are candidates for auction to the lowest bidder? Are you sure?) In addition, organizations must carefully balance the desire to reduce vendors to a bare minimum with the need for continuity of supply when one of them fails. Procurement and strategic sourcing - we're not just talking about office supplies here - are key elements of any good risk-management program.

Technology's the answer, you say? You've been reading too much marketing material from software vendors. Yes, there are some highly sophisticated IT products out there for measuring and managing supplier performance. They save humans from countless hours of drudge work and manual processes. But applications are tools; they still require people to use them intelligently. "I'm a do-it-yourself person with a toolbox," says Shaw. "But a carpenter can take that same toolbox and build a beautiful house."

He says companies need to act now to prepare for the coming labor gap. Start with a detailed procurement strategy that lays out your immediate and long-term targets for cost savings. Define the precise role of each commodity owner, and the tools you need to achieve your goals. Build an underlying infrastructure that captures all sourcing activities, perhaps as an online forum. Most of all, tap into the extensive knowledge of your procurement professionals. You're going to need it when they're gone.

Foster talent within the organization as well. Build a career path for junior employees, whose value to the organization will rise with their longevity. Offer opportunities for training - BravoSolution makes available a series of e-learning tools under its Education Network initiative. And don't forget to celebrate employee successes. The last thing you want is to engage in a bidding war for talent, when the supply of qualified workers begins to shrink.

Companies are understandably occupied with the crisis of the moment. But they need to look ahead as well. "You have to achieve your goals year to year," says Shaw. "But make sure the direction you're moving in is toward capturing intelligence to address future risk."

*     *     *

"And all the pieces matter..." A recent article on Slate.com talks about how major universities like Harvard and Duke are teaching The Wire, HBO's superb five-season series about crime, labor, education, culture and politics in Baltimore. They're focusing on the social issues raised by the show, which is a fine (if obvious) way to view and study it. I maintain, however, that The Wire is also an unrivaled study of human behavior in organizational settings - including the business world. Watch this show and see how people become swallowed up by the institutions of which they're a part - how ideals get shoved aside by the desire to protect one's turf and perpetuate the group. It's a familiar scenario to any executive who has ever tried to get the various departments of a company to cooperate with one another. What we like to call organizational silos are, it turns out, present in just about every walk of life - from cops and labor unions to city halls and drug gangs. The Wire will teach you what you never learned in business school. On top of that, it's one hell of a compelling story. The entire series is available on DVD. I urge you to watch it.

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If you're a supply-chain executive struggling to control costs, please your customers and cope with unstable demand in a punishing recession, the last thing you want to hear about is a big shortfall in skilled managers. Too bad: it's coming.

So says John Shaw, director of education service with BravoSolution, a vendor of software and services for procurement. In fact, he believes his discipline will be especially hard hit by the talent drought.

Blame it on the Baby Boomers. That massive pool of workers is nearly due for retirement, and their numbers won't be easily replaced. According to the U.S. Census Bureau, more than 60 million of them will exit the workforce by 2025, but only 40 million new bodies will enter. It doesn't take a math genius to figure out the impact on business.

The problem cuts across all industries and job descriptions, so why single out procurement as a particular source of concern? According to Shaw, it has to do with the highly specialized nature of the discipline. Even today, companies have trouble finding and keeping talent in that area. Skills tend to be acquired from lengthy on-the-job experience. Remember Ken Steers of Freight Solution Providers, who said in my previous post that it takes three years of training before one of his salespeople gets up to speed on selling airfreight-forwarding services? For procurement, make that 10 years, says Shaw - and that's for experts in sourcing a single commodity. For those dealing in multiple commodities and high-level strategizing, the learning curve can be as long as 15 years. What do you do when one of those individuals takes the gold watch and lights out for the golf course?

In times of tight budgets and wholesale cost-cutting, procurement takes on a vital role. Managers must be able to group items according to their value to the organization, and potential for savings. (Which ones require long-term relationships with specific suppliers, and which are candidates for auction to the lowest bidder? Are you sure?) In addition, organizations must carefully balance the desire to reduce vendors to a bare minimum with the need for continuity of supply when one of them fails. Procurement and strategic sourcing - we're not just talking about office supplies here - are key elements of any good risk-management program.

Technology's the answer, you say? You've been reading too much marketing material from software vendors. Yes, there are some highly sophisticated IT products out there for measuring and managing supplier performance. They save humans from countless hours of drudge work and manual processes. But applications are tools; they still require people to use them intelligently. "I'm a do-it-yourself person with a toolbox," says Shaw. "But a carpenter can take that same toolbox and build a beautiful house."

He says companies need to act now to prepare for the coming labor gap. Start with a detailed procurement strategy that lays out your immediate and long-term targets for cost savings. Define the precise role of each commodity owner, and the tools you need to achieve your goals. Build an underlying infrastructure that captures all sourcing activities, perhaps as an online forum. Most of all, tap into the extensive knowledge of your procurement professionals. You're going to need it when they're gone.

Foster talent within the organization as well. Build a career path for junior employees, whose value to the organization will rise with their longevity. Offer opportunities for training - BravoSolution makes available a series of e-learning tools under its Education Network initiative. And don't forget to celebrate employee successes. The last thing you want is to engage in a bidding war for talent, when the supply of qualified workers begins to shrink.

Companies are understandably occupied with the crisis of the moment. But they need to look ahead as well. "You have to achieve your goals year to year," says Shaw. "But make sure the direction you're moving in is toward capturing intelligence to address future risk."

*     *     *

"And all the pieces matter..." A recent article on Slate.com talks about how major universities like Harvard and Duke are teaching The Wire, HBO's superb five-season series about crime, labor, education, culture and politics in Baltimore. They're focusing on the social issues raised by the show, which is a fine (if obvious) way to view and study it. I maintain, however, that The Wire is also an unrivaled study of human behavior in organizational settings - including the business world. Watch this show and see how people become swallowed up by the institutions of which they're a part - how ideals get shoved aside by the desire to protect one's turf and perpetuate the group. It's a familiar scenario to any executive who has ever tried to get the various departments of a company to cooperate with one another. What we like to call organizational silos are, it turns out, present in just about every walk of life - from cops and labor unions to city halls and drug gangs. The Wire will teach you what you never learned in business school. On top of that, it's one hell of a compelling story. The entire series is available on DVD. I urge you to watch it.

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