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The Supply-Chain Talent Gap Is Wider Than You Think

CEOs know there's a widening talent gap in the supply-chain sector. They also know they're not doing enough to close it.

The Supply-Chain Talent Gap Is Wider Than You Think

It's an odd kind of stasis: being aware of a serious problem, while admitting that you're not fully committed to a solution. But who can blame companies today? The talent gap is all too real, if more visible in some areas than others.

Take the nationwide driver shortage, which qualifies as old news by now. According to the American Trucking Associations, the industry is short by 35,000 to 40,000 drivers. (Others put the amount at nearly ten times that number.) And, depending on the size of the fleet, the annualized turnover rate in the fourth quarter of 2014 was between 95 and 96 percent, ATA says.

According to a new white paper from the faculty of the Haslam College of Business at the University of Tennessee, Knoxville, the problem is much more wide-ranging than that. Entitled “Supply Chain Talent: Our Most Important Resource,” the Ryder-sponsored report identifies talent shortages at nearly every level of supply-chain management, “from the front lines to senior executives.” As the economy continues to recover, and Baby Boomers bow out of the workforce, the gap is likely to grow even worse.

It’s not a matter of executive ignorance. More than 90 percent of CEOs realize they need to do a better job of managing and attracting supply-chain talent, says Shay Scott, a co-author of the report and director of UT’s executive MBA program. A similar gap between action and awareness is identified in another recent study of the talent issue, Deloitte LLP’s third annual Supply Chain Survey. It finds that just 38 of executives are “extremely or very confident” that their organizations possess the competencies that are needed to deal with the supply-chain issues of today.

The Deloitte study surveyed 400 executives. UT interviewed just over a dozen, albeit in greater depth. But both reports bear out the fact that companies are in need of fresh and better-trained talent at every stage of the supply chain.

On the issue of the driver shortage, the UT paper goes beyond hand-wringing to propose some solutions. One is targeting students just out of high school – not to begin piloting big rigs immediately, but to participate in apprenticeships. The report identifies as a best practice “bringing 18-year-old high-school grads into a distribution center environment, getting them trained on how things work in transportation, and having a program that begins to transition them into the driver pool,” says Scott.

Another idea is to reconfigure trucking networks to focus on more regional hauls, with handoffs between teams. That would reduce the number of days that a given driver spends on the road away from home. It would also make the job more attractive to a labor pool that has other options in a growing economy, such as construction.

At the same time, Scott and his four co-authors urge companies not to treat the driver shortage as a discrete problem, but one that’s tied to the issue of attracting talent across the organization. No longer can they get by with filling positions on a case-by-case basis. “I believe we’re entering into an era where the development of talent strategy is going to be required to go hand in hand with business strategy,” he says.

One way to achieve that goal is to discard what the UT paper sees as a number of supply-chain talent management “myths.” They include the assumption that the issue is exclusively the responsibility of human resources, and that companies can’t afford to spend on talent recruitment and development.

On the contrary, “raw talent should be procured via systems like internship programs and relationships with top universities, while existing labor reserves are further refined internally through mentorship and education opportunities,” UT says. At the same time, organizations need to promote diversity in recruiting – an approach that opens up an even deeper pool of potential talent.

Other “myths” include the notions that talent development happens “naturally and informally,” and that it’s mostly about teaching specific supply-chain content. That might have been true in the days before supply-chain management became a formal discipline, supported by dozens of university programs throughout the country. Back then, a supply-chain professional was likely to have entered the organization to fill a specific job, such as warehouse or procurement manager, then evolved into a broader role. The term “supply chain” was barely heard at the college level, and in high school not at all.

Some companies are finding it difficult to measure and manage talent beyond the traditional responsibilities of H.R. In that area, the Deloitte study uncovers a significant gap in perception. Around 54 percent of chief executive officers and presidents believe H.R. is doing an “excellent” or “very good” job of helping to meet the requirements for supply-chain talent. But only 28 percent of supply-chain and logistics personnel feel the same way.

The biggest talent gaps, according to the UT study, are in middle management. They’re the “forgotten ones,” says Scott, those who might have been hired five or 10 years ago and have since been grappling with the physical and philosophical changes that supply chain has undergone. Often they’re given no formal development plan or resources to move forward. But their lack of maturing in the job is bound to have a ripple effect throughout the organization.

The Deloitte paper doesn’t mince words. “As a profession,” it says, “supply-chain management finds itself in something of a crisis. Just as it is gaining stature within enterprises, many organizations are confronting critical shortfalls of talent. Years of headcount reduction, training-budget cuts, and the retirement of highly skilled individuals have hollowed out the ranks of veteran professionals. New graduates, despite the growing number of supply-chain programs, emerge from universities in what seems like a trickle.”

That’s the problem in a nutshell, and it comes as no surprise to supply-chain professionals in the trenches. Now it’s up to senior management to take constructive action.

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It's an odd kind of stasis: being aware of a serious problem, while admitting that you're not fully committed to a solution. But who can blame companies today? The talent gap is all too real, if more visible in some areas than others.

Take the nationwide driver shortage, which qualifies as old news by now. According to the American Trucking Associations, the industry is short by 35,000 to 40,000 drivers. (Others put the amount at nearly ten times that number.) And, depending on the size of the fleet, the annualized turnover rate in the fourth quarter of 2014 was between 95 and 96 percent, ATA says.

According to a new white paper from the faculty of the Haslam College of Business at the University of Tennessee, Knoxville, the problem is much more wide-ranging than that. Entitled “Supply Chain Talent: Our Most Important Resource,” the Ryder-sponsored report identifies talent shortages at nearly every level of supply-chain management, “from the front lines to senior executives.” As the economy continues to recover, and Baby Boomers bow out of the workforce, the gap is likely to grow even worse.

It’s not a matter of executive ignorance. More than 90 percent of CEOs realize they need to do a better job of managing and attracting supply-chain talent, says Shay Scott, a co-author of the report and director of UT’s executive MBA program. A similar gap between action and awareness is identified in another recent study of the talent issue, Deloitte LLP’s third annual Supply Chain Survey. It finds that just 38 of executives are “extremely or very confident” that their organizations possess the competencies that are needed to deal with the supply-chain issues of today.

The Deloitte study surveyed 400 executives. UT interviewed just over a dozen, albeit in greater depth. But both reports bear out the fact that companies are in need of fresh and better-trained talent at every stage of the supply chain.

On the issue of the driver shortage, the UT paper goes beyond hand-wringing to propose some solutions. One is targeting students just out of high school – not to begin piloting big rigs immediately, but to participate in apprenticeships. The report identifies as a best practice “bringing 18-year-old high-school grads into a distribution center environment, getting them trained on how things work in transportation, and having a program that begins to transition them into the driver pool,” says Scott.

Another idea is to reconfigure trucking networks to focus on more regional hauls, with handoffs between teams. That would reduce the number of days that a given driver spends on the road away from home. It would also make the job more attractive to a labor pool that has other options in a growing economy, such as construction.

At the same time, Scott and his four co-authors urge companies not to treat the driver shortage as a discrete problem, but one that’s tied to the issue of attracting talent across the organization. No longer can they get by with filling positions on a case-by-case basis. “I believe we’re entering into an era where the development of talent strategy is going to be required to go hand in hand with business strategy,” he says.

One way to achieve that goal is to discard what the UT paper sees as a number of supply-chain talent management “myths.” They include the assumption that the issue is exclusively the responsibility of human resources, and that companies can’t afford to spend on talent recruitment and development.

On the contrary, “raw talent should be procured via systems like internship programs and relationships with top universities, while existing labor reserves are further refined internally through mentorship and education opportunities,” UT says. At the same time, organizations need to promote diversity in recruiting – an approach that opens up an even deeper pool of potential talent.

Other “myths” include the notions that talent development happens “naturally and informally,” and that it’s mostly about teaching specific supply-chain content. That might have been true in the days before supply-chain management became a formal discipline, supported by dozens of university programs throughout the country. Back then, a supply-chain professional was likely to have entered the organization to fill a specific job, such as warehouse or procurement manager, then evolved into a broader role. The term “supply chain” was barely heard at the college level, and in high school not at all.

Some companies are finding it difficult to measure and manage talent beyond the traditional responsibilities of H.R. In that area, the Deloitte study uncovers a significant gap in perception. Around 54 percent of chief executive officers and presidents believe H.R. is doing an “excellent” or “very good” job of helping to meet the requirements for supply-chain talent. But only 28 percent of supply-chain and logistics personnel feel the same way.

The biggest talent gaps, according to the UT study, are in middle management. They’re the “forgotten ones,” says Scott, those who might have been hired five or 10 years ago and have since been grappling with the physical and philosophical changes that supply chain has undergone. Often they’re given no formal development plan or resources to move forward. But their lack of maturing in the job is bound to have a ripple effect throughout the organization.

The Deloitte paper doesn’t mince words. “As a profession,” it says, “supply-chain management finds itself in something of a crisis. Just as it is gaining stature within enterprises, many organizations are confronting critical shortfalls of talent. Years of headcount reduction, training-budget cuts, and the retirement of highly skilled individuals have hollowed out the ranks of veteran professionals. New graduates, despite the growing number of supply-chain programs, emerge from universities in what seems like a trickle.”

That’s the problem in a nutshell, and it comes as no surprise to supply-chain professionals in the trenches. Now it’s up to senior management to take constructive action.

Comment on This Article

The Supply-Chain Talent Gap Is Wider Than You Think