Supply-chain professionals have been sounding the warning bell about the coming talent shortfall for several years now. But who's listening? At a time when the economy at large is coping with high unemployment and sluggish job growth, the notion of a sector that can't attract enough qualified bodies is tough to grasp. Still, that's the reality in the supply-chain world today, and it's only going to get worse.
For those who are paying attention, the message is coming through loud and clear. Finding and nurturing the right talent was among the five most critical issues cited by the 42 corporate members of the advisory board to the University of Tennessee's Global Supply Chain Institute. Spanning a dozen industries, those companies come together twice a year to share their observations about supply-chain management.
Others identified the trend earlier. In the fall of 2010, MIT's Center for Transportation & Logistics issued a white paper with the provocative title "Are You Prepared for the Supply Chain Talent Crisis?" In it, global communications consultant Ken Cottrill speculated that the recession, ironically, was at least partly to blame. Eager to cut costs in a down economy, companies went too far in shedding themselves of valuable (albeit expensive) supply-chain expertise. They took for granted their ability to pick up suitable talent from a supposedly deep pool of applicants, when things got better. Meanwhile, baby boomers, who make up the lion's share of supply-chain professionals, are beginning to retire, and younger replacements are in short supply. Add to that a discipline that's ever-changing and more challenging than ever before, and you have a situation that's bordering on the critical.
Why aren't more young people drawn to a career in supply chain? For the most part, the jobs pay well, and provide interesting and challenging work. But they also demand a set of skills that are rare in any one individual. "For supply-chain people, you need depth everywhere," said Daniel Stanton, supply chain professional and development manager with Caterpillar Logistics Inc. (He spoke at the SCOPE Spring 2012 conference in Chicago.) An effective executive in that area today must be free-thinking, good at managing people and dealing with multiple cultures, willing to travel, conversant with information technology and able to crunch numbers.
Cat Logistics was hit by its own "lightning bolt" after reading a December 2010 article about the problem in the Wall St. Journal. Soon after, it got a lesson even closer to home. The third-party logistics provider was unable to find an internal replacement for a retiring chief procurement officer. It ended up filling the position from outside the company. "That was a wakeup call for us," said Stanton.
Stanton began assessing Cat's needs for supply-chain talent over the next five years. (And none too soon. The company was anticipating a boost in full-time employment from 104,000 to 120,000 between 2010 and 2011.) Accounting for natural attrition, it was looking at 15-percent growth in its workforce - a level of demand that wouldn't come close to being satisfied by job-market entrants. Polling its account base, Cat uncovered the need for twice as many experienced professionals as recent college grads. "We were focusing on career fairs," Stanton recalled. "Customers were telling us that's not what [they] wanted."
Next, Stanton broke down the cost of failing to filling that gap. It turned out to be substantial. There were five discrete areas of consideration: the initial cost of recruiting; compensation and benefits; relocation and travel; education, training and development, and opportunity cost. That last category, says Stanton, was the "eye-opener." It detailed the price of work that would get done badly or not at all, and employees burnt out by overtime. Solving the dilemma meant striking a careful balance between paying for fresh talent and meeting business needs.
Bottom line: when it comes to assessing a workforce, you don't give short shrift to the supply chain. Typically, it accounts for between 60 and 70 percent of a company's cost structure, according to David Ecklund, program director of the University of Tennessee's Global Supply Chain Executive MBA program. Supply chain, he said, represents "most of the inventory and a pretty significant majority of the assets. It's the single organization in the company with the most impact on the customer."
Understanding the full value of supply-chain talent will often lead a global company to depart from the standard model of depending on expatriates to run an overseas operation, Ecklund says. Kraft Foods, for example, increased its reliance on nationals - the right move, no doubt, but one that creates yet another challenge in finding the right individuals.
Ecklund counsels a "dual development path" - one that hones in on core supply-chain skills while simultaneously embracing cross-functional capabilities. The transformation of talent requires a focus on standard competency models, career and succession planning, continuing education and global networking. The last one, he said, "is absolutely critical. You've got to get outside your own industry."
Don't just delegate the job to Human Resources, Ecklund adds. "I would encourage you not to take that approach. You need to become directly involved in the recruiting and development process."
We often speak of the need for dramatic improvements in systems, processes and collaborative links within the supply chain. It begins, though, with the right individuals to make it all run. All companies should be undertaking an honest appraisal of their workforce requirements, and taking steps to meet them. As Ecklund put it: "You should start looking at talent as a supply chain."
Watch my video interview with David Ecklund, conducted at SCOPE Spring 2012, about supply-chain talent requirements.
- Robert J. Bowman, SupplyChainBrain
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