WHY IS THE SUPPLY CHAIN TALENT SHORTAGE SO WORRISOME?
Consider this Scenario :
Situation: An automaker planned to launch a complex new vehicle, and produce the car in four different global locations based on its platform strategy. Two of the four locations were in emerging markets, where lack of infrastructure and availability of skilled supply chain managers complicated an already difficult launch.
Problem: Lack of supply chain expertise in the two emerging markets ended up causing multiple points of failure in the automaker’s supply chain. Supplier capacity management, supply chain network design, production line parts/ component sequencing and supply chain risk management – none were up to the complex task.
Impact: Supply chain costs exceeded budgeted program costs by more than 15 percent. The OEM was forced to use premium freight transportation to ensure continuity of supply. Even so, final product launch was delayed three weeks, which ultimately resulted in a 5 percent drop in market share that year in the two new markets.
Lessons like these are painful reminders of what happens when a supply chain fails. Such failures will become more common if companies lack sufficient supply chain expertise, as a growing number of OEMs, suppliers and their supply chain partners are realizing.
A recent study by the University of Tennessee, Knoxville, revealed through surveys of companies that 90 percent of CEOs believe they should be doing more to attract supply chain talent. In a similar Deloitte survey, only 38 percent of executives interviewed were extremely or very confident that their organisations possess the competencies needed to deal with today’s supply chain issues.
That’s a huge problem.The global supply chain is a $26 trillion per year industry and it’s only getting more complicated. Between 2010 and 2020, the number of available jobs in supply chain will grow by 26 percent. Currently, the demand-to-supply ratio of jobs to qualified individuals is six to one. In a few years, that could be as high as nine to one. Most of the openings exist in middle management positions, in which there is a current shortage of 54 percent.
What is it about the supply chain industry that led to such a dearth of qualified professionals?
Four Reasons for the Shortage :
1. The Industry Is Expanding Faster than Workers Are Becoming Qualified
Over the past two decades, globalization led to an ease of outsourcing and a rush to manufacture in multiple countries. Parts are being manufactured across the world from each other, cutting costs, but at the same time, increasing complexity. In the past, managing a supply chain just wasn’t as hectic.
Inventory was cheap—it wasn’t a consideration. But in the last 5 to 10 years, we saw a sea change in the way people view procurement, transportation and supply chain management. Suddenly, companies are losing money as their shipments fall prey to disruptions both unforeseen and avoidable—and much of it comes down to not having enough qualified people making invaluable decisions. Most of the people had agreed to that 20 years ago, those who wanted to make money went into marketing or finance—never procurement. Now it’s a hugely important industry, but no one has the necessary experience.
2. The Qualifications Needed for Supply Chain Careers Are Expanding
David Closs, a professor of supply chain management at MSU, believes that one big issue behind the talent shortage is the amount of talent required from each individual. “If you’re in procurement, you’d better be good at procurement. But these days, it also means you have to manage corporate social responsibility, and understand political issues like trade, taxation and customs. It becomes much more complex. I believe this to be the case partly because of our education system and partly because the world has changed.”
It’s a tough but important issue to face: People who work in supply chains today need to be dynamic. They need to be able to work long hours, to travel across the world. It’s a demanding field that—unfortunately—doesn’t carry the same prestige as equally taxing careers. It’s not enough for someone to understand logistics. They have to be able to be politicians, managers, designers as well, if they want their companies to truly benefit from their manufacturing and transportation process.
3. There’s an Education Shortage and Companies Have Trouble Gauging a Good Supply Chain Mind
According to the DHL report, the number of full-time business faculty in supply chain management and logistics was “consistently below 1.3 percent of all-field business faculty both in the United States and worldwide” over the past few years. Hau Lee, a professor of supply chain management at Stanford, said that there “just aren’t that many universities finding the number of people needed” to fill supply chain positions. While a number of universities are implementing programs to increase interest and encourage students to choose a career—more on that later—it’s hard to pump out enough graduates who are prepared for such a demanding job.
On the other side of things, many companies don’t accept the versatility inherent in supply chain jobs. Professor Lee gave the example of someone in procurement who might help change the way a prototype is designed and produced. That’s not old-school procurement, sure—but it would greatly affect manufacturing and help the company, so upper-level managers should be aware that a supply chain manager might do a lot for another department—but it all comes back to the supply chain.
4. Supply Chain Has an Image Problem
Richard Wilding, a professor of supply chain management at the University of Cranfield, UK, said that most people he knows just “stumbled into supply chain” from engineering or business. Very few people actually make the decision—especially at a college level—to study the world of supply chain. Many people don’t even know what the term means. And until recently, that wasn’t a huge problem. But now, working in the global supply chain necessitates a thorough understanding of how it works—meaning that it may become harder for professionals to fall into that career path.
It’s time for the industry to accept that supply chain doesn’t have the best connotation. While the career itself is dynamic, demanding and an integral part of any company, most people would say it sounds pretty boring. Why the huge disparity? Partly because of the changing global environment and partly because efforts to change that perception are also pretty new. But many people believe that a shift in connotation can stem from a clearer understanding of what supply chain professionals do and lead to a big increase in supply chain talent.
To secure its future, the industry must tackle the supply chain talent shortage head on and develop more effective talent acquisition, development and retention strategies.
So, how do you then resolve the talent gap ?
1. INDUSTRY COLLABORATION
The automotive industry – OEMS, suppliers, third-party logistics service providers (3PLs) and academic institutions – has begun to take a proactive stand on resolving the talent gap. Leaders in the industry are working with universities and trade associations to develop supply chain education programs designed expressly for the sector.
2. EXPANDED IN-HOUSE AND EXTERNAL EDUCATION OPTIONS
Faced with a lack of educational resources tailored to supply chain and the automotive industry, a growing number of firms are taking matters into their own hands and developing their own education programs. “Our biggest concern is to make sure there are no huge gaps in our people’s education,” reports Ehm of Infineon. To remedy this problem, Infineon founded an internal e-learning academy. “The modules we developed cover about 100 topics, and we’ve trained 1,000 people on these modules so far,” he says
3. JOB ROTATION PROGRAMS
Formal job rotation programs can be an effective way to grow people. “Rotating supply chain professionals through different departments and functions enriches their skills and gives them a broader perspective of the business. A global services company calls its job rotation program a ‘talent exchange’ and uses these placements to promote cross-functional development. In one program, employees – who include new recruits from universities as well as more experienced folks – complete a two year rotation that involves six-month stints in different functions,” says Ken Cottrill of the MIT Center for Logistics and Transport.
4. FORMALISED KNOWLEDGE TRANSFER
With so many retirements looming on the horizon, the industry must get serious about capturing its people’s knowledge before it literally walks out the door. Companies could set up formal programs where their soon-to-retire supply chain professionals transfer their knowledge to their younger colleagues under a formal program.
5. BECOMING AN EMPLOYER OF CHOICE
Companies will need to do more to retain the supply chain talent they have – and that means taking steps to ensure they are an attractive place to work. “Our industry needs to incentive people to stay in supply chain, and that comes from providing competitive salaries and establishing attractive career paths,” says Gabriela Gola, Supply Chain & Procurement Senior Recruitment Consultant at recruiting firm Michael Page’s São Paulo, Brazil office.
What are these incentives? The obvious include better pay and a formal career path with clear opportunity for advancement. The less obvious, but equally important, include a recognition within the organization that a career in supply chain is valued by senior management. “We need to eliminate the perception that supply chain isn’t a valuable profession, or is less valuable than other careers such as finance or marketing,” says Volker Oesau, CEO DHL Global Forwarding Middle Europe. “Supply chain can’t be seen as a ‘fallback’ position, as a less worthy profession. This means corporate culture needs to change – and that change must come from the C-level.”