One of the topics at the Supply Chain Insights Global Summit I attended in Scottsdale, AZ, last month was entitled “Supply Chain Talent – The Missing Link.” It is a topic that Lora Cecere, founder of Supply Chain Insights, introduced in a post entitled “Supply Chain Talent: The Missing Link in Your Future?” [Supply Chain Shaman, 12 August 2013] She introduced that post by writing, “I even more firmly believe that supply chain talent is the missing link in the supply chain. In figure 1, I outline the company’s biggest gaps. It is the sourcing and development of mid-management talent. YOWZA! It is large.” The figure to which she refers is found below.
The reason that Cecere believes this is an enormous problem is because most current “efforts are focused on new-hire recruitment or mentoring for high-performance development for executive level positions. There are few companies that understand and have addressed the mid-management talent issue.” I suspect that Paul Teague, U.S. contributing editor of Procurement Leaders, would agree with Cecere. He believes that companies need to do a better job of talent management. “When it comes to ‘talent management’,” he writes, “the obvious question you have to ask is, ‘what talent?’ It’s not a trivial question.” Cecere’s answer, of course, is middle management talent.
If you don’t think that Cecere is correct, consider what Jake Barr, Principal and CEO of BlueWorld Supply Chain Consulting, told participants at the Supply Chain Insights Global Summit. He reported that between 25% and 33% of the supply chain workforce is at or beyond retirement age. Most of these people fill operational roles, including middle management. He also told participants that, for every graduate with supply chain skills, there are six holes to be filled and it could be as high as 9 to 1 in the future.” Those are pretty sobering statistics. If you want to watch the full hour-long panel discussion held on this topic at the Supply Chain Insights Global Summit, click on this link. If you haven’t the time to listen to the entire discussion, Robert J. Bowman, managing editor of SupplyChainBrain, provides a quick overview of what panel members discussed. I’ve included his comments later in this post. Here are some of the highlights from Cecere’s research report on supply chain talent.
“Opportunity to improve. Overall, companies rate their capabilities to manage supply chain talent worse than their peers. In the study, when companies were asked to self-assess their capabilities to manage supply chain talent, 17% self-rated that they perform better than their peer group while 34% reported that they do worse than their peers. And, we all know that self-assessment scores tend to overstate capabilities. … I think that it is worse than reported …
“High turnover. Average turnover of supply chain managers is 15%. It is increasing. In the study, 46% of companies attempt to hire from within the company, and 17% fill roles primarily through recruiting talent from other companies. External recruiting is becoming less and less successful.
“Shortage of talent. The average company in the study has four positions open for five months. Companies are is feeling the pain of open positions. The most difficult positions to fill are in the areas of planning that require both a technical mastery of technology and an organizational understanding of the business drivers.
“Stiff competition for college graduates. Today, there is a 6:1 demand to supply ratio for new college graduates in supply chain management. Competition is intense and there is a lot of effort to attract the best and brightest from college recruiting; however, the larger issue is with the retention of mid-management talent.
“Working on the Right Stuff? In short, we need to broaden our scope. The current focus is on recruiting college graduates and high-performing talent with little attention being given to middle-management talent development. Only 23% of companies responding to the study have a planned cross-functional training program for existing employees. This study points out the need for skill development in the areas of training and career progression to give employees cross-functional breadth.”
Cross-training appears to be a particularly important activity for the development of middle managers and C-level executives. Teague discusses “a McKinsey report on the ideal profile” for a Chief Financial Officer. He indicates that the study identifies four profiles, “finance expert, generalist, performance leader, and growth champion – and described in general how CFOs can plan their careers around each.” Teague believes each of those profiles applies equally to Chief Procurement Officers and probably wouldn’t quibble that other supply executives need those talents as well. Teague concludes, “The two talents that seem to be common throughout all profiles are the ability to be flexible and the ability to inspire.”
As noted above, Robert J. Bowman is another observer who believes that there is a growing talent shortage. “The field of candidates who can tackle the challenges of global supply-chain management today remains alarmingly sparse,” he writes. [“Bridging the Talent Gap in Supply-Chain Management,” SupplyChainBrain, 30 september 2013] He then refers to Jake Barr’s comments at the Supply Chain Insights Global Summit and labels the situation “a crisis.” He continues:
“Barr said the roles that require the most brainpower and technical expertise are going begging. At the same time, the rate of turnover is increasing, and positions are remaining open longer. What’s so hard about finding the right people in supply chain these days? It has to do with the growing complexity of the job. Many older specialists came out of the armed forces, where the term ‘logistics’ was coined. Others fell into the job from former positions in marketing or operations. But modern-day supply chain management is about much more than coordinating the physical movement of goods from one point to another. It encompasses procurement expertise, supplier management, knowledge of international trade trends and regulations, information-technology prowess and customer-relationship management, to name but a few key aspects of the discipline. Making matters worse is the looming retirement of Baby Boomers and the lack of younger talent to replace them. A majority of organizations lack succession plans for critical roles, said Barr.”
Bowman reports that “Barr urged companies to adopt a five-point plan.” The highlights of that plan include:
“• Engage in cross-functional development, both for existing employees and new hires;
“• Work on leadership development, by identifying those individuals who have the ability to head up large-scale organizations;
“• Speed up the standardization of business processes, to make it easier to train, qualify and move people through the system;
“• Launch ‘retain-and-train’ efforts, in the form of educational seminars, simulations and various Web-based techniques, and
“• Challenge employees early. Deploy a ‘risk-and-reward strategy,’ with an emphasis on rotating people through short-term positions in developing nations.”
While that plan may sound costly, Barr told Summit participants, “It takes 200 percent of fully loaded cost to bring someone in to fill after you lose them.” Bowman goes on to highlight what other panel members discussed.
“Joe Krkoska, director of global supply chain with Dow AgroSciences LLC, said the talent-gap dilemma is ‘brewing’ at his company, which requires a highly specialized level of knowledge. A first step, said Krkoska, is convincing imminent retirees to stick around a bit longer, and focus on mentoring incoming talent. He said companies are reaping the consequences of the downsizing that took place during the depth of the recession. As a result, there’s a ‘void in the population. [New hires] are going to have to accelerate like crazy to get to the level you want them to perform at.’ Seventy percent of an adult employee’s training is acquired by actually doing the job, said Krkoska. Companies need to emphasize real-world experience, by bringing together seasoned managers and new talent to shadow them.”
“The average company spends only about $650 per person per year on training, said Cindy Urbaytis, vice president and managing director of the Institute for Supply Management. That’s despite the dramatic increase in skills and responsibilities that are needed to do the job. She said individuals shouldn’t be left alone to develop their abilities. ‘If there’s no support and encouragement, it’s just not going to help.'”
“Patrick Curry oversees skills development and university relations for the Integrated Supply Chain organization of IBM. Emerging from a two-year hiring freeze, the company found itself ‘late to the game’ in recruiting, he said. The schools on which IBM normally relied for graduates were ‘sold out,’ said Curry. ‘They had zero supply-chain talent for us. To meet the hiring target, we had to go to 35 universities.’ In the past, much of IBM’s talent pool had come from engineering backgrounds. Now the company had to ramp up hires that were skilled in finance and business management. In the process, it began working to shape curriculums, in some instances all the way back to high schools. At that level, the company found an alarming lack of awareness among counselors and students alike. ‘No one’s talking about supply chain as an option,’ Curry said. IBM has launched six talent-development programs, aimed at various levels of management. A ‘global buddy’ initiative matches veterans and newcomers in a mentoring effort, frequently centered outside the U.S. Participants stress the value of having learned about the global aspect of business, Curry said.”
“From the perspective of universities, the talent gap can be a plus. ‘Our graduates are over-subscribed,’ said Nick Little, assistant director of executive development programs at Michigan State University. ‘They’re able almost to dictate salaries.’ These days, he said, holders of degrees in supply-chain management can command better starting deals than their counterparts in finance and marketing. Continuing education for older managers is equally important, Little said, adding that Web-based programs are growing in popularity. ‘We’re helping them to understand the new requirements,’ he said. ‘In the future, there’s going to be a vast increase in online learnings for people with gaps in knowledge and experience.'”
Bowman concludes, “For those keen on pursuing a career in supply chain, the job market is wide open.” The picture is not quite as rosy for companies looking for supply chain talent (especially, middle management talent). If your company hasn’t already put in a place a plan like the one recommended by Jake Barr, it should establish one now.