Keeping Strong Supply Chain Talent: Five Things You Shouldn't Ignore

1. The Importance of Strong Supply Chain Talent

The contribution of the supply chain toward revenue growth shouldn’t be underestimated. Work performed by Deloitte indicates that companies with high performing supply chains achieve revenue growth that’s well above the industry average. Effective supply chain management contributes to success through reducing total costs, controlling inventory levels and efficiently meeting demand.

As companies transition from brick-and-mortar selling to a true omnichannel shopping experience, they need strong and capable supply chain personnel at all levels to drive these changes and develop their supply chain strategies.

2. The Supply Chain Talent Shortage

According to the 2019 MHI Annual Industry Report, more than 57 percent of respondents surveyed expect to invest more than $1 million in new supply chain technology. This was over the next two years with as many as 34 percent expecting to spend significantly more than that figure.

The same report reveals that 65 percent felt the biggest challenge they face is hiring supply chain talent. This is not simply a US problem; in Europe, 56 percent of employers also struggle to find talent, and the supply chain talent shortage is particularly severe in leadership and executive positions.

3. Employee Turnover Exacerbates the Problem

In an environment where it’s relatively easy to find a job, voluntary turnover naturally escalates. According to the Work Institute’s 2019 Retention Report , 41 million (27 percent) employees voluntarily resigned in 2018, and by 2030, this figure is expected to be 35 percent. In retail, the figure is even higher, while for distribution positions, the figure is 23 percent.

Many baby boomers, known for their work ethic, are reaching retirement age, an issue because they fill many senior posts. With fewer Gen Xers coming through, and the workplace largely reliant on younger millennials, replacing them will exacerbate shortages.

4. Reasons for Supply Chain Talent Shortages

While turnover worsens shortages and needs to be addressed, there are a number of other reasons for supply chain talent shortages, including the availability of skills, training, resistance to change and new technology. Some specific reasons for the shortages include:

Employee turnover: People leave employment for many reasons, including for career development, to improve their work-life balance, because of poor management, for better compensation and for their own well-being.

Industrial growth: Industry is finally recovering from the 2008 Great Depression and GDP is growing at 2 percent per annum. Manufacturing, in particular, is growing at a faster rate. All this contributes to increased competition for employees and the shortage of supply chain talent.

Insufficient talent to meet demand: The number of job openings sits at around 4.4 percent, while unemployment is at 3.5 percent. This means there are more openings than available people to fill these vacancies. This situation exacerbates the supply chain talent gap, and companies need to attract employees from other companies to fill vacant positions, an expensive and time-consuming exercise.

Changing technologies: Companies are investing in new supply chain technologies at a fast rate. According to logistics specialists DHL, these technologies are disrupting traditional supply chain technologies, creating a mismatch between available and required skills and often forcing companies to outsource investment.

Millennials’ value system increases voluntary turnover: Millennials now represent the largest demographic group in the workforce, surpassing Gen Xers, whose numbers in the workforce are starting to decline. While the real differences between the generations are possibly overstated, voluntary turnover among millennials appears to be higher as they seek jobs that engage them more or leave for a better work-life balance.

5. Ways to Address Supply Chain Talent Shortages

While businesses should continue to focus on how to attract supply chain talent, it’s equally important that they devote significant resources to retaining valuable employees. The Work Institute report referred to earlier pointed out that more than three out of four employees who voluntarily separated could have been retained if their employers had invested in employee retention. Here are some ways to achieve this:

Improving the work experience: According to MMC’s Global Talent Trends 2019 report, U.S. employees consider the ability to manage their work and life balance as very important, closely followed by recognition for their contribution. Some of the ways to achieve this include the ability for employees to collaborate remotely and recognition for the unique skills they bring to the workplace. Employees also appreciate opportunities to participate in short-term projects and other work experiences that enhance job place learning. It is also important to reduce the volume of distracting digital noise, such as unnecessary emails, electronic communications and internal social media by carefully managing information flow.

Aligning work to future value: The supply chain workplace is rapidly changing, and it’s vital to align current work experiences with future work requirements. This helps prepare employees for change by providing them with training in the new skills required, as well as reskilling others whose functions will be replaced by automation. What’s different about this approach is that companies should take the lead and work hard to build an adaptable workforce.

Creating a talent pipeline: Rather than seeking to fill vacancies externally, businesses should invest in employee career development processes that ensure qualified and capable staff are available to fill vacancies. The benefits of this approach include continuity, no need to onboard new employees and the provision of a viable career development path. Effective career development processes require a degree of investment and careful planning to ensure employees are adequately prepared and also that their aspirations are considered.

Crafting brand identity: People aspire to work for companies that are respected for their brand. This is more than the organization being a popular consumer brand and includes a reputation for ethics, a good working environment and excellent working conditions. This is especially important with supply chain recruiting because it helps overcome any stigma that may be associated with what some consider a backroom activity.

Investing in advanced software and analytics: Advanced supply chain software helps reduce the need for certain types of work, limiting overall staffing needs. Supply chain automation reduces the risk of error and is more efficient. Advanced supply chain analytics help drive informed data-driven decision-making that improves supply chain performance.

Demonstrating leadership: The one factor that determines the quality of the workplace experience is leadership. People enjoy working for a good leader and will often go the extra mile. Conversely, poor management destroys working relationships, leading to low morale, poor work ethics and high turnover. Managers need training in relationship skills and must be held accountable for workplace performance and unusual turnover.

Staying Ahead of the Curve Helps Minimize Supply Chain Talent Shortage

Advanced supply chain skills are crucial for success. Working together with HR and other decision-makers, it’s essential businesses discover the real reasons for workplace turnover and take steps to change the workplace environment, taking into account employees’ needs. Building brand identity helps reduce recruiting barriers to attracting top supply chain talent, while addressing workplace issues in a constructive manner helps reduce preventable turnover. Training employees from within builds loyalty and helps aspiring employees see a future within the organization. Taken together, these steps significantly reduce the shortage of supply chain talent and contribute toward meeting organizational goals.