There is no question that talent management and a shortage of critical needed skills is a fundamental challenge for manufacturing, supply chain, product management and procurement disciplines. Industry environments are changing constantly and change brings new and different needs. This challenge is consistently identified or amplified in industry forums, industry analyst quantitative surveys or roundtables.
However, by our view, what seems to be missing from the ongoing dialogue is some straight talk regarding how to best address this challenge, especially in the light of an economy that has ample numbers of people seeking challenging and rewarding careers.
Reading the Wall Street Journal this morning, this author read the article: Just Whose Job Is It to Train Workers? (Paid subscription required or free metered view) By far, it was one of the more insightful articles that traditional business media has produced thus far concerning some root causes of current worker shortages. This is the takeaway quote within the article: “Companies complain that they can’t find skilled hires, but they aren’t doing much to impart those skills, economists and workforce experts say.” That is straight talk.
The article cites sources that indicate that today’s hiring processes take the form of a transaction matching exercise where employers expect highly skilled people to walk through the door. They are unwilling to evaluate candidates based on skill potential or invest in on-the-job training efforts. Instead, there is a high reliance on colleges and universities, trade schools and government programs to be able to train people for desired skills. To add further credence, the WSJ cites studies including one from MIT labor economist Paul Osterman which concluded that manufacturer’s spending on training has essentially been flat for the last five years. A Deloitte research study is further cited as indicating that from 2006 to 2013, the percentage of staffers dedicated to training and development has fallen by about a half.
While Supply Chain Matters acknowledges that there are leading-edge organizations that are willing to truly invest in development of people for unique skill requirements, they are being outnumbered by those that are not so inclined. The WSJ profiles dental instruments provider Hu-Friedly which is investing in skills development. Small and mid-sized firms may not necessarily have the complete financial resources to develop people but that is where industry and government subsidized training programs can pay benefits. In April, Supply Chain Matters highlighted summary conclusions from the landmark MIT Study on Manufacturing Competitiveness that also concluded that skill shortages have more to do with training and development.
The prevailing attitude seems to be that of inventory fulfillment- there are lots of people seeking employment and we should be able to snag someone. That is not a formula for building and sustaining world-class supply chain teams. Global competitiveness not only hinges on product and service innovation, but on the collective skills and problem-solving abilities of the workforce.
The purpose of this rant is to motivate more straight talk concerning skills development. Invest in the potential of people able to perform required responsibilities. Evaluate candidates on both hard and soft skills, stop filtering on age or other criteria, and compensate people for the skills that they demonstrate as opposed to managing a cost center expense.
The time is way overdue for straight talk on skills shortages and the notion of investing in talent. Let us all commit to stop looking at hiring statistics and more to meaningful talent development planning.
While surfing all of our various Web alerts this week, we came across a rather insightful commentary penned by Dana Theus, titled: 3 Ways Managing Millennials Will Make You Better. Millennials are defined in this commentary as workers roughly between the ages of 18-30. This age group makes up a significant proportion of today’s industry supply chain operations, planning and logistics teams and some will certainly be the supply chain leaders of tomorrow. We believe that the three management actions outlined in this commentary could certainly be helpful to current supply chain leaders. The three management actions outlined are:
Millennials require us to be vision-driven. They are driven to make an impact and perform best when they understand how their efforts contribute to a broader purpose.
Millennials are experts in personal productivity. They have no desire to waste energy and requirements to be in a certain physical place are less meaningful than what needs to get accomplished.
Millennials can mentor managers. According to author Theus, they require lots of feedback as to what they did well and where improvements can be made. These are great opportunities for coaching and continuous improvement feedback as opposed to waiting for a formal performance review milestone. Millennials have ideas and want to contribute, so best to keep an open door and listen.
Theus closes her commentary by addressing that unstated management trip point, “But they haven’t paid their dues!” by offering wisdom on graciousness and compassion that we can all be more sensitive toward.
Overall, we found this managing millennials commentary to be helpful and we trust you will as well.
The commentary triggered another thought for us. When we review our Supply Chain Matters readership profile we note that we have a noteworthy profile of millennial readers. Many of you are aspiring to be tomorrow’s supply chain leaders and/or studying supply chain concepts. We have noted your active comments to some of our commentaries and when this author visits colleges and universities, it’s clear to note that you visit this site to gain insights and learning.
Thus in the spirit of feedback and contributing ideas, please feel free to let us know where Supply Chain Matters content can be enhanced and be of more value. What other areas of supply chain related topics would you like us to feature? What other features would be helpful to your career needs?
You can provide feedback either in the Comments block below this post or sending us an email to the following: info <at> supply-chain-matters <dot> com.
Supply Chain Mattershad the opportunity to review PwC’s 17th Annual Global CEO Survey which provides some important observations and considerations for supply chain, B2B Business Network and IT professionals.
The survey incorporates the viewpoints of over 1300 CEO’s among 68 countries and was conducted in the period of early September to December 2013. The majority of the data collected in this PwC survey, 54 percent, was collected in qualitative interviews. The full PDF copy of this survey can be downloaded at this web link.
Uncertainty remains an overarching theme including industry global markets and regulatory policies. According to the survey authors: “the number of CEO’s who believe that the global economy will improve over the next 12 months has double to 44 %, compared to the previous year.”
Similar to other CEO studies we have reviewed of late, this PwC study reflects that the vast majority of CEO’s, 86 percent, view advancing technologies as transforming their businesses over the next five years. Of further note, 36 percent believe that product and service innovation offer prime opportunities for growth in 2014. In terms of geographic based differences, when asked to cite the main opportunity for growing the business in the next 12 months, 47 percent of German based, 43 percent of China and Hong Kong based vs 36 percent of U.S. based CEO’s cited product/service innovation. A quote from the study: “For many companies, the growth agenda will be centered on new digital ecosystems- the hardware, software, services, and communications infrastructure that make digitization possible.” That statement, by our view, reinforces the stronger alliance among product management and supply chain business network, new product introduction and customer fulfillment processes.
Other important supply chain and customer fulfillment insights brought out in this PwC survey:
- Fewer U.S. based CEO’s view China, India or Brazil are most important for company growth in 2014 with greater expectations reflected from investments in Europe and the United States. The numbers reflect a dramatic decrease in sentiment towards business growth opportunities within India. Deeper details of the findings indicate that more than half of U.S. CEO’s are concerned about current shifts in consumer spending and behaviors along with corresponding customer growth and retention strategies.
- CEO’s are focused more heavily on new products and services along with increased share in existing markets. New geographic markets are only cited by 14 percent of respondents in the PwC findings. Thus the supply chain fulfillment strategy in 2014 is focused on existing geographic markets, primarily in developed countries.
- While CEO’s have gained five years of tough experience in managing profitability, 61 percent of U.S. CEO’s are still focused on cost-cutting efforts. That is down from the 73 percent number reflected in the 2013 survey, which reflects some definitive signs of more optimistic perspectives on business profitability. However, the study authors reflect a statistic that stock buybacks authorized by S&P 500 indexed companies rose to $445.3 billion in the 12 months ending in September 2013. We find that situation rather troublesome since these are monies that could have been invested in process and technology related investments related to business areas, not to mention increased training of the workforce. Instead, financial engineering of stockholder performance rules the board room.
- Regarding the priorities that CEO’s have currently placed on specific areas of technology investment, the PwC survey reflects:
- Business analytics- 44 percent
- Socially enabled business processes- 41 percent
- Mobile customer engagement- 39 percent
- Cybersecurity- 39 percent
- The PwC study reflects that 70 percent of U.S. business leaders remained concerned about the availability of key skills, reflecting a sharp increase from the 2013 findings in this area. Noted by the report authors: “Do more with less” has taken a toll on morale. Business leaders recognize this: just 32 percent of U.S. CEO’s agree that the level of trust with employees has improved in their industry over the last five years.” Nearly 62 percent plan to expand hiring in 2014. The above have significant implications for supply chain talent management strategies.
For supply chain teams, as we enter the second part of 2014, this and other CEO data reflect that investments in enhancing both product and service offerings, business analytics and associated re-skilling or hiring plans should be supported by senior management teams. Customer retention and enhanced service strategies remain a high priority that should receive support in new fiscal year budgets, along with broader efforts directed at enhancing NPI processes across the global supply chain. For IT teams specifically supporting supply chain and B2B initiatives, the priorities of the business are focused on enhancing areas of supply chain business analytics and mobility access. Technology enhancements directed at bringing together product, software and services related information sources would appear to gain senior management funding and support.
It’s the end of the work week and we continue with our news update series related to previousSupply Chain Mattersposted commentaries or news developments. In this capsule commentary, we include the following topics:
- Legal Protection Required to Haul Older Railroad Tank Cars
- Railroads to Face Increased Scrutiny for Agricultural Shipments
- Potential West Coast Port Disruptions Looms
- CSCMP Announces New Young Professionals Mentorship Program
Legal Protection Required to Haul Older Railroad Tank Cars
A new development has occurred concerning the carriage of older, non-compliant versions of railroad tank cars containing crude oil shipments in the U.S. According to a published report by the Wall Street Journal, the Norfolk Southern railroad has become the first U.S. freight railroad to require its customers to provide legal indemnification that absolves the railroad carrier against damages from fires, explosions or the release of hazardous materials caused by tank cars that do not meet the rail industry’s most up-to-date standards. This change is scheduled to take effect on July 15 and applies to DOT-111 tank cars built before late 2011, which accounts for the bulk of the existing U.S. tank car inventory.
Norfolk Southern indicated this action will cover the railroad, its parent company, subsidiary and affiliated companies, officers, directors, employees and agents from any liability.
The obvious open question is whether other railroads, particularly the BNSF and Canadian Pacific will join in this requirement. If they do, it will force tank car owners and lessors to re-think current asset management upgrade practices in light of having increased liability exposure.
Railroads to Face Increased Scrutiny for Agricultural Shipments
While on the topic railroads and the shortage of specialized rolling stock, a South Dakota newspaper report indicates that the BNSF and Canadian Pacific Railway will face increased U.S. and Canadian regulatory scrutiny as each service operator works to address potential specialized bulk railcar availability during upcoming agricultural harvest peak periods. According to the report, each of the railroads must provide weekly status reports indicating the number of total grain car orders, the orders filled, and the average number of days late for rail cars that are behind schedule to meet shipper needs.
This action is in response to current shortages of specialty rail cars affecting farmers, ethanol plants and grain elevator operators. While agricultural shippers acknowledge that prior shortages and delays of specialty rail cars has improved, there are continued concerns that the rail network can again become over-stressed starting in July, when farmers in the upper plains region of the U.S. harvest their wheat and corn, and later, soybean harvests. The other issue is that certain amounts of prior harvests are still being held at farms and grain elevators. Further noted is that ethanol producers have had to previously cut-back on production because of the timely availability of tank cars to ship products to oil company customers.
A side note: The overall shortage of specialty railcars has become a windfall for railcar manufacturers, lessors and finance companies. Monthly leasing rates for such equipment has increased by double-digit rates as the demand and supply imbalance continues across U.S. and Canadian rail networks.
Potential West Coast Port Disruptions Looms
As noted in our prior Friday news capsule, labor negotiations between labor unions representing Longshoremen and the Pacific Maritime Association move closer to next week’s June 30 contract deadline. The negotiations centers on a labor agreement for roughly 14,000 West Coast port workers in California, Oregon, and Washington.
The latest reports now indicate that such talks will more than likely stretch out to the last hour and perhaps lead to a temporary contract extension or government mandated cooling-off period. Meanwhile, a recent study conducted by the National Retail Federation (NRF) and National Association of Manufacturers (NAM) by economists at the Interindustry Forecasting Project at the University of Maryland indicate the U.S. economy could lose $2.5 billion per day if a shutdown were to occur. That is impetus enough to keep all the parties working towards resolution of a new labor agreement.
CSCMP Announces New Young Professionals Mentorship Program
Supply Chain Matters has echoed in many of our commentaries the current and future need for increased talent and skills across multiple industry supply chains.
The Council of Supply Chain Management Professionals (CSCMP) has announced a Young Professionals Mentorship Program. The professional organization is inviting its members to provide support and guidance to up and coming supply chain professionals, helping them to either enhance their academic, career or personal goals. Since this blog has a global-wide readership from students conducting studies in supply chain management, we wanted to call out this program for awareness.
The program includes certain requirements and commitments from volunteer mentors as well as certain personal benefits. Students and young professionals need to meet certain baseline requirements including a willingness to make a one year commitment to the program, and be dependable and consistent in meeting the program’s time commitments. Both mentors and mentees are required to submit applications. According to CSCMP, the partnership should be based on mutual trust and respect, and offers personal and professional advantages for both parties. More information can be obtained from the web link or by contacting CSCMP directly.
We applaud CSCMP for coming up with this program and look forward to hearing future feedback from our readers regarding this program.
SAP conducted its annual Sapphire NOW users conference in the U.S. and utilized this customer forum to once again communicate significant changes and implications concerning future direction. The prime theme that SAP management delivered to customers was the SAP Run Simple message, which for many day-to-day users of SAP, is a message that is received with some cynicism. None the less, the implications are rather profound and real. Supply Chain Matters penned a prior commentary regarding the implications of SAP’s new strategies focused on integrated business planning that has since received significant reader and social media activity.
Among the keynotes delivered at Sapphire was the often anticipated talk by Hasso Plattner, one of the original founders of the company and existing Chairperson of the company’s Supervisory Board. While Hasso’s annual talks to SAP customers tend to sometimes be academic and lengthy, they often contain candor and important insights regarding SAP direction or missteps in the market. This year was no exception.
One of the most significant messages delivered by Hasso was that enterprise software running on-premise is going to the cloud, no matter what. That is why SAP’s new strategic emphasis is now all about reengineering for “the cloud.” The message from Hasso was that it is no longer a matter of if but rather a matter of time. That alone is a significant message coming from SAP’s founder and most influential investor. He further indicated that four years ago, SAP leadership was initially very apprehensive regarding the challenge to change 400 million lines of code within its ERP backbone system, but has now come to the conclusion that it would have no choice but to do so. Software that was designed many years ago under different assumptions related to business processes and existing technology at the time, now has to better match the realities of today’s new business and technology paradigms. Hasso’s drumbeat message remains: “simplicity beats complexity”.
A very significant implication of SAP’s ongoing re-engineering towards leveraging HANA and the cloud is the goal to eliminate “aggregates” within its internal system’s functions. Aggregates are when the system calculates for instance, gross margin, income statements or a supply chain planning optimization. Long-time SAP APO user teams can best relate to this concept by considering APO’s in-memory or former “live cache” design concept, where all planning related transactional and master data is drawn into the planning engine to formulate optimized supply chain plans.
Instead, the new HANA based cloud or on-premise technology will store all of SAP transactional data in memory (column-store) and will respond to information needs and reporting requirements by assembling models and algorithms on top of transactional data. The implication is a system with a far smaller footprint that users will eventually have the infinite freedom to re-arrange information hierarchy’s on-the-fly in a matter of a few seconds. By Hasso’s description, that opens opportunities for the system to perform all functions via models and algorithms and the ability to perform more predictive and simulation based analysis capabilities based on system-wide data.
Other significant implications will be the even more critical importance to accurate master data, internal skills in modeling and simulation of supply chain related data and the ability of supply chain planning and fulfillment teams to perform multitudes of what-if or target supply chain goal fulfillment analysis.
Of course, this broad and sweeping scope of SAP focused change is going to take additional time, perhaps years in scope. There will be critical decisions that customers will need to make over that time period. At Sapphire, SAP further communicated its increased dependence on select key partners to assist both SAP and its existing customers to more quickly and successfully navigate this ongoing and significant transition.
Existing SAP customers need to seriously think about the implications of this shift in technology direction, especially as it relates to supporting today’s and tomorrow’s broader and more complex supply chain management needs. While complexity and frustration may rule today’s mindsets, start seriously thinking about what these new changes imply for integrated supply chain and business planning support needs under the SAP HANA enabled banner. Such changes involve a changing mindset, new and different skill needs as well as a reliance on a trusted external consulting and support partner.
It is no secret that SAP APO, while designed as a bullet-proof supply chain planning system built around SAP master and transactional data, is somewhat difficult and inflexible in its ability to provide a means to support rapidly changing supply chain business processes or to support a new data paradigm where the majority of supply chain related data exists in an external demand or supply network. In a prior Supply Chain Matters posting, we noted that the structural design rigor and tight internal system linkages has led to many work arounds, including spreadsheets and supplemental systems. In many cases, the full potential of supply chain optimization, such as optimized supply planning is avoided because of the complexity and lack of understanding of innards of SAP APO. However, those teams that have taken the dedicated time and patience to learn and understand such innards with supplemental tools have managed to leverage APO functionality and subsequent benefits.
As noted in prior commentaries, as SAP continues to build out its described muscle platform, organizations need to focus efforts on the further mastering of broad-based supply chain planning and fulfillment process modeling, optimization, simulation and master data management capabilities. There are available tools and knowledgeable partners who can help you to re-focus your current efforts and direction and better respond to line of business needs, customer fulfillment or product management requirements, while helping to facilitate the skills and new capabilities roadmap that prepares for what will come in the new world of SAP.
Key SAP strategic partners such as Intrigo Systems, are not only focused on SAP APO, but the broader SAP Supply Chain Management, both today, and in the realities of the SAP HANA enabled environment. The Intrigo Systems Optek tool suite consists of modules that have been designed to place the planner more in control of the process while making SAP APO functionally more effective today, and in the future capabilities of SAP Supply Chain Management.
© 2014 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
Disclosure; Intrigo Systems is a current client of the Ferrari Consulting and Research Group.
Supply Chain Matters had the opportunity to attend the Gartner Supply Chain Executive conference held in mid-May. As an AMR Research alumni analyst who specialized in research coverage of supply chain software and network technology, I am fully aware that the roots of this particular conference are deep, extending to the late nineties. The conference featured many well-known and respected research analysts and its reputation was often that of “must attend” among any who either practiced supply chain leadership or provided technology and services to the supply chain community. While we have admittedly not attended this conference for the past several years, we decided at the last minute to attend this year’s conference. Overall, the conference provided some highlights and disappointments. We walked away with impression that the conference is not what is used to be in terms of research depth, insights, and analyst personalities, although it still draws a very influential audience.
The opening keynote was a highlight since it reflected on a look back of supply chain management for the prior ten years, and Gartner’s perspective of supply chain requirements and needs for the next ten years. Acknowledged was that the span of control among industry supply chains are indeed wider and that 40 percent of senior supply chain leaders now report to their respective CEO. As we at Supply Chain Matters can certainly attest, Gartner further noted that articles about supply chains have tripled in the Wall Street Journal. That is somewhat of good news, and not so good news aspect since what happens in the supply chain more directly affects business results and overall performance. Further noted was that the adoption of cloud-based technology within industry supply chain IT environments has increased 40 percent, which is a rather significant development when one considers that supply chain systems are often viewed as mission critical in nature and scope.
Reflecting on the next decade for supply chain management, Gartner’s viewpoint is that industry supply chains will continue to lead in the next decade. However, spaghetti-like networks with silos of conflicting goals, not aligned to singular, over-arching goal remain as an obstacle that needs to be overcome. According to Gartner, too many people are bogged down in trivial tasks. Analysts pointed to talent management as a continuing challenge and top priority for the next three years. Further noted was that universities are not keeping up with changing skill needs. We are not completely convinced about that conclusion, but colleges and universities that specialize in supply chain management need to do a better job at overcoming cross-curriculum barriers to insure that students are prepared with broader exposures to other required skills. For technology adoption needs, Gartner cited social, mobile, cloud, advanced information analytics and the Internet of everything as the only feasible way to manage supply chains more profitably.
Tom Peters, noted author of the iconic book, In Search of Excellence provided the second day keynote, and candidly, could have well been the opening keynote because of Tom’s unique, direct communication style. He opened with the statement that “there is no more sexier profession than that of supply chain management.” He pointed to the management conundrum of “damned if you do, damned if you don’t” as especially pertinent to supply chain professionals and made reference to the “huge, huge, huge issue of supply chain network vulnerability.” Peter’s viewpoint was that supply chains are the focal point of all operations and should be more responsible for sales and marketing goal fulfillment as opposed to reducing costs. His belief is that a supply chain must have formal research and development or center of excellence group, or go home. One quote that especially caught this author’s attention related to the critical importance of managing supply chain risk: “You (the supply chain), can destroy an 80-year-old brand in a matter of a week.” Dwell on that statement the next time Finance questions the overall supply chain budget. Peter’s final words of wisdom were to de-emphasize items, trucks and planes and concentrate on big “S”, services.
Two other sessions we found to be insightful were one titled: The New Realities of Digital Manufacturing delivered by analysts Simon Jacobson and Mike Burkett, and the session: Key Findings from Gartner’s Chief Supply Chain Officer (CSCO) study also delivered by research vice-president Mike Burkett. Both sessions stressed the needs for industry supply chains to think more about product management and its integration to the new era of digital manufacturing technologies. Both the digital and physical worlds of supply chain processes are indeed on the verge of coming together. Among the key highlights of Gartner’s latest CSCO study was data reflecting that new product introduction and sustainability capabilities have been the most often added in the last three years by either direct or dotted-line reporting responsibility. According to the Gartner CSCO study, the top priorities for supply chain centers of excellence are:
- Standardize and improve processes
- Performance management and analytics
- Supply chain strategy
- Supply chain technology enablement
Yet, talent and change management appears to be lower in priority and Gartner raised the concern of why so low, since both of these competencies are required for the above to succeed.
Another rather important takeaway from Gartner’s latest CSCO study was the survey reflecting expected levels of investment and expected benefits over the next two years. Without taking thunder away from Gartner, the important takeaway for us was that product launch and portfolio management along with supplier collaboration and flexibility are highlighted as emerging medium and top priorities for investment in the next two years. That correlates with what we have been hearing and picking-up with our conversations with clients and readers.
In our Part Two posting, we will provide additional comments of some other highlights of the recent Gartner supply chain conference including the annual Top 25 Supply Chains announcements, along with some interesting and noteworthy presence among supply chain technology providers.
© 2014 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.