The Talent Gap

Rising Demand

At recent supply chain user conferences, a major concern for many companies was the talent gap in supply chain. This is an urgent issue for corporations to address, since the gap stymies growth, dampens innovative ideas and programs, and limits problem solving on a day-to-day level.

Supply chain talent shortages plague organizations from the executive level to the shop floor and right into the customer’s home. And the problem is bound to get worse. Globalization is quickening the demand for more supply chain personnel as more developed nations enter and compete on the world stage and hunger for world-savvy talent. Most interestingly, our changing lifestyles are turning consumers into same-day delivery, mobile shoppers, taxing the logistics and merchandising prowess of even the largest corporations. And the sheer increase in population, forecasted to increase by a whopping billion in the next eight years, plus a growing middle class of consumers, increases demand for a larger range and availability of products. In the broader U.S. job market we are at nearly full employment, so with that as a backdrop, it is no wonder we have a shortage.

At a recent Logility conference, there were many exclamations from attendees about talent shortages at their companies and the impact this is having on the organizations, abilities to achieve their goals. It was noted that almost every organization stated they had job openings.

What is the Talent Gap?

So, just exactly what is the talent gap and what are some things we can do about it now? The talent gap can be defined in a few ways:

• Lack of personnel to fill specific roles
• Lack of skill, knowledge/expertise to fully perform that role
• Poorly designed work or poor organization that leads to lack of productivity
• Inability to fill surges or seasonal roles
• Lack of resources in the service market to fulfill needs and requirements
• Lack of enablers—equipment, technology or other resources that stymy workflow, communication, and productivity.

Most gratifying, and yet ironically, is the recognition of supply chain as a function that can take its place among other executive functions in the corporation such as finance and IT. We have arrived! But with attention comes expectations. This means that supply chain needs the sharpest talent to fill all this demand and to operate as innovatively and optimally as possible. We often have brilliant ideas for the business, but can have a hard time expressing and selling them at the top. Even the smartest talent may lack that bit of the savvy required to claim the next great transformative idea for the corporation. That’s a critical talent gap, too.

Often when we think about increasing demands and workloads or new projects, the most obvious solution is ‘add more people.’ But that is the crux of the problem—we don’t have more people—so we must find other solutions, at least in the near term.

There have been several significant research projects from a variety of organizations such as universities, consultants, and service providers, as well as research firms about this very issue. Many of their recommendations rest upon very strategic and long-term solutions. But ultimately, these are mostly hire-people-only solutions. (Yes, hire and nurture.) But that still presupposes supply. However, there are things organizations can do now to fill the gap and maintain or accelerate the benefits delivered by their supply chain team.

Getting an Assist: Three Key, but Simple Ideas

I think it goes without saying that technology plays a vital role in productivity today. Over time, the use of better tools can ease workloads and provide those sharper answers needed day to day to optimize the business and get things right. In fact, most companies own more software than they use, and as customers of major supply chain vendors they have usually bought-in to receive significant upgrades from them. Today, unlike the ‘90s when supply chain suites first hit the market, the technology has mostly outstripped the user’s ability to leverage it. So at minimum this means taking some time to assess where you’re at and how your team can leverage what you have.

So the first simple idea is to get an assessment. Is the current way you work adequate? Can it become more effective? The answers are usually ‘probably’ and ‘yes.’ You can read lots of case studies, attend other user presentations, or participate in benchmark surveys to get a bearing on where you are at and some great ideas that can be applied. Or you can get your tech provider to come in and review how you are using what you have, and suggest any helpful features and functions you might be missing.

The key is momentum. Organizations that are consistently re-evaluating and measuring their progress tend to continue to improve. So those assessments should result in some form of reasonable KPI goal setting. Of course, then the next challenge becomes, how are we going to do that?

The second simple idea, then, is to get updated training. This may seem so obvious, but our research shows that organizations have low allocation of budget dollars and time—if at all—to keep their employees up to date. Today, the art and science of supply chain has progressed, with many new and effective approaches. So training should include some advanced analytics, leveraging big data, and, not to forget, refreshing the basics. Training should include ‘dropping into the future,’ and also be relevant to the challenges faced today. Often team training, or in-house coach-type sessions allow the team to think together about what they are learning within the context of how they can implement new ideas and/or achieve goals.

The third simple idea is managed services or, as it is called, optimization services, (that I will describe below), which more companies are beginning to avail themselves of today. Since this is an area many are not familiar with, I will spend a bit more time on this.

Manage It? Optimize It!

The managed services we are most familiar with is the management of hardware and software by a third party. These services are often provided by the software tech company or their certified partners. It really is not a great term for the kind of services that I am referring to here in this article, though. An emerging and powerful service provided by a few supply chain companies like Logility is an optimization service. The idea here is getting an assist from those who know the software—and probably have seen a few things in their career—to support, advise, and coach your operation and supply chain team.

This is not outsourcing a function, nor is it a traditional consultant role, though there is some of that. These services are not designed to replace existing resources, but rather integrate and align with and feel responsible to help the team achieve supply chain metric improvements.

These areas of assistance can take the form of a super-user role; reviewing and helping to update planning techniques and models; training, providing training in business and technical issues to leverage technology and incorporate appropriate techniques; helping to refine process and workflows; updating reporting; and so on. The optimization service provider can also advise on how to produce more meaningful information and use that information better. And yes, you can outsource operations as well.^[1]

These services can really run the gamut from tactical data clean-up to more strategic activities such as introducing new complex processes like New Product Introductions or Integrated Business Planning.

So why does optimization service work as compared with other approaches such as using consultants? Consultants are most often brought in on a fixed project, whereas the optimized service can be on-going support and/or on-demand.^[2] And in fact, consultants are having challenges getting the best people, too. They do have legions of people,^[3] but often they don’t have quick access to experts with that super deep knowledge you need on your solution to make a tangible impact.

With consultants, it’s a one-for-one model,[4] whereas an optimization partner has economies of scale vis-à-vis how services are designed, with a broad and deep mix of talent and skills. They have the supply chain expertise gained through many, many customer engagements, their deep knowledge of the software plus understanding their business goals as well as knowing their current use of the solution set. Though the optimization service may provide specific assigned resources, they also leverage a deep pool of experts to dip into to support various tasks, if needed, providing additional insights and knowledge to the task at hand. Unlike consultants on a fixed project, the optimization team can be available on regularly scheduled intervals to coach (e.g., helping to streamline and prepare for that monthly S&OP meeting), or on-demand to solve a short-term issue. More strategically, and very unlike consultants, the goal here is to establish an on-going process for talent development.

Measuring Results

Those who attended Logility’s Connections 2017 had the opportunity to attend presentations and listen to two examples of how this optimization service helps upskill their teams to drive results and confidence.

SPANX uses Logility Optimization Services and has been able to slim down their inventory, reducing DoS[5] by an impressive 36 days! MAPE[6] was reduced by 6 points, and turns accelerated by 20%. One of the things I find most attractive was the rapport built by blending into the supply chain team. Unlike pompous power consultants who come in to cut costs, the optimization services team aligned with the team and their goals, which can be ‘soft’ goals as well as the ‘hard’ measurements. For example, a key outcome for SPANX has been “building confidence in the use of the system.”

We hear over and again from companies that building confidence ultimately has a hard value in terms of data accuracy, streamlining processes, and overall metric improvements. This happens because of process alignment and abandoning non-scalable and inaccurate spreadsheets, once the organization learns to trust the data. Using ‘the system’ means that information is integrated cross-systems and cross-functionally so that plans materialize in execution and results can be measured later on, leading to that cycle of continuous improvement.

Niagara Bottling faced many of the issues we have described. Year-on-year growth of the company had them ‘strapped for bandwidth’ with increasing workloads, staff turnover and an ever-changing network of customers and manufacturing sites. Here, many of the basics had to be put in place to gain knowledge of supply chain as well as the supply chain system. With that foundation, they could then focus on the supply chain goals as well as some very specific tasks that needed implementation. In their situation, a lot of ‘knowledge transfer’ (coaching) became part of the relationship. Hence, the advice had both strategic and specific benefits. The hands-on work taught them optimal use of the system, such as setting up and using specific functions.  That allowed them to work on process improvements such as demand planners collaborating with the sales organization.

Supply Chain professionals, by their very nature, think more strategically than many functions due to the forecasting mind set and cross-functional nature of their work. Thus, hard-core numbers/KPI’s as well as effective use of the system is only part of their vision. Yes, goals like increasing turns, forecasting accuracy, and so on are central, but so are those often elusive process improvements such as collaborating, integrated planning, new product introductions, and so on.

The hard-core cost reductions and inventory cutting, improved responsiveness and customer service metrics, of course, do happen too, in these efforts. But savvy supply chain people know that, generally, excesses or shortages in inventory and other performance gaps are symptoms of the problem. Having the optimization service integrated into the supply chain team vs. external management from consultants (who may be hired by the finance department) ensures that you are working on causes which have tactical as well as more far-reaching benefits to the organization.

Conclusion: Free to Work on the Big Picture

Working suboptimally exacerbates the resource gap. Effective use of systems, cleaner data, and streamlining processes all add to productivity.

Interestingly, although there have been no studies that I am aware of that specifically focus on the productivity of supply chain ‘office workers,’ many other functions such as programming, finance, sales, and other professional^[7] jobs have had such studies. Results demonstrate that uber-performers can outperform the rest of the pack by 1.5 to 6 times. So making your team uber-performers through optimization support is a simple but powerful solution.

The more organizations improve their use of systems and their data quality, the more that ‘problem chasing’ is reduced and the team is freed up to think about and work on the big picture. There is a growing recognition among hiring managers that the skills of today and tomorrow are those of planning, communicating, and collaborating. So don’t worry—you won’t be replaced by a drone. But let those drones do the drone work and free yourself up for the big ideas.

[1] Outsourcing the management of the software does free up the business and IT—usually both scarce resources in the firm—to focus on the other priorities.

[2] Customers sign up for a minimum or planned number of hours per year.

[3] For example, big consulting firms are the most active in recruiting college grads.

[4] You are paying for headcount by the hour.

[5] Days of Supply

[6] mean absolute percentage error

[7] One study was of loan officers in banks, a job thought to be people in a ‘high human touch’ role. However, a lot of that work is now done by computers.