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The Human Factor in Supply Chains. December 6 – 7, 2007 Rob Handfield Co-Director, SCRC Bank of America University Distinguished Progressor. Agenda. The Role of Humans in the Supply Chain Skilled and Semi-Skilled Labor Shortages Supply Chain Management – the Impending Talent Crisis

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the human factor in supply chains
The Human Factor in Supply Chains

December 6 – 7, 2007

Rob Handfield

Co-Director, SCRC

Bank of America University Distinguished Progressor

agenda
Agenda
  • The Role of Humans in the Supply Chain
  • Skilled and Semi-Skilled Labor Shortages
  • Supply Chain Management – the Impending Talent Crisis
  • Succession Planning: An Agenda for Change
slide3

#1 Trend: Growing importance of demographics, labor and people

  • #1 Challenge: How to attract, retain and continuously develop people
  • #1 Impact: The current blue collar labor environment has forced industry to do more with less, to become flexible and accommodating, which has led to increasing costs.
  • Retail Industry Leaders Association (RILA) roundtable of senior executives discussed the most pressing issues facing the industry:
    • Performance Management
    • Schedules and Payroll
    • Recruiting

Source: http://www.mhia.org/summit2007/

the need for scm talent
The Need for SCM Talent

The CPO’s Strategic Agenda

“Enhancing team skills and promoting collaboration is the #1 priority for Best in Class organizations.” And they have to learn how to “sell and market to end users.”

Aberdeen Research, Nov, 2006

A Striking Correlation Between Purchasing Excellence and Financial Performance with Collaborative Skill and Behavior as the Critical Differentiator.

“The Talent Factor in Purchasing” The McKinsey QuarterlyMarch 2007

4

slide5
Full-time workforce

Healthy supply of skilled and unskilled labor

Stable financial markets

Long product and project life cycles with long-term resource planning initiatives

Guaranteed jobs for life

Career paths predictable and viewed as a natural progression in the company

Loyalty to company viewed as an indicator of career safety

Healthy supply of engineering and supply chain talent

Increasing use of temps to manage highly season items

Shortage of skilled and unskilled labor

Volatile financial peaks and troughs lead to unpredictable job planning

Projects curtailed at short notice – associates assigned to short-term projects and hired as consultants when required

Postponement and seasonal stocking

Unpredictable career paths

Individuals may switch jobs up to 10 times in a career

Shortage of technical skills

Shortage of supply chain talent

Humans in the Supply Chain

A New World for Talent Management

OLD WORLD

NEW WORLD

workforce demographics
Workforce Demographics
  • -
  • Whites will continue to predominate (76 percent of 18 to 24 year olds), but their growth rate lags that of African Americans and Hispanics.
  • The growth rate of African Americans(21 percent) and Hispanics (23 percent) is almost four times more rapid than Whites (6 percent).
aging workforce vs supply
Aging Workforce vs. Supply
  • In 2000 there were 114 young males for 100 older males,
  • but by 2015 this will decline to 85
shortage of trades
Shortage of Trades
  • "One of the welding industry's biggest challenges is attracting young talent, which is attributable in large part to its tarnished image. Many people still associate welding with black and white photos of tired welders covered in scuffmarks and dressed in soiled clothing. But the welding industry has undergone dramatic changes with the advancement of technology, and is no longer confined to the dark and dirty setting reminiscent of last century's industrial era. Despite this, the image problem continues to exist and parents, instructors and counselors have been hesitant to introduce students to the industry.”
  • Dennis Klingman, American Welding Society, Education Committee chairman.
proactive labor management
Proactive Labor Management

Over the next two to three years, we will need 500-600 welders. We are working with a trade school in Port Arthur Texas, and are recruiting experts to run our welding school. We run 50-60 people through schools such as pipefitting and pull them out of junior colleges.

In Texas, we pulling kids out of the hayfields who straight out of high school! They are getting 23 bucks an hour plus 65 dollars per diem on top of it

other solutions for unskilled labor
Other solutions for unskilled labor:
  • Develop a plan
  • Cast the widest possible search net, including targeting areas with high unemployment rates (Detroit, New Orleans)
  • Consider untapped groups, such as stay-at-home parents, disabled, seniors who want to work part time
  • Scout out young candidates (job fairs at local schools)
  • Be proactive with job training, and partner with community colleges
  • Promote from within whenever possible, by helping unskilled employees move up, while building loyalty
  • Keep up with technology to boost productivity
supply chain management talent

Supply Chain Management Talent

Filling the Pipeline

national science board observations 2006
National Science Board Observations (2006)
  • ……“a troubling decline in the number of U.S. citizens who are training to become scientists and engineers, whereas the number of jobs requiring science and engineering … training continues to grow.” The board further observed:
  • … if the trends identified in Indicators 2006 continue undeterred, three things will happen.
  • The number of jobs in the U.S. economy that require science and engineering training will grow;
  • The number of U.S. citizens prepared for those jobs will, at best, be level;
  • The availability of people from other countries who have science and engineering training will decline, either because of limits to entry imposed by U.S. national security restrictions or because of intense global competition for people with these skills.
the tightest white collar markets
The Tightest White Collar Markets

Fields

Source: BLS, the Kiplinger Letter vol. 84, no. 45

  • Health workers
  • Mechanical, electrical, computer engineers
  • Physicists, chemists
  • Accountants and pilots
  • Database administrators and systems analysts
results from a recent set of interviews
Results from a Recent Set of Interviews

Capability to Deliver Value Through SCM….

…..Depends on Human Resources Available to Engage!

slide25

“Our biggest challenge is: What will we need in 5 to 7 years – and what do we need to do in 2007 that will get us where we need to be.?

Many of our executives are 50 today and we need to be able to be able to create a set of identifiable requirements tied to the roles – even at a high level – and begin to develop a strategy around these requirements.

We need to understand where we will be lacking in competencies- and begin to estimate which roles we don’t even know today we will be seeking to fill based on attrition retirements, etc.

slide26

“….succession planning requires talking candidly about what qualities are missing…..it’s sort of like a married couple trying to calmly discuss who the perfect replacement spouse would be.”

“….if senior ranks are thin, it’s because so few companies have the foresight to ask managers to take on cross-functional assignments. They let them rise to the tops of their silos – and retire.”

iaccm study n 80
IACCM Study (n = 80)

Thanks to Tim Cummins and Katherine Kawamoto from

IACCM for the survey posting and analysis.

iaccm survey on succession planning
IACCM Survey on Succession Planning
  • What percentage of your staff will retire in the next 5 years?
approaches to developing talent34
Approaches to Developing Talent

High Potentials

Within SCM

Organization

(40%)

BU Subject Experts

(25%)

LOW HIGH

Industry-Specific Knowledge and Competencies

General Business

Universities

(10%)

SCM-Focused

Universities

(25%)

LOW HIGH

Supply Chain Competencies and Knowledge

observations
Observations
  • There is an imminent dearth of talent that will occur both in SC management and skilled/unskilled labor in the next ten years that companies are unprepared to deal with.
  • Most companies have NOT spent the time thinking through their succession planning and talent pipelines, and in many cases, have not even had the discussion!
  • A targeted approach needs to be developed that explores multiple avenues for talent development.
questions to consider
Questions to Consider
  • IF growth from within WILL BE the primary source of succession planning:
    • What roles and mentors are established to create supply chain leaders?
    • What performance measures are being used to motivate people to aspire to these roles?
    • What approaches are in place to retain talent and before they are picked off?
    • What career path planning approaches are in place to drive success in these areas?
scm career paths
SCM Career Paths

Supply Chain Operations Leadership

Operations

SCM

MBA Recruiting

Executive Recruitment

Direct Hires

Future

Careers

Divison, SBU President

College Interns

Internal Transfers

Rotational

Programs

M&A Mgmt

Enterprise/

Bus Strategy

Source: “The Future of Supply Management: Organization and Talent, P. Carter and J. Carter,

SCM Review, November 2007.

best practices in succession planning
Best Practices in Succession Planning
  • Monitoring Future Needs
    • Identify pools sorted by division or business units
  • Talent Assessment
    • A semi-transparent process – using a core set of competencies to establish a standard of comparison for assessment (fewer is better!)
    • Used to identify high-potential employees, and call out individuals with capabilities who can take on leadership roles in the business.
  • Use Technology to Integrate Data
    • Web-based systems to organize data that is accessible to all divisions.
  • Developmental Activities
    • Spend time creating stretch opportunities, and use temporary assignments as part of action learning assignments to cultibate experience
    • Offer mentoring, coaching, and action learning along with university-based exec ed programs.
  • Measure Performance
    • Assess individuals on the basis of performance, corporate values, and perceived potential, including “learning agility” – ability to learn new material and adapt to new situations.
    • Track percentage of openings filled from within over time ( should be 75-80%), number of cross-functional assignments, diversity.

Source: “Choose Tomorrow’s Leaders Today, Robert M. Fulmer, PhD, Pepperdine University.