The supply chain management profession is facing a talent crisis that threatens organizations' current and future ability to create the value required to satisfy customers. This talent shortage is being fueled by the impending retirements of huge numbers of "baby boomers," the expansion of global supply chain requirements, and the cumulative effect of years of head-count reductions, all leading to a shortage of employees with the skill sets and knowledge needed to keep companies on the leading edge of supply chain competitiveness.
Companies are responding to these challenges by turning to colleges and universities as a source of new managers, but despite the recent growth in academic supply chain programs, the demand for supply chain professionals far outstrips the supply of available talent. Furthermore, the skills required to support world-class supply chains are continually broadening; organizations are therefore seeking a blend of analytical and managerial leadership capabilities that can only be developed through integrated programming that includes classroom education, hands-on training, and on-the-job experience. Even the best trained of these new managers, then, often lack the breadth and depth of knowledge and experience needed to lead effectively right away.
As a result, many senior managers are beginning to realize that the challenges associated with staffing and retaining the talent needed to ensure organizational success must be addressed using a more programmatic approach than was necessary in the past. They recognize the impacts the new status quo will have on their businesses, and they are seeking ways to fill the gap between the demand and supply of highly capable individuals who can execute the supply chain mission. Some are treating the procurement and development of talent in much the same way they would identify and develop key sources of goods and services—for example, by developing risk-mitigation strategies to ensure the continuity of talent availability, and making intelligent "make/buy" decisions about whether to acquire talent externally or develop existing resources.
How should companies go about developing a supply chain talent pipeline? This question is an ongoing topic of discussion for senior executives who are members of the University of Tennessee's Supply Chain Forum. Their responses to our research inquiries overwhelmingly show that talent must be sourced in both its most raw form—the new college graduate—and the form of more experienced professionals. Further, both must be continually developed in order to provide maximum value to the organization.
Shockingly, however, their responses also showed that very few companies are truly ready to view supply chain talent as a long-term, strategic asset to be invested in and continuously improved upon. Additionally, there are significant misconceptions developing in the organizational chasms between supply chain and human resource (HR) functions that are constraining companies' ability to fully capitalize on the potential of their human capital.
This article, based upon a recent University of Tennessee (UT) white paper1 that reports the results of the research described above, presents the "top 10 myths" that are currently inhibiting the development of effective, highly valuable supply chain talent and suggests key ways for companies to overcome these myths and get more out of their most critical basic resource—their people.
Ten myths about supply chain talent development
The University of Tennessee's Supply Chain Forum consists of 62 member companies from a broad cross section of industries and geographic regions that partner with the university to recruit students, interact with faculty on basic and applied research, and provide insights and advice regarding curriculum and future research requirements. Managers from these companies attend two conferences per year, and senior leaders engage in advisory meetings an additional two times per year. The faculty at UT has engaged these leaders in an ongoing discussion over the last year to ascertain their thoughts, concerns, and actions related to the supply chain management (SCM) talent issue. The following represents key findings from those ongoing discussions regarding the greatest misperceptions in the realm of supply chain talent development, and what supply chain leaders can do to address them.
1. Talent development is HR's responsibility.
Supply chain leaders have responsibility for a broad array of cost, service, and quality goals within the business. They cultivate and maintain close partnerships with finance and accounting in order to ensure key improvement initiatives are adequately funded, and they ensure that the company's demand and supply sides are integrated via their relationships with sales and marketing teams. Rather than develop the same type of relationship with their company's human resources department, however, supply chain organizations often abdicate primary responsibility for talent acquisition, development, and retention to HR.
Corporate structures often do not empower supply chain leaders to set human resource policy. And if human resource managers fail to collaborate closely with the supply chain function, they will not completely understand the rapidly evolving nature of supply chain management. To ensure the flexibility and ingenuity needed for the company's success in the ever-changing field of supply chain management, a talent strategy must be constructed through an effective partnership between the leadership of both functions. For example, a first step toward better managing supply chain talent is to formalize existing partnerships between the supply chain organization and human resources and improve basic communication.
2. Returns on talent development cannot be measured.
Misaligned metrics further exacerbate the issue of "ownership" of supply chain talent and may be the reason talent does not get the focus and priority that it deserves. Human resource teams generally are focused on siloed objectives such as salary statistics or the equitable distribution of meager training and development budgets, while many SCM teams have (by necessity) transitioned to broader metrics that reflect the required performance outcomes of the organization as a whole.
Supply chain leaders have become adept at linking capital expenditures and technology enhancements directly to financial results. However, the link between investment in talent and financial results is often not articulated. Yet there is a link: The hiring of someone with critical knowledge in a particular focus area or investments in developing competencies within a team can be tied directly back to financial results.
Companies must therefore establish the connection between developmental investments in supply chain talent and quantifiable returns, tying those investments to supply chain key performance indicators (KPIs) and pushing for further development of competency-based educational programs. This can be accomplished by creating talent development plans that link performance assessments to desired skill sets, and by identifying the specific development opportunities needed to achieve them. This approach enables both managers and employees to track their developmental progress and measure the impact on performance.
3. The cost of investing in talent development is too high.
The lack of a strategy and the requisite measurements discussed in the previous myths greatly hamper investments in talent. While organizations spend large amounts of money on talent in general, the relative sophistication of their investment decisions is low compared to those involving capital improvements or technology.
For example, the search and training costs to replace a professional position are usually two to four times the annual salary of the position. This should influence organizations to focus on developing and retaining the talent they already have, assuming they are performing well. In most organizations, however, any investment in talent is disproportionately spent on new hires.2 The objective seems to be to fill open positions in an ad hoc manner at minimum expense, rather than develop and execute a strategy to maximize organizational results. This is not surprising given the previously discussed lack of a strategy, ownership, and metrics to guide talent development.
In sum, expenditures on acquiring and developing talent should be viewed as an investment with the objective of maximizing returns, and should be treated like any other business decision, complete with robust cost-benefit analyses.
4. Talent development is primarily about teaching supply chain content.
When companies do choose to invest in supply chain talent development, they often tend to focus on building technical knowledge in areas such as procurement, manufacturing, or logistics. Such knowledge is important, of course, but restricting talent development to function-specific training is shortsighted.
That's because the maturation of end-to-end supply chain management and the positioning of SCM organizations as the primary value creators within the company have led to an expanded role for supply chain organizations. This development has spurred the need for broader education of supply chain talent that includes areas outside of supply chain management.
To successfully execute the complex supply chain strategies of today, employees must possess a strong understanding of how supply chain management intersects with other business functions and processes to create value. One aim of talent development, then, should be to ensure that supply chain teams are able to work effectively with finance, accounting, marketing, and other internal organizations to accomplish their goals.
5. A one-size-fits-all training solution will be effective.
Almost everyone agrees that developing talent is a good idea, but the lack of strategy, investment, and measurement yield watered-down, generic training programs that usually do not deliver results. They do not include strong ties back to the business, they do not zero in on high-priority areas, and they are spread too thin to make a real difference anywhere. This is so pervasive that business leaders have become accepting of the notion that formal developmental activity usually does not lead to real change.
Talent development must focus on delivering the results the business needs to support its specific strategy. Generalized programming, however, typically does not provide the coverage or opportunity to directly tie into the ways in which an organization's supply chain can create additional value.
The most effective training is tailored to the supply chain organization and its mission within the company. There is no one, best way to provide that education. Perspectives on what constitutes the domain of supply chain knowledge vary widely, as do opinions and practices regarding delivery modes and pedagogies for supply chain education. This variety forces those tasked with supply chain talent development to employ a sophisticated approach to education to ensure that they are indeed getting the value they seek. For companies that operate globally, the challenges only intensify given the differing views on SCM, pedagogical philosophies, and learning styles around the world.
6. Internal (or external) resources are always better.
Most organizations position the question of whether to internally or externally develop talent as a one-time, binary decision. This oversimplification may be due to the immaturity of talent development strategies or the outsourcing of these decisions to human resources as discussed above. This is outdated thinking in today's rapidly changing market. Solid talent strategies will appropriately utilize both internal and external resources to achieve specified goals.
In the case of internal resources, no substitute exists for a leadership team teaching and developing those within their own organizations. This builds esprit de corps and forces the leadership to develop a clear vision for the future. Teaching also is a fabulous way to encourage continued mastery of a concept or strategy by those leaders who must employ it for their company; through teaching they will more closely examine and perhaps challenge their own methods. The use of internal resources is also typically a cost-efficient way to build core capabilities and competencies across the organization. Moreover, internal rotational programs, where employees spend time in different functional areas, build experiential knowledge.
An exclusive reliance on internal development, however, has significant drawbacks. For one thing, it limits key talent's understanding of what is happening outside the company. As one manager told us, "Internal resources can only teach a company what it already knows." For another, it is unusual for a supply chain organization to possess the needed expertise for developing a curriculum and pedagogy, even for internal sessions. There is no benefit in having leaders teach others if the sessions are not designed well and do not meet learning objectives.
Supply chain organizations should therefore consider the use of external resources in order to broaden their talents' exposure to ideas, resources, and information, and to challenge existing thought paradigms. An external perspective can also help to validate the need and provide the basis for organizational change, as organizations are often blind to their own strengths and weaknesses and can benefit from comparison with peers. Still, simply having employees take externally taught courses will not necessarily yield the desired results. Instead, external resources should be strategically employed as a part of an overall talent strategy in a way that complements internal efforts.
7. Talent development primarily happens in a classroom.
The traditional stance that learning and development primarily occur in a classroom continues to subconsciously pervade the thinking of supply chain and human resource leaders. It seems natural: If you want to learn, you should go sit in a classroom.
But the act of sitting in a classroom does not necessarily make an employee perform better, nor is it the primary way in which people develop their skills and abilities. Learning happens continually, every day, whether it is recognized or not.
To be clear, some classrooms are vibrant environments where participants can build tremendous competency. Thanks to the current trend toward "flipped" classrooms where the emphasis is on active discussion and hands-on learning, formalized classroom education should be a component of any supply chain talent strategy. At the same time, the best talent development programs take advantage of the knowledge that employees are already gaining on the job, and use formal instruction to build on and enhance that knowledge.
8. Talent development will happen naturally and informally.
As noted in myth number 7, learning does indeed happen on the job, and the oft-repeated mantra "We learn something new every day" is not wholly untrue. Unfortunately, even good managers and teams often use this as a reason to avoid taking the necessary steps to improve themselves. However, even if employees do learn new things every day, that does not mean they are learning the correct things at the correct times to help move a defined business strategy forward.
In addition, the formality of degrees, certifications, and awards imposes needed structure and accountability on talent development efforts. Formal graded assignments, progress assessments, one-on-one time with experts, and peer learning opportunities all drive changes in behavior due to the external accountability they provide. Moreover, employees today are too busy to spend time on learning unless it is packaged and prioritized.
As previously discussed, a talent strategy must deliver measurable results to the business, and do so in a deliberate way. Supply chain leaders therefore need to have a clear strategy and investment scheme for talent development that incorporates individualized ways for employees to overcome the distractions and busyness that often rule the day.
9. Talent development is less important than the "issue du jour."
Whether it is an operational issue that threatens daily production, the need to respond to the continual stream of questions from a micromanaging superior, or implementing process improvements—to name but a few possibilities—many priorities pull at supply chain professionals on a daily basis. This may explain why it is so difficult for managers to find the time to speak with HR about that open requisition for a key position, or to work on a talent development plan for a team they oversee. Yet studies have shown that working less and planning more actually increases productivity and overall output.3
Supply chain leaders would benefit from applying such longer-term thinking when it comes to talent development. Instead of constantly pressing subordinates to address immediate problems or asking them to figure out how to implement a new initiative without the necessary training, wouldn't it make sense to devote time and attention to helping them learn how to meet these challenges in new and better ways?
The research firm Supply Chain Insights found that developing employees' ability to successfully confront and overcome difficult situations is among the biggest challenges facing leaders.4 Supply chain leaders simply do not prepare their teams to succeed, and yet they expect them to do so. Over time this can be exhausting and demoralizing for people who want the organization to succeed. They eventually begin to disengage, and the company loses the opportunity to harness their creativity and capabilities.
Contrast that with companies that choose to invest in talent development. They not only see improvements in efficiency and business growth, but they also see an increase in employee loyalty and dedication.
The answer to the question of whether talent development is more important than the "issue du jour"—the concerns of the moment—comes down to whether the organization needs to perform better tomorrow than it does today. If so, talent development should win.
10. It's too late to start a talent development program.
Having read this far, you may be asking: With no strategy, no clear ownership or strong partner in human resources, and meager investment, where do we even begin? Is it too late to develop a more formal, effective program for supply chain talent development?
It can be daunting, and it might be tempting to simply not try. But how a company manages its supply chain talent has a direct impact on its competitiveness, and therefore this is not an area where anyone can afford to give ground. Indeed, many people believe that due to the increasing complexity of the SCM organization's mission, the rapidly changing nature of supply chain thought, and the vastly disparate perspectives across global organizations, talent will be the defining issue in supply chain management over the next decade. More immediately, the supply-demand imbalance of talented supply chain managers and the significant benefits that accrue to companies that excel at SCM mean that talent development should be at the top of every supply chain executive's agenda.
This is a challenging area where many organizations need to allocate significant resources. The initial focus should be on building relationships internally with human resources and working jointly to develop and fund a talent strategy that is recognized as a critical business need. This effort can start small and should focus on early wins. Often the identification and development of key talent (those tasked with leading important initiatives or areas) can seed an organization. This seeding approach also provides examples that can be included in business cases seeking further investment in talent development.
Prepare for the future
In our surveys, every supply chain executive, without exception, agrees that managing supply chain talent is both extremely challenging and enormously important. Our senior executive advisory board members strongly believe that talent management determines whether a company will survive and thrive in the highly challenging global environment of today and tomorrow.
We recommend that you go back and honestly rate your supply chain organization on the degree to which it subscribes to the 10 myths described in this article. Then use that assessment as a catalyst to develop a strategy to acquire, develop, and retain the best supply chain talent for your company now and in the future. As one of our advisory board senior executives told us, "Our very best effort today will simply not be good enough tomorrow. We have to keep raising the bar, and somehow find and develop the people who can meet that challenge."
Note:
1. University of Tennessee Global Supply Chain Institute Faculty, "Supply Chain Talent Management," UT Global Supply Chain Institute white paper, April 2015.
2. Lora Cecere, "Supply Chain Talent: The Missing Link?" Supply Chain Insights LLC, November 8, 2012.
3.The Economist online, "Working Hours: Get a Life," September 24, 2013.
4. Supply Chain Insights, 2012.
