Succession of Talent a Key Supply Chain Challenge

The main issues with which employers in the supply chain sector must contend are:

• Low awareness and understanding of the sector (resulting in recruitment issues);

• Lack of the required skills among new recruits (particularly leadership skills);

• A small and diminishing talent pool (due to poaching and retirement); and

• Challenges related to succession and career planning (impacting employee retention).

These are the main findings of the final report of the Canadian Supply Chain Sector Council’s HR Study Update Project, based on 3,244 surveys of employers, employees and education providers, 11 focus groups and 16 key-informant interviews.

The study was undertaken to update the findings of the Council’s 2005 Strategic Human Resources Study and to identify any new challenges the sector faces. Now, as then, the demand for supply chain employees in all categories and sub-functions is expected to increase.

Because of anticipated growth in the sector, combined with turnover rates that range from 6.3 percent to 11.9 percent and older-worker retirement that is expected to become significant in the near future, the annual demand for new supply chain employees is about 65,979. This employee shortfall is the reason that awareness-building activities related to the supply chain are so critical.

Employers and educators consistently reported that outreach efforts should be targeted at high-school students. They suggested that those who are best-positioned to influence youth, namely parents and high school guidance counselors, also need to be made aware of the opportunities available in the sector.

Respondents emphasized that efforts to increase awareness of the sector should be combined with efforts to improve the image of the sector.

Lack of the Required Skills

Employers, employees and educators agree that the most important skills required of those working within the supply chain sector both now and over the next five years are soft communication skills, leadership skills and computer skills. The importance of all of these skills is expected to increase over the next five years.

Thirty-eight percent of the employers interviewed for this study report that finding workers with the skills they require is a “major” issue for them.

Leadership skills were identified as a “major” recruitment issue by 25 percent of employers. They also indicated that new recruits lack basic numeracy and literacy skills. Many suggested that this problem is worse among young people.

To increase the skills of new recruits, the report recommends increased communications between employers and educators, including industry participation on college program advisory councils; more partnership between employers and educators, and increased investment in work-study programs to give students on-the-job experience prior to entering the supply chain; and credential recognition by employers for immigrants.

A Diminishing Talent Pool

Thanks to low awareness and understanding of the opportunities available in the sector, the limited reach of recruitment methods, and poaching and retirement, the supply chain talent pool continues to be inadequate to meet demand. Study results show that job growth in the sector continues to outpace employee availability.

The impact of retirement, coupled with the limited number of new recruits entering the sector, means that employers must expand their recruitment efforts to attract not only more high-school students, but also immigrants, women, mature workers, Aboriginals, visible minorities and workers with disabilities.

To increase the size of the supply chain talent pool, the report’s authors encourage, among other things, that employers work cooperatively to tackle the problem, rather than compete for the same, too-few employees.

Succession and Career Planning

Because of the issues identified above, employee retention is expected to become increasingly important to employers.

Those who work in the supply chain appear to like doing so. While they expect competitive compensation, they are not primarily motivated by money, but rather by the opportunities the sector provides. The report recommends that supply chain employers provide their employees with clarity in terms of career paths, career-development opportunities, flexible working arrangements, support for further education and a family-friendly work environment. It goes on to suggest that, if offered, these workplace features be promoted in job postings and at job fairs.

The study results suggest that many employers are not making sufficient preparations to meet the human resource challenges they currently face or will face in the future. Succession planning to replace the employees who are retiring or leaving the company is still quite limited. Just 35 percent of employers have a succession plan in place. This is a particular issue at companies with revenue of $50 million or less, of which only 29 percent have a succession plan in place.

Employer best practices recommended in the report include prioritizing the development of succession plans to safeguard against skill gaps when experienced employees retire and aid in employee retention.

Communication to employees about succession plans underscores for them that the company is investing in their career advancement.

Employment Changes Since 2005

Results of the study show that the most-common occupations in the supply chain sector are managerial, followed by tactical and then operational. This represents a dramatic shift from 2005, when operational positions were most common. This change is not unexpected; authors of the 2005 study anticipated the rapid expansion of managerial positions based on the supply chain increasing in importance as a business function and supply chain operations becoming more strategic and complex as organizations attempt to manage the entire supply chain, meet increasing customer demands and manage cost pressures.

A considerable decline is evident in managerial positions in the warehousing, transportation and inventory/material-control sub-functions, while there has been an increase in knowledge-based and customer-centric management positions. The number of operational positions has declined dramatically over recent years, due in part to the increased use of contractors for this type of work.

Third-party logistics providers (3PLs) continue to play a significant role in the functioning of the supply chain. However, the specific type of work outsourced to 3PLs appears to have changed somewhat since 2005.

While results of the 2005 study showed that customer service was generally completed in house, the 2012 study suggests that customer service is being outsourced to a greater extent. While transportation was more commonly outsourced than warehousing in 2005, the reverse is true in 2012.

Related Editorial:

What Your Work Is Worth

Grow Business by Developing Talent

Technology does not correct stupid

Are You So Good at Your Job that Your Boss Will Be Upset If You Leave?

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