Education Insights: The talent supply chain

The supply chain industry is facing a talent crisis. While there is no quick-and-easy answer, we can take some practical steps to mitigate the impact in our own organizations. It requires us to look at talent as a supply chain. This idea makes it easier to see opportunities to hire people at different points in their academic development, and to help them advance their careers while growing their knowledge and capabilities. In the end, this approach will make it easier for companies to find and retain talent, improve the process for workers to start and advance in their careers, and lower the cost (and the risks) of education.

Back in the fall of 2010, the MIT Center for Transportation and Logistics published a white paper titled “Are You Prepared for the Supply Chain Talent Crisis?” The gist of the study was that demand for supply chain professionals was going to overwhelm the supply of qualified people. On the demand side, the number of jobs was increasing and the jobs were becoming more complex. On the supply side, Baby Boomers were retiring and the industry was not doing a good job of recruiting and developing new talent. These big trends were setting up a perfect storm for a supply chain talent crisis.

When you’re already in the middle of one crisis, it’s hard to think strategically about preparing for the next one. When the MIT white paper was published, the global economy was still in recession and the U.S. unemployment rate was 9.5%. So it’s easy to understand why the talent crisis didn’t immediately jump to the top of every leader’s priority list. Today, however, the inability to fill critical positions with qualified employees comes up every time we hear supply chain professionals talking about what keeps them up at night.

We don’t really have much control over the demand side of this equation; older workers are going to leave their current jobs, and the number of supply chain jobs is going to grow. So it makes sense to focus on the supply side and try to understand why we can’t find enough people to fill the jobs. Most of the conversations that I’m hearing boil down to some combination of three issues:

• The U.S. public education system: Schools are not preparing students with the hard and the soft skills they need to be successful in 2016 and beyond.

• The “university for all” mentality: We have convinced ourselves that everyone should get a four-year university degree before entering the workforce, even though there are plenty of jobs that don’t require people to use calculus, chemistry or creative writing.

• The cost of higher education: If the goal of education is to prepare someone for a successful career, how do you justify an investment of several times their expected annual salary for that preparation?

Let’s start with the public education system. We generally believe that every child is entitled to a free, quality education through the 12th grade. Between the White House, the Congress, state boards of education and the 13,000+ local school boards across the United States, a huge number of policies and programs are designed to educate students and validate their mastery of basic skills. Teachers today devote a huge amount of energy to complying with standards and preparing students for tests. Meanwhile, high school guidance counselors often serve between 250 and 500 students each. This situation leaves little room for innovation and creativity in the schools. So, who’s job is it to teach young people about supply chains, to help them develop soft skills and to provide opportunities for them to explore the range of career opportunities that our industry can offer?

The rural town of Patterson, near the top of California’s Central Valley, has found an answer. Patterson is one of a handful of communities around the country where the local school district has established a logistics and supply chain program at the high school level. Career and technical education programs like the one in Patterson are similar to the “shop” classes we took when I was in school, where we’d get hands-on experience with power tools and safety. Today, Patterson’s students are learning about receiving, inventory, fulfillment processes and all of the technologies that support them. Imagine a high school graduate who can operate a lift truck, use a warehouse management system, and tender a load to a carrier. And, imagine that in the process of learning these practical skills they had also developed soft skills such as teamwork and a dependable work ethic.

A big part of the success of this program has been support from businesses in the area. Patterson is home to distribution centers for Amazon, CVS Health, Restoration Hardware, Grainger and others. Leaders from these companies actively support the high school program by serving on advisory boards, inviting students and teachers in for tours and internships, and even making donations of cash and equipment. Several of these facilities now guarantee that they will hire at least 10 graduates from the Patterson high school program every year.

The partnership with industry has provided a great boost for the program because students (and their parents) see the tangible benefit of taking the supply chain classes. But it’s good for the businesses, too, because it helps to ensure a sustainable pipeline of qualified talent flowing into their facilities. Kids who graduate from the program are absolutely ready to step into jobs making better than minimum wage, but they are also ready to continue their education at a technical school or university with a clearer focus on their personal strengths and career interests.

That brings us to the next issue, the “university for all” mentality. A disconnect seems to exist between the general principle of encouraging people to learn, and the specific knowledge required to perform a job. A study from the Georgetown University Center on Education and the Workforce estimates that by 2020 there will be a roughly equal distribution of jobs across three categories: those requiring at least a bachelor’s degree, those requiring some education beyond high school, and those not requiring education beyond high school.

Many employers view recruiting as a transaction and focus on getting the best candidate to fill the job in the shortest time possible. An alternative approach is to think about talent as a supply chain, and look at jobs as a series of stepping stones in a career path or matrix. With this alternative approach, there can be opportunities for new employees to join the company at various points in their education, and still develop and advance. This approach also provides the opportunity to balance the benefits of advancing an internal candidate against those of bringing a new person into the company. In the long run, a holistic view of the talent supply chain will make it easier for the company to attract and retain talent, and make it easier for candidates to jump into a supply chain career. A source of income makes it easier for these professionals to pursue additional education, and work experience prepares them for the responsibilities of a better paying job.

That brings us to the cost of higher education. The U.S. Department of Education estimates the average cost to attend a public four-year university is more than $17,000 per year, and the cost to attend a private university exceeds $35,000. In spite of the cost—or perhaps because of the cost—less than 60% of students are able to graduate in four years. A few graduate late, or take a break and continue their education later.

Meanwhile, a growing percentage of the knowledge a tuition provides is now available on the Internet for free. Need to learn about databases? You can take an introduction to databases class from Stanford University. For free. And then you can take a class in contract law from Harvard. Top it off with a mini-masters in supply chain management from MIT.

Through massively open online courses (MOOCs) the world’s leading universities are competing to spread knowledge far beyond their campuses. Students from around the world are logging on to MOOCs like edX, Coursera, Khan Academy, and other sites like YouTube and Lynda.com, to learn from the world’s leading authorities while paying a tiny fraction of what it would cost to take the same classes through a traditional university. However, human resources policies and practices are now challenged to recognize the value of this kind of education and validate that prospective employees have actually learned the material.

The supply chain industry is in the middle of a talent crisis. It really shouldn’t be a surprise because it’s a simple imbalance between supply and demand. We have been so focused on the rapid changes to supply chain processes and technologies that we have been slow to respond to changes in the supply chain workforce. Now we are scrambling to turn things around and restore the balance before it is too late.

There is a Chinese proverb that says, “the best time to plant a tree is 20 years ago. The second best time is right now.” Each of us needs to be looking at ourselves, and our organizations, and making the changes today to ensure we’ll have the talent we need tomorrow.