Transcript 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
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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
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#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/
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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
Quarterly March 2007
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Humans in the Supply Chain
A New World for Talent Management
OLD WORLD
• 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
NEW WORLD
• 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 shortterm 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
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Skilled and Semi-Skilled Labor
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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).
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Aging Workforce vs. Supply
• In 2000 there were 114 young males for 100 older males,
but by 2015 this will decline to 85
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Shortage of Trades
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•
"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.
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Is there a labor force to keep up
with the demand for projects?
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Responses and Labor Strategies
Advanced Labor Sourcing Strategies
Ad Hoc
80%
Defined
10%
Managed
5%
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Leveraged
3%
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Optimized
2%
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No well-defined process for labor management
No basis for reviewing and comparing actual versus plan.
Labor strategy based on lowest per hour cost as needed
Low price bid used to award any new business
Processes for forecasting labor requirements have been defined and documented
Metrics for measuring productivity improvements established
Service level agreements with key Production Labor Suppliers are established– including issues such as
fulfillment cycle time, quality etc.
Significant involvement of industrial engineering during planning and design phase of labor lines
Common measurement metrics for all business units are implemented to develop strategies for labor
resource allocation and planning
Definition of in-sourcing, out-sourcing or collaboration operations based on requirements analysis and
total cost of ownership
Metrics for Service agreements are defined, documented and tracked using piece rate improvements
and total delivered cost.
Early labor sourcing pilots drive continuous improvement and on-going database development.
Frequent informal meetings are held with industrial engineering to modify/upgrade labor requirements
Strategic partnerships with labor suppliers defined to synchronize planning and monitor service level
agreements in real time.
Suppliers are interactive in helping define service level agreements.
Standardized language, evaluation criteria, reporting formats and processes to normalize individual
managers’ different personality styles and forecasting outlook biases
Process embodies cross-functional linkage through group performance rewards, overlapping
responsibilities, integrated planning procedures and facility layout.
Demand and supply information from suppliers and customers is shared & used to synchronize
production labor sourcing requirements
Regularly review performance-to-forecast data to fine-tune resource allocation decisions and the
resource allocation system.
Continuous improvement driven measures on resource planning workload and HR characteristics.
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Production Labor Supplier is an established strategic partner.
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
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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
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Supply Chain Management
Talent
Filling the Pipeline
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National Science Board
Observations (2006)
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•
……“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.
1. The number of jobs in the U.S. economy that require science and
engineering training will grow;
2. The number of U.S. citizens prepared for those jobs will, at best, be level;
3. 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.
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The Tightest White Collar Markets
Fields
• Health workers
• Mechanical, electrical,
computer engineers
• Physicists, chemists
• Accountants and pilots
• Database administrators
and systems analysts
Percent of Workers Age 55 and Over
Construction
Mining
Wholesale and Retail Trade
Transportation & Utilities
Health
Government
0%
5%
10%
15%
20%
25%
Source: BLS, the Kiplinger Letter vol. 84, no. 45
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Results from a Recent Set of
Interviews
Capability to Deliver Value Through SCM….
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8
6
4
2
0
…..Depends on Human Resources Available to Engage!
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8
7
6
5
4
3
2
1
0
Competencies and Number of People to
Skills of People
Manage Relships
Systems
Culture and
Incentives
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Supply Management Salaries
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Experience is Valued…
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“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.
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“….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 crossfunctional assignments. They let them rise to the tops of
their silos – and retire.”
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IACCM Study (n = 80)
Thanks to Tim Cummins and Katherine Kawamoto from
IACCM for the survey posting and analysis.
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IACCM Survey on Succession
Planning
• What percentage of your staff will retire in the
next 5 years?
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Pareto Chart of Q.1 Staff Retire by Region
Region = Americas
100
40
Count
30
60
20
40
10
0
Q.1 Staff Retire
Count
Percent
Cum %
Percent
80
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10-25% Don’t know.
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32.6
28.3
32.6
60.9
< 10%
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17.4
78.3
25-50%
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15.2
93.5
> 50%
3
6.5
100.0
0
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Do you have a program in place for
succession planning in SCM?
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Is succession planning a topic of
discussion in your company?
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Approaches to Developing Talent
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Future Recruiting
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LOW
HIGH
Industry-Specific Knowledge and Competencies
Approaches to Developing Talent
High Potentials
BU Subject Experts Within SCM
Organization
(25%)
(40%)
General Business
Universities
(10%)
SCM-Focused
Universities
(25%)
LOW
HIGH
Supply Chain Competencies and Knowledge
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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.
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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?
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SCM Career Paths
Supply Chain
Operations
Leadership
Operations
SCM
Buying /
Planning
Sourcing /
Design
Managing
Teams
Leading
Groups
Source: “The Future of Supply Management: Organization and Talent, P. Carter and J. Carter,
SCM Review, November 2007.
Future
Careers
Divison, SBU
President
M&A Mgmt
Enterprise/
Bus Strategy
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Best Practices in Succession
Planning
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Monitoring Future Needs
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Talent Assessment
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Web-based systems to organize data that is accessible to all divisions.
Developmental Activities
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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
–
•
Identify pools sorted by division or business units
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
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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 crossfunctional assignments, diversity.
Source: “Choose Tomorrow’s Leaders Today, Robert M. Fulmer, PhD, Pepperdine University.
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17 July 2015