Got labor? How supply chain companies are recruiting talent during a labor crunch

When Tisha Danehl was asked to participate on a panel that also included two vice presidents of supply chain for large retail stores at a recent Retail Industry Leaders Association (RILA) event, she had an inkling that the job market would be a focus point. What this vice president for Chicago-based recruiting firm Ajilon didn’t realize was just how much emphasis would be on this pain point.

“The [moderator] asked the audience: ‘What’s keeping you up at night? What is your biggest supply chain concern?’” Danehl recounts, “and someone wrote TALENT on the board.” Three or four other pain points were eventually added to the board, but talent—or a lack thereof—remained the focal point for that RILA session.

“In the supply chain and logistics sector, finding and retaining talent is absolutely becoming more top-of-mind for companies,” Danehl says. “This is the first year that I’ve been asked to speak on multiple panels on this topic. Companies are really starting to feel like they have to be very intentional about how they both attract and retain talent.”

It’s no wonder, really. The most recent jobs report paints a picture of a country where jobs are plentiful and workers are scarce. The numbers tell the tale: According to the most recent jobs report from the Bureau of Labor Statistics, the unemployment rate declined to 3.6% in April—the lowest rate since December 1969.

What the BLS numbers don’t reveal, however, is the more specific unemployment rate for management, senior-level and C-suite executives. A company that is looking for a new vice president of supply chain or a warehouse manager, for example, has a much smaller pool of candidates.

“If someone has a four-year college degree or more, from what I’m seeing the real unemployment rate is more like 2%,” Danehl points out, noting that job experience can also drive those percentages down. “If your criteria for a new hire is three-plus years of experience, then you’re definitely getting into the 2% realm versus 3.6%.”

Getting a piece of the pie

Looking at Logistics Management’s 2019 Salary Survey, companies are willing to pay for supply chain and logistics talent. In fact, salaries for these professionals have been creeping upward year-over-year. Right now, the average salary for logistics and supply chain professionals is $117,400 (up from $114,250 in 2018). According to the survey, 62% of those professionals say that their salaries have increased with logistics managers/directors; operations managers/directors; VPs/GMs; and corporate/divisional managers earning the biggest share of the salary pie.

Thomas W. Derry, CEO at the Institute for Supply Management (ISM) in Tempe, Ariz., says most companies recognize that they’re competing on the quality of their supply networks as much as anything else. Because of this, he says packages for C-suite level executives in the industry are in the “multiple seven-figure salary” range. “If you’re an accomplished chief procurement officer (CPO) or head of supply chain with the right skills, you can expect to make more than $1 million annually,” says Derry, “which is a pretty astonishing number.”

Peeling back the layers on those salary figures, Derry says they correlate directly with what’s going on in the manufacturing, distribution and retail environment right now—namely, the need to deliver smaller orders faster than ever. And with Amazon announcing in April that it would drop its two-day Prime shipping promise down to one day, that bar continues to rise for everyone else.

“If you’re operating in certain industries that have very thin margins (e.g., contract manufacturing, distribution and some retail), how you manage your supply chain is crucial to your organization’s financial health,” says Derry, who knows of one company with $25 billion in annual revenues, but $28 billion in parts spend. “Because of this, C-suite executives can command very high compensation packages.”

Where to find great workers

According to LM’s 2019 Salary Survey, when it comes to employer selection, 29% of respondents said that they got their current jobs via word of mouth or personal networking. Others were promoted internally (21%); used an online job search (15%); or worked with a headhunter or search firm (10%). Company loyalty still appears to be holding strong in the supply chain sector, where most survey respondents (43%) have been with their current employers for more than 10 years (17% have worked for their current employers for six years to 10 years and 18% have been in place for three years to five years).

Right now, 42% of survey participants say that they’re “always open to better opportunities,” while 33% said that they’re happy in their current positions. Another 16% are “passively looking” for new career opportunities. When asked if they would recommend the logistics/supply management field to a son, daughter or friend, 82% said “yes.” These are all positive points for an industry that isn’t always easy for newcomers to understand, and that hasn’t historically been advocated for (or even existed) at the college level.

“The development of individuals at an academic level is difficult because there’s such high demand for supply chain professionals, and because schools haven’t really changed their curriculums much,” says Abe Eshkenazi, CEO at the Association for Supply Chain Management (ASCM) in Chicago. As a result, he says employers who hire recent college grads—and even those candidates who hold supply chain degrees—must retrain those new hires to get them up to speed with industry realities.

“We work with academic institutions and we tell them what employers tell us in terms of their labor wants and needs,” says Eshkenazi, “but there remains a gap between what companies are looking for and what the academic institutions are providing.”

Derry says he’s seeing a number of post-graduate opportunities to earn credentials in some of the areas that employers are emphasizing, including data management and analytics. For example, someone holding a bachelor’s degree might add an MS in data analytics to his or her education. Other students are opting for double majors in order to cover more bases (a data analysis and supply chain/logistics degree).

“Right now, a data analytics thesis is a lot more important than it used to be,” says Derry, who sees procurement as one area where data analytics is increasingly being applied to functions like sales and operations planning (S&OP) and forecasting. “Procurement used to just lay out the forecasts and align its requirements to that forecast,” he explains. “Now, it’s actually influencing what those forecasts looks like—a reality that has made S&OP a required skillset.”

Collaborate, communicate, lead

Not willing to stand by while their competitors scoop up all of the viable job candidates, companies are getting more involved in identifying, hiring and cultivating high-level supply chain talent across multiple job roles. Whether that means training a current warehouse supervisor on how to manage the transportation component; creating a succession plan for future vice presidents of supply chain; or cross-training executives on other aspects of supply chain management, the focus is often on developing well-rounded professionals who can tackle the rigors of the modern-day, global supply chain.

“Companies are both looking for and developing more broad-based individuals who can communicate and manage,” says Eshkenazi, “and who don’t just sit in a room crunching out reports.” Those managers and executives must not only understand the business, but must also lend their expertise and contributions across the enterprise. “They’re looking for individuals who have both technical and advanced management skills,” he says, “and who can collaborate, communicate and lead.”

In a job market where just 2% of available candidates have the years of experience, training, and/or educational background to fulfill these needs, companies have to do more. That means better promotion of supply chain and logistics as a viable, long-term career for a diverse set of candidates. It also means reshaping the public perception of what it means to manage and lead in the supply chain environment—and letting candidates know that these are quality opportunities with room for steady growth.

“As an industry, we need to change policies in order to attract greater diversity within supply chain and logistics,” says Eshkenazi. “It’s not only about gender or race, but also about diversity of thought. A whole host of opportunities exist for individuals that we, as an industry, are not really taking advantage of.”

Cultivating the NextGen leader

Danehl sees succession planning and the nurturing of future leaders as two important exercises that all companies should start to implement right now. She also points to job rotation as a viable strategy, noting that one company has a 25-person supply chain/logistics department where employees work in a position for one year to two years and then “rotate” to another opportunity. This not only helps expand a company’s internal candidate pool, but it also keeps employees from being unchallenged in their roles.

To companies that are struggling to figure out a formula for finding, hiring and retaining supply chain and logistics managers and executives, Danehl suggests working with educational institutions to identify and help cultivate good candidates.

“When I talk to executive directors of supply chain programs, not only is attendance increasing, but their placement ratio is 90%,” says Danehl, who knows one company that starts working with students during their sophomore year in a supply chain program. “It makes an intentional program of interacting with its local supply chain talent. That’s one great way to start the conversation early.”