When the recession of 2007 hit the United States, it hit hard. It greatly impacted the middle class, bankrupt thousands of people, and it left the housing market in shambles. Seven years later, the aftershock of the recession could still be felt as the economy has not fully recovered yet. Because the effects were universal, thousands of people in numerous professions are still unemployed. There was almost no industry that was safe from the economic downturn, and the supply chain industry was hit just as hard. However, it appears that the repercussions will be felt much longer, for a talent drought looks to sweep the industry off its feet.
Growth and Stagnation
According to the U.S. Bureau of Labor Statistics, jobs in logistics are estimated to grow by 26 percent between 2010 and 2020, an average growth rate that is nearly twice as fast as 14 percent of all occupations. Even with the expected and current growth, companies are finding it difficult to retain good talent, as highlighted by the 19th annual third party logistics study conducted by . In the study, 100 executives of global companies across 11 industries were asked to give their feedback on the existing problem. Nearly half of the respondents were having trouble finding and retaining qualified employees. This is a serious issue for the logistics industry, and there are numerous trends that will further compound the talent drought issue such as a growing talent gap in the workforce, the constant shift of a logistician’s role, and the “free agency” mentality that is beginning to permeate throughout the industry.
A Growing Talent Gap
The U.S. Census estimates that in the year 2025, about 60 million Baby Boomers will retire from the workforce, and only 40 million new bodies will replace them. That statistic will inevitably shake up the logistics industry because of the amount of skilled workers that companies will be losing. The decline of the workforce is bound to hit every section of the supply chain. The talent gap will be most felt in the number middle managers and upper managers. As their numbers begin to decline, this will trigger a greater demand for them.
The next trend that will heighten the talent drought is the change of roles that supply chain professionals will undergo. A lack of talent in the future workforce is bad enough for the industry, but what will happen if the remaining workforce is incapable of handling their responsibilities? The global economy is seeing a quick shift toward a more knowledge-based and globalized economy, which will affect the supply chain profoundly. In fact, it is estimated that 75% of the jobs in supply chain will change by 2015. Furthermore, 60% of all new jobs in the 21st century will require skills that only 20% of the workforce today possesses. For supply chain as an industry, this means being an industry rich in hard analytical skills is no longer sufficient. Instead, broader business and leadership skills will be needed.
The “Free Agency” Mentality
The final trend of a waning supply chain workforce is the further development of a “free agency” mentality amongst logisticians. Because of the recession’s devastating effects, multiple logistics companies had to significantly trim workforces. Those who remained then had to adapt with the sudden loss and learn different skill sets in order to offset the layoffs. This created highly skilled employees who could potentially act as “free agents” and seek out companies who offered higher compensation. In order to stay competitive and retain that talent, companies will invariably raise their wages. The outcome then produces an unsustainable system that is compounded by the growing demand of talent.
The Talent Drought’s Ultimate Challenge
Certain trends are already starting to take place in the industry today. If they were all to suddenly come into play though, the effects would significantly damage the logistics industry. The effects would be felt across all supply chain functions, from top to bottom, and it will not be a catastrophe that will be short lived. Furthermore, organizations will struggle to search for the right talents to replenish the retirees’ roles while raising the skill sets of their existing workforce in order to thrive in an ever changing environment. With these struggles set in place, supply chains will then find it nearly impossible to groom high-potential talents into future supply chain leaders.