Supply Chain Managers: Mind the Gap!

As a recent graduate, I know how daunting job hunting can be. In the midst of financial crisis and rumors about inevitable cost cutting, it was hard to imagine a job market, where the demand for professionals exceeds the supply. However, this is not a fantasy – it is the reality in the supply chain management (SCM) job market. So what are the reasons for low supply and high demand for SCM talent?

Three possible answers can be identified: weak branding, skills gap, and demographic change.

1. SCM brand image

For a long time, SCM has been perceived as a mere coordination of physical goods from one point to the other, with the SCM professional’s daily activities composed of background tasks somewhere in a dusty warehouse and not much more. A significant part of graduates still have a similar impression of the job. However, SCM has evolved immensely and became a crucial part of any business. Modern-day SCM comprises of procurement expertise, knowledge of international trade and foreign market regulations, supplier management, IT skills, customer-relationship management and many other aspects. Modern SCM’s nature needs to be communicated to the fresh business school graduates. However, who is responsible for communicating this message?

Graduates are already being lured by shiny multinational companies and think that finance, marketing or consulting are the only professions there are. Supply chain professionals and academics should take the initiative and demonstrate how SCM has changed over the years. Due to advancements in the fields of logistics and SCM, we now take next day or even same day delivery for granted. Academics and professionals should show how exciting it is to improve the efficiency of the supply chain, and how essential an optimized supply chain is to any company or organization. Otherwise, the demand for supply chain professionals will continue to exceed the supply by a ratio of six to one.

2. Skills gap

Another important issue faced by companies looking for supply chain professionals is the skills gap. Due to the low popularity of the SCM profession, not many universities are offering focused degrees which would provide students with the necessary skill set. According to a survey conducted by Supply Chain Insights, the middle-management level has the greatest supply chain talent shortage. Software Advice, an online platform that helps people find the right software for their organization, decided to dig deeper and conducted on research on job listings for supply chain managers. They found the majority of companies require supply chain managers to have between 2 to 20 years of work experience:

However, employers are willing to substitute the work experience with an advanced degree, usually a Master of Business Administration (MBA). As the SCM subject has gained popularity only recently, companies which required a specific undergraduate’s degree seemed to be equally content with a SCM or Business degree:

Between 2008 and 2013, the percentage of universities offering SCM programs increased more than twofold, from 6% to 13%. The biggest and most famous universities in the US, e.g. Penn State University or NYU Stern School of Business, introduced MBA programs with a focus on SCM. Universities in Europe are moving in the same direction as well. For example, one of the largest German universities – Hochschule Fresenius University of Applied Sciences – now offers an Executive MBA program in Transport Strategy and Management. The program is organized in collaboration with The Robert Gordon University in the UK, and is designed to help transport and supply chain professionals gain necessary skills to operate at a strategic level. This program is a great example of a way to close the skills gap at the middle management level.

According to the research conducted by Software Advice, the supply chain manager should have both, ‘hard’ and ‘soft’ skills. About two-fifths of employers want candidates with advanced software skills:

As seen in the graph, 41% of the job listings stated that the candidate should be proficient in working with enterprise resource planning software. Having any professional certification in supply chain management was also seen as advantageous by 37% of employers. Alongside the ‘hard’ skills, the candidate should also have a strong set of ‘soft’ skills. For example, he or she should be an exceptionally good communicator and be able to effectively negotiate:

As seen from the research, the ‘hard’ analytical skills are not enough for a complex, global supply chain anymore. Now one also has to be a good communicator, a leader, be able to deal with suppliers and know where, when and how to best manage the procurement process.

3. Demographic change

The fact that the world population is aging is no secret. As a result, this inevitably has an effect on the available supply chain talent. It might not be so significant now, but it will definitely become a substantial problem in the near future. Currently, there are approximately 76 million ‘baby boomers’ in the US who are turning 65 at the rate of one every eight seconds. At such a pace, according to the US Census Bureau, more than 60 million ‘baby boomers’ are going to retire in 2025, but only 40 million new workers will enter the job market. Such drastic change will widen the talent gap even more, especially at mid-management and senior-management positions. For the supply chain industry, where the number of jobs is expected to grow by 22% in the next 7 years, and where it is predicted that about 270,000 jobs will be unfilled annually until at least 2018, such a vast demographic change will definitely hit where it hurts the most.

Closing Thoughts

In order to close the gap in the SCM job market, concentrating on only one of the aforementioned problems will not be enough. It is necessary to focus on multiple frontiers and implement a strategy to prevent the situation from deteriorating.

One option is to lure millennials to the SCM profession by showing how they can make a difference by doing things that matter. This means, SCM professionals and academics should work collectively on rebranding the SCM. Moreover, clearly indicating the industry’s requirement to the academic world could help ensure there is no skills gap in the future. Even though the process might take 3 to 5 years, it would help avoid greater problems on the SCM job market in the future.

What are your thoughts on reducing the supply chain talent gap?