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Will the lack of skilled people derail retail’s digital supply chain transformation?
A new study finds that more companies than ever are engaged in efforts to digitally transform their supply chains. It also finds that many do not have enough of the right people on staff to achieve that goal at a time when external factors such as supply chain disruptions and inflation are complicating the planning process.
Ninety-three percent of supply chain professionals surveyed by ToolsGroup and the Council of Supply Chain Management Professionals (CSCMP) said their companies are actively engaged in digitally transforming their operations.
“The past two years have put a spotlight on the need for digitizing supply chain planning, and fortunately, more companies than ever are responding by stepping up efforts to transform their operations,” Caroline Proctor, chief marketing officer, ToolsGroup, said in a statement. “The percentage of companies that are not pursuing a digital transformation strategy at all is, at seven percent, the lowest we have measured so far. Our findings reveal increasing investments in software, automation and people.”
Fifty-three percent of respondents said that having people with the necessary skills was the biggest obstacle they currently face in making the transition. Recruitment is on the top of the list of many companies, but labor shortages in key disciplines remains a significant challenge.
“As supply chain challenges become more frequent and intense, company leaders are increasingly focused on implementing solutions that can help them better manage risk, bypass skills shortage and become more resilient,” said Mark Baxa, CSCMP president and CEO.
Half of the respondents said a focus on people, process, technology and security are key to their digital transformation efforts. Forty-five percent said change management and effective communication are necessary for success. Forty-three percent point to the need for leadership-driven goals.
The more than 300 supply chain pros participating in the study reported that they started off 2022 with a positive outlook but that external factors have made supply chain planning more challenging. Twenty-five percent point to supply chain delays as a complicating factor. Twenty-four percent said surging inflation and 19 percent reported escalating fulfillment costs.
Internal concerns, including shorter product life cycles and more production options, were not top of mind for many who find themselves having to respond daily to external challenges.
Discussion Questions
DISCUSSION QUESTIONS: Has the lack of skilled people combined with supply chain disruptions, inflation and other external challenges made the logistics planning process significantly more complicated than before? Are there ways that companies can effectively pursue their digital transformation efforts despite the internal and external challenges that they currently face?
Poll
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The lack of skilled talent is, at worst, temporary for the next five years. The labor market may change a light to yellow but it will not derail the transformation.
There’s no doubt that technology could significantly make the lives of truckers, in particular, easier — since an approximation of when a load will be ready cuts down on unpaid time sitting and waiting.
You know, as Nike has famously reminded us — “Just Do It.” There will always be something in the way of improving and implementing supply chain technologies (which I think is a better term than digital transformation, since we still need real people) but the windfall of profits logistics providers have reaped, coupled with real software maturity in supply chain would make a HUGE difference.
Make the right investments: in people, processes and technology, and a ton of uncertainty will fade into the past.
Most challenges with any transformation and rethinking ways of working comes down to seasoned staff not wanting to change. It can be daunting to think that your role will change as your organization enables new technology or processes because it could mean job loss. Empowering existing staff and bringing on new and diverse teams will help implement a successful transformation.
Staff shortages is a challenge that is impacting nearly all businesses across all industries. Many companies are turning to innovative technology like IoT to improve inventory tracking throughout the supply chain and robotics in warehouses to automate routine tasks to help alleviate staff shortages and improve supply chain efficiency.
There are two separate issues at play with the manpower requirements for digitizing the supply chain. The most visible issue is the availability of skilled people. There is a pervasive belief that technology advances mean lesser talented employees can perform more complicated tasks – particularly when the conversation turns to AI. The reality is that technology is a force multiplier, but it requires a higher level employee.
The second issue is that many companies are looking for employees already trained in these technologies. They no longer consider training employees in the technology to be their responsibility. With the rapid proliferation and evolution of tech, companies really need to re-think the training component as a cost of doing business.
The rate of disruption and digital acceleration we have experienced over the past several years has required retailers and consumer products companies to fast track their supply chain transformation initiatives. The technology solutions enable digital supply chain transformation, re-engineered processes, and enhanced digital and customer-first operating models.
However the most critical element of any digital supply chain transformation is the change management and the criticality of enhancing the organizational skill levels to keep up with the accelerated pace of innovation. Technology and processes are the enablers. However the adoption of any transformation is entirely dependent on the organizational readiness, training, expertise, and commitment to the change.
The digital supply chain transformation leaders are Target, Best Buy, Home Depot, Amazon, Kroger, and others. They have fully committed to investing in their team’s capabilities to enable, support, and drive the execution of the digital initiatives forward.
Yes, scarce talent exacerbates market pressures like supply chain delays, inflation and heightened consumer expectations. Logistics planning in 2022 is complex, as companies seek digital maturity while navigating economic risks and shifting habits.
Offering a competitive, flexible employment can attract and retain skilled talent. Companies can also fill gaps by outsourcing supply chain digitization projects to trusted experts.
As mentioned, digitally transforming the supply chain is imperative for several reasons: 1.) labor and workforce issues; 2.) rising costs; and 3.) crippling bottlenecks. Achieving this requires hefty investment, speed, and willingness to leap without complete information.
It may be advisable for organizations to look outside their own four walls for additional support and expertise (we’re definitely seeing this in other areas of retail operations from planogramming to data analytics, fixture coordination to retail training). Even for those companies that prefer a “made it here” mentality, time and resources are not in their favor and working with partner organizations may be the only means to an end.
Investing in technology can bridge the gap caused by these disruptions. Implementing transportation management systems, warehouse management systems and streamlining and simplifying processes are key to survival. In today’s world, retailers don’t just need visibility into processes, they should be able to change them on the fly. As noted in this article, the trifecta of people, process, and automation need to be aligned. The price of highly skilled software engineers is through the roof, so selecting the right automation tool(s) and connecting the right decision-makers within the retail organization might be the best approach for now.
This almost makes technology sound like the problem instead of what it actually is – the answer to many of these problems. By moving to modern technology, retailers can remove manual laborious tasks, improve their analytics capability and become significantly more efficient and capable of managing the vagaries of today’s complex supply chain. The skills shortage is more about priorities and how the retailer builds up the supply chain as a core of their business. Too often in the past it has been undervalued and seen as the poor relation of buying, merchandising and digital. Thus skilled smart people have chosen those careers rather than supply chain. If retailers really steer great candidates to the supply chain, they will see great rewards.
I would say this quote from Lora Cecere’s research Feb. 2022 describes the problem quite well:
“Unfortunately, excel spreadsheets drive 93% of supply chain decisions. The reason? The users trust the approach, and it is easier for the finance team. The problem? It is impossible to model the details of variability, constraints, and cross-functional trade-offs in a spreadsheet.”
So it’s a skills issue for certain given the complexities of operating a competitive supply chain in today’s world. To resolve this — and I say so as a vendor — any really meaningful decisions across supply chains will benefit from low or no code analytic software tools intended to pick up where spreadsheets run out of steam. The variety of systems, and internal and external data sources, to say nothing of the necessity to explore predictions and prescriptions where they create value, demands a more concerted — and exec-led effort — to upskill managers and analysts.