The average consumer didn’t really have to think about supply chains until the pandemic forced them to. Within days and weeks, they were faced with shortages in everything from toilet paper and chicken to laptops and lumber. Unexpectedly, the supply chain became a regular topic of conversation over the dinner table.
And for good reason. The retail supply chain, in particular, felt the impact of the pandemic more keenly than many other industries. While COVID-19 jumpstarted the public supply chain conversation, it was far from the only disruptor to production and distribution. Geopolitical circumstances, the fuel crisis, raw materials shortages, evolving customer expectations, and unprecedented inflation are just a few of the trends continuing to generate obstacles at every tier. The result is a ripple effect on retailers’ efficiency and profitability.
However, at the core of the supply chain challenge is a talent problem. Like the goods and products they support, the workers and leaders who manage the retail supply chain are in high demand and short supply. As the industry continues to evolve in order to gain resiliency against ongoing challenges, the right talent is critical—but where will we find them?
Leading the Future of Retail Supply Chain
The best supply chain leaders have always sought to optimize processes and capabilities, but few could have imagined a disruptive force as large as the pandemic. During a period of just 12 months, online retail sales experienced four years’ worth of growth. At the same time, retailers were grappling with severe supply chain disruptions that left most of them struggling to keep up with demand.
This experience has shifted the conversation from optimization of the supply chain to resiliency and agility. Where the sector once operated behind the scenes, company leadership is now recognizing how critical the supply chain is, putting it center stage in the strategic plan for success and growth. But this shifted mindset doesn’t change the rocky landscape of the supply chain.
For retailers who have felt the exodus from brick and mortar to ecommerce, the challenges are manifold. Warehouse capacity is one example. With less demand for in-store products, there’s a greater need for warehouse space and freight. Some innovative leaders are turning to a hub-and-spoke model, where central stores with larger stock support smaller stores in an effort to minimize warehouse need, freight, and time-to-ship.
Additionally, customers are now ordering from a number of different platforms and are faced with a wider variety of in-store, pick-up, or delivery options. As a result, order management, inventory management, and forecasting are another host of challenges for leaders. All these factors must now account for multichannel operations and more complex retail ecosystems. This is one reason why McKinsey reports that 52% of consumer and retail companies plan to revise their inventory management strategy over the next three years.
These supply chain issues might be front and center, but there are other trends that leaders must take into consideration. Re-commerce, for instance, is becoming a more popular retail strategy and requires a creative approach to re-absorbing products into the supply chain. Furthermore, sustainability and social responsibility are hot topics among consumers, whose brand loyalty will swing to those retailers who align best with these values.
Last, but certainly not least, is digital transformation in the supply chain. The sector needs leaders who understand the power of technology to become more agile, gain greater visibility into the end-to-end supply chain, and pivot in the face of future disruption.
Ulta is an excellent example of a retail company that has moved the supply chain into the spotlight. Their three interconnected pillars of focus include their supply network, innovation and technology, and capabilities and processes—and they understand that any development in one pillar can impact them all and subsequently trickle down to the customer. Chief Supply Chain Officer Aimee Bayer-Thomas at Ulta Beauty says this: “Simply put, if you’re not winning in supply chain, you’re not winning at all.”
Understanding the Retail Supply Chain Talent Shortage
A staffing shortage has hit every industry in the wake of the pandemic, and the supply chain is feeling it acutely. It was not immune to the wave of the Great Resignation. Of the 47.4 million people who quit their jobs in 2021, 20% came from positions in transportation, logistics, retail, and wholesale—all critical pieces of the supply chain. Some of those people left the industry altogether. Others left for companies that promised more money and benefits, better career paths and skills development, or greater meaning and purpose.
But they aren’t the only ones on the move. The continuing wave of Baby Boomer retirements is still a top concern for the supply chain sector. According to Pew Research, over half of all adults aged 55 and above have retired from the U.S. workforce; two thirds of those 65 and above are retired. Supply chain leaders, subject matter experts, and even supply chain faculty at educational institutions have traditionally been roles held by the Baby Boomer generation, and many companies aren’t yet prepared with adequate succession plans. Organizations are left scrambling to recruit professionals from a highly competitive talent pool.
All this comes in the face of continued growth in the sector, with the BLS projecting a 28% increase in job openings through 2031. Additionally, it’s important to note that as the supply chain evolves in its sophistication, there are many newly created roles that are adding to the talent shortage. Automation in the supply chain, for example, doesn’t actually eliminate jobs so much as it changes what type of roles are needed. As technology becomes more integrated with the supply chain, there comes a greater need for technology talent to lead, strategize, and maintain those tools and applications. Unfortunately, technology professionals are even harder to find, with extremely low unemployment rates and high demand.
For retailers, these statistics come on top of the already harrowing numbers of open positions at the frontline. Stores across the nation are hurting, under-staffed and facing high competition over a limited talent pool. Their compensation, benefits, and perks continue to fall short in a world where candidates have their pick of other highly attractive opportunities. The convergence of this shortage with the challenges in the retail supply chain inevitably impacts customers and leaves companies questioning how they can get ahead.
Overcoming the Talent Shortage in the Retail Supply Chain
Attracting and retaining talent in the retail supply chain requires an intimate understanding of these professionals’ motivations, goals, and desires in their careers.
The good news is that the Association for Supply Chain Management (ASCM) reports high job satisfaction across the industry, despite the ongoing disruption. The majority of surveyed supply chain professionals report a good company culture and are likely to recommend a supply chain career to others. Of those who did quit their supply chain jobs, 40% were looking for a higher salary, 20% a better work-life balance, and 20% more flexible work arrangements. These are similar reports to other industries—people simply want to be paid well with appropriate accommodation of their life outside of work.
So, if the career goals of supply chain professionals look very similar to workers in every industry, how do companies in the sector seek to navigate their own unique talent shortage? In a report analyzing the alignment of supply chain and human resources strategy, the Ferrari Consulting and Research Group provides a number of recommendations, including training and reskilling programs, comprehensive DEI efforts, more sophisticated career pathing, and an integrated technology strategy.
That last point in particular is paramount. As mentioned above, technology is transforming the supply chain, streamlining processes and giving way to greater visibility across multi-tier operations. Digital innovation can help attract new talent, but only when IT solutions are strategically integrated across the enterprise. As Bayer-Thomas of Ulta points out, “today, companies are either disrupting or they’re being disrupted.” When it comes to digital disruption, the supply chain must be aware of the implications across both operations and people, or risk losing talent in the process.
At the end of the day, overcoming the retail supply chain talent shortage is going to depend upon building and nurturing a culture that values its employees. Supply chain has taken center stage, but its dependence on the talent who serve this space is what should inform companies’ vision and objectives for the future.
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