There’s a term that started with meteorologists: “the perfect storm.” This concept has spread to the rest of us, meaning a situation in which conditions are right for a disaster to happen. A workforce vacuum, return of manufacturing to American soil, the rise of e-commerce, and a perception problem that haunts supply chain organizations are coming together to create a perfect storm for the supply chain community. Here’s a look at the elements of this perfect storm, and some insight into how companies may prepare themselves to weather it.
1. The workforce vacuum. It’s no secret that baby boomers in America are beginning to wind down their careers. And this isn’t just an exodus of numbers; it’s an exodus of skills and knowledge. The next big generation to enter the workforce, millennials, are coming in now. These younger workers have become accustomed to a gig economy, in which they work more than one job, both to make ends meet, and to find fulfillment in their lives. Gig economy mentality proves challenging for employers in the manufacturing and warehouse sectors who will invest time and money to train employees for whom the jobs may not be the primary source of income. In short, the employees may be less invested than the employer.
Added to this general shortage is the shortage of truck drivers. Estimates range from 40,000 to upwards of 10,000 drivers needed to fill the gap as older drivers retire and companies struggle to recruit and train new drivers to replace them.
2. The Manufacturing Renaissance. The US is on the cusp of a manufacturing renaissance, or “reshoring.” Indeed, we’ve been resurging for a while now. As a nation, we’ve added over 900,000 manufacturing jobs since 2010. With a new regime promising to bring jobs back to America and to protect the interests of American manufacturers, hopes are high. And this all sounds like a good thing if we are prepared to meet the challenges of the added burden to our workforce, our consumers, our systems, and our infrastructure.
3. E-commerce The new economy requires more direct shipping to consumers, which is less efficient. Products that used to ship 30 to a carton, from warehouse to store, to be picked up by customers, are now shipping directly to them. This requires many more trucks to deliver the same number of goods (and we’ve already talked about the driver shortage.) Companies are straining to plan routes efficiently, keep their customers happy, and deliver profits to owners and shareholders.
4. The perception of supply chain Let’s face it, supply chain management has a perception problem. People think of it as unskilled, dirty, and dare we say, unsexy? There’s just no “cool factor” attached to it. Millennials and the Generation Z, who come just after them, are looking for jobs in exciting fields, like game development and entertainment or they want to make the world a better place. GE has caught on to the need to attract millennials They are running commercials featuring a young guy talking about how his work at GE is going to change the world. The supply chain industry isn’t just failing to attract young people; it is also failing to attract women. That can be a fatal error in today’s world.
The perfect storm that is brewing isn’t just a people problem. It’s a problem with people, operations, ways of doing business, with technology and automation. You need to be sure your business is going to be ready to take on the challenge, to weather the storm.
So. How do you make sure you are ready?
Rebrand. Consider starting as young as pre-school, go far beyond the ‘cheesy’ coloring book. Partner with the school systems and help support STEM curriculum. Invest in our future by thinking long-term!
Educate on the career possibilities. Most people have no idea what supply chain is, and mostly do not grow up wanting a job in supply chain. But, I can tell you the opportunities are exciting and endless. Spread the word!
Keep your employees by reducing turnover. Go out of your way to ‘Wow’ them with benefits and pay where they don’t want to leave!
Invest in Training. Help enable your staff to succeed. Don’t set them up for failure.
Redesign Operations. Work re-allocation of work can provide great savings dollars, people, and time. An example is by shifting workload to vendors.
Macro Optimization. Redefine supply CHAIN.
Micro Optimization. Process Improvement savings add up.
Eliminate unnecessary handling. Forget the excess packaging and save on handling and transportation.
Use Technology, and advance in technology. Technology is a powerful tool when used correctly. Technology can help you stay competitive; reduce your costs; optimize processing, and provide valuable data. If you don’t keep up with your competitors, the ‘Perfect Storm’ could ultimately destroy your business.
Robotics is another technology tool. Your need for technology, automation, and robotic systems will be a necessity to survive this quickly advancing ‘Perfect Store’.
If you are looking for help to survive this ‘Perfect Storm’, contact Beacon Grace, LLC to schedule an appointment.