How to overcome the impact of the supply chain talent shortage

How to overcome the impact of the supply chain talent shortage

The supply chain is one of the largest and most important sectors for businesses in a range of industries. Companies rely on those employed in this sector to create and deliver their products to consumers. However, a 2024 study found more than three-quarters of supply chain and logistics leaders are experiencing notable talent shortages. Nearly two-fifths say the talent shortage is high to extreme. With no end to the talent shortage in sight, it's important to understand why there's a shortage, how it impacts businesses, and how your company's HR team can overcome it.

Reasons for the supply chain talent shortage

Several factors have contributed to the supply chain talent shortage. Young people aren't raised to consider a career in the supply chain as an attractive option. Career counselors rarely promote the industry, and few colleges and universities teach topics relevant to this career path, such as software as a service and supply chain management. As supply chain workers age out of the industry, businesses are struggling to find new hires to replace them.

The supply chain industry is also evolving to become more tech-focused. Experienced supply chain employees find they lack these skills but have few training options to pick them up. Generation Z is typically more tech-savvy, but as they're not gravitating toward this sector, businesses don't benefit from their aptitude.

At the top end of the sector, there are substantial barriers preventing people from progressing. Businesses expect their supply chain leaders to have a wide range of skills, including project management, business process optimization, and vendor management. It's becoming increasingly difficult for employers to find candidates that meet their stringent requirements.

Impacts of the supply chain talent shortage

The shortage of supply chain talent impacts businesses' ability to manufacture products and get them to their customers. The shortage can impact all processes in the supply chain. There may be shipping delays caused by driver shortages and delays in loading and unloading deliveries at ports. Businesses may struggle to fulfill their customers' orders on time, or even at all, if there are inventory stock-outs. These issues can undermine customer loyalty and encourage people to seek other options from competitor brands. If they do, a business' profits can take a hit.

Supply chain issues have a knock-on effect for retailers and distributors who stock a business' products. This can damage business partnerships, as third-party sellers lose confidence in the company's ability to deliver for their customers. When businesses struggle to manufacture and deliver their products, it can cause the economy to deflate or slow down.

Strategies for combatting the supply chain talent shortage

The supply chain talent shortage can make hiring the right people in this sector more challenging. However, these strategies can help you overcome this challenge and find the best supply chain employees for your vacant roles.

Harness technology

Cutting-edge technologies such as artificial intelligence and analytical solutions can ease some of the burden on supply chain workers. Some technologies reduce the reliance on supply chain employees, while others allow people to work more efficiently.

While technology can be a powerful tool for addressing the supply chain talent shortage, it's not a complete solution. Businesses need people with tech skills to implement, utilize, and maintain supply chain technology. Without people who understand the supply chain sector, technology can become superseded and less effective over time. Supply chain technology is most effective when it has people to drive it forward and ensure it continues delivering results.

Be more flexible

When trying to fill your supply chain roles, create a list of desirable skills and experiences rather than prescriptive job descriptions. Being flexible about your requirements can help you find people who can grow into your supply chain positions. If people are willing to receive training in the skills they're lacking, they can become valuable, experienced members of your supply chain over time.

"Supply chain technology is most effective when it has people to drive it forward and ensure it continues delivering results."

Enhance the onboarding process

A strong onboarding process sets your new supply chain hires up for success and improves your chances of retaining them. Evaluate your onboarding process and look for ways you can improve it to help your new employees better understand their roles and acclimate to their teams. Supply chain employees who've recently been onboarded could offer feedback on the strengths and weaknesses of the existing process.

Invest in supply chain training

Supply chain training can give new hires and more experienced people within your organization the skills to succeed in a supply chain role. It's good practice to identify the skills you're looking for and offer training programs with components covering those in-demand skills. Cross-training can prepare participants for a variety of supply chain positions. Partner with external training providers experienced in teaching the supply chain skills your business needs.

Implement an internship program

An internship program can bring new, motivated people into your business to improve the productivity of your supply chain network. You might offer positions to the most promising interns at the end of the program. Internship programs can also improve your business' reputation in the supply chain sector and help it attract top talent.

Focus on employee retention

Rather than worrying about filling talent gaps, shift your focus to retaining the employees you have within the supply chain. Employee retention helps your business operate seamlessly and reduces recruitment costs. As your employees gain more experience within the company and their team, they're more likely to innovate and improve the business' operations.

Retaining supply chain employees can be challenging during a talent shortage, as the market for their skills is more competitive. Long hours, which may be stressful or physically tiring, can even tempt people to leave the industry altogether.

However, employing retention strategies can make staying in your business more appealing than pursuing other opportunities. Training and development opportunities can help employees grow professionally. They can also increase company loyalty by reminding employees of the business' faith in their potential. Competitive salaries, benefit packages, rewards programs, and job perks such as flexible working hours can also encourage people to stay with the business.

Promote supply chain roles as a good option for all

Several reports have noted that historically, the supply chain industry has found attracting diverse talent challenging. While there have been recent gains, women and minority groups remain underrepresented in the sector. For example, in 2023, women made up 41% of the supply chain workforce, compared to 46.5% of the nation's total workforce. However, just 31% held frontline roles.

Diversity brings new perspectives and innovations, which can improve the culture and give a business an edge when attracting new talent. This is crucial during talent shortages when businesses need to stand out from their rivals to obtain top talent. It can also improve employee retention, as diverse voices help ensure that the workplace accommodates the needs of all employees.

The supply chain talent shortage has made attracting and retaining the right people for your supply chain more challenging. However, with the right strategies in place, you can continue to have a strong supply chain that reliably produces and delivers products to your customers.

Related reading: addressing talent shortages

Labor shortages making life tough? Try these strategies for attracting, recruiting, and hiring talent.

Experienced workers are never too old to make a difference. Read all about how unretired people can fill positions during a talent shortage.

The perfect people for your positions might be already in the company. Internal recruiting can be a great option during labor shortages.

While you're promoting from within, think about upskilling and reskilling to fill those skills gaps.

A talent shortage can really hurt small businesses. If your small business is feeling the pinch, try these hiring strategies.

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