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Rafay Ishfaq is the W. Allen Reed Associate Professor in the Department of Supply Chain Management at Auburn University’s Harbert College of Business. He is also the department’s graduate programs coordinator. Dr. Ishfaq's research is focused on issues related to the strategic planning of logistics operations and the efficient use of resources within supply chain networks.
David Maloney, Editorial Director, CSCMP’s Supply Chain Quarterly 00:02
The Covid-19 pandemic showed us just how vulnerable supply chains are. Today we face many threats: shipping delays; a lack of workers; failing infrastructure; transportation rates that are out of control; cybersecurity threats; and of course, a worldwide pandemic that is still very much with us. But with each of these threats comes opportunities. Welcome to this limited podcast series from CSCMP’s Supply Chain Quarterly, the Top 10 Supply Chain Threats.
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Today, we focus on the threat of a labor shortage. Here's your moderator for this segment, Supply Chain Quarterly's executive editor, Susan Lacefield.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 01:41
Thank you for joining us today for the latest episode of top 10 threats to supply chains. Our subject today are the risks and challenges surrounding the current labor shortages. Speaking to us today about this subject is Professor Rafay Ishfaq from the University of—Auburn University. He is the W. Allen Reed associate professor for the Department of Supply Chain Management. Rafay is also engaged in a lot of different research reports and studies that are associated with this topic, such as the State of Retail Supply Chain for the Retail Industry Logistics Association, and the Logistics 2030 study for the Council of Supply Chain Management Professionals. In fact, we are speaking to Rafay today from the CSCMP Edge conference. Rafay, thanks for joining us.
Rafay Ishfaq, Associate Professor, Department of Supply Chain Management, Auburn University 02:34
Thank you, Susan, for inviting me for this brief talk.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 02:37
Thank you. So, there's been a lot of talk across all industries about the current labor shortage, but the problem feels particularly acute for the supply chain. Can you talk about some of the positions and job types that have been particularly hard for companies to fill, and the challenges they are facing in those areas?
Rafay Ishfaq, Associate Professor, Department of Supply Chain Management, Auburn University 02:58
I think we find ourselves in a very unique and unprecedented situation where the demand for labor and management talent has surpassed the capacity or the supply of labor in management skills. If you think about the current situation, we have got a surge in demand across retail. We see a lot of logistics activities on the inbound side, where companies are looking for drivers, they're looking for warehousing staff to be able to stock up the inventory, a nd all the way up to the sourcing and global movement of goods across the oceans. There is just so much need for logistics activities that the available pool of labor and management skills are just not there. Think about all the different options that [the] labor force would have right now. There are many companies who are offering more than—higher-than-usual salaries. I can think of Amazon and Target as some of those companies that will pay you a premium on being available to work for them. Even in the gig market, if you're willing to do a, an Uber or Lyft service or other crowd-sourced options, you can not only make good money, but also have the flexibility in the work schedule that a lot of us are looking for in these tiring times of family-oriented struggles and just making things work. So, when there are limited number of people available and there's a[n] unprecedented surge in demand, these mismatches are bound to happen. So, to answer your question, I think we are seeing issues with finding enough labor and management people to fill the roles that are available all across the board.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 05:13
And it's seems that it's not just a matter of recruiting the right talent; it is retaining them as well. How much of a factor is that in the labor shortage that we are seeing currently?
Rafay Ishfaq, Associate Professor, Department of Supply Chain Management, Auburn University 05:25
That's a great question, and if you think about this for a second, both of these issues, recruiting and retention, kind of goes hand in hand. I have met a number of people here at the conference who would share their experience of having worked at a company for just a little bit of time, a little over a year, and already receiving job offers with better salaries and signup bonuses, just to get those people to cross over the fence and come and work for the other company. I think part of the ways this, the retention and recruiting challenges are connected is the way our industry has shifted. If you think about the impact of e-commerce on warehousing and distribution processes, where we have moved away from just moving pallet loads on a forklift truck. We are now asking people to move boxes and pick, pack, and ship orders that are in smaller quantity, just increase the labor work. As well as, the management roles are becoming more complicated. I sometimes refer to this as a little bit of a skill deficit. The complexity of managing today's supply chains and all the technologies that are incorporated in handling this, the new modern supply chain, has left [the industry] with fewer people who are trained, who are skilled to be able to handle this. And once you get workers trained for warehousing operations, or get them attracted to the transportation and driving roles, there is just so much out there that they are, they will easily move to another company, with the premiums being offered.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 07:21
Right, right. So what are some innovative ways that companies can respond to these challenges?
Rafay Ishfaq, Associate Professor, Department of Supply Chain Management, Auburn University 07:30
We have to think about the recruitment and the retention of labor force and the management roles in slightly different ways. When you talk about the labor force, there has to be a little bit of flexibility, maybe higher wages. In the most recent study that we have just concluded, these are the things that we are hearing from a lot of businesses. Just the supply-demand dynamics in the labor market means that companies have to pay a little bit of [a] premium to get people to work, to actually come work for the business as a[n] employer of choice. On the management side, there is a strong need for additional training programs, especially management—leadership management programs, that would attract high quality and talented managers to come and work for your company. So, there are ways that companies are handling it, they're tackling it. And that's the need of the time.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 08:34
Excellent. Do you have any sense of how successful these strategies are? Are the companies that are paying more having less of a challenge recruiting people, or is it still hard?
Rafay Ishfaq, Associate Professor, Department of Supply Chain Management, Auburn University 08:46
There are recent labor statistics that indicate about 60% of the lost jobs at the start of the pandemic have been recovered. The remaining 40% is where the surge in demand in unavailability of trained and skilled workforce remains. It is not surprising that 60% of middle and top management job opportunities remain unfulfilled. National Association of Manufacturing ha[s] identified this shortage to actually lead up to about $1 trillion worth of lost business by 2030. So, this is a work in progress. Companies are struggling, but they are making the effort to incorporate these training programs, flexible work options, and leadership-development programs to attract and train future leaders.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 09:50
Are there any sort of long-term strategies or solutions companies need to keep in mind. Is this the time you really need to be looking at automation, especially for the labor roles, that is?
Rafay Ishfaq, Associate Professor, Department of Supply Chain Management, Auburn University 10:01
Yes, and I think part of that automation value proposition has shifted in favor of doing it that way—just the sheer rise in e-commerce and omnichannel, and we are moving product flows in smaller quantities that require more labor. So, from a volume standpoint, automation in the warehouses is making a lot of sense, as far—as well as adding technology from machine learning and artificial intelligence to be able to automate day-to-day workflow so that we can enable managers to actually spend more of their time on strategic initiatives and improving their their supply chains in general.
Susan Lacefield, Executive Editor, Supply Chain Quarterly 10:47
Well, great, thank you so much, Rafay, for joining us today and I'd like to thank our audience for tuning in on some important topics that we are all struggling with. And please remember to subscribe to our podcast so that you can keep up to date with the episodes as they release. Thank you again.
David Maloney, Editorial Director, CSCMP’s Supply Chain Quarterly 11:05
Thank you for joining us for this podcast from CSCMP’s Supply Chain Quarterly, the Top 10 Supply Chain Threats. We encourage you to subscribe wherever you get your podcasts.
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